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  • Modern Auditing:Assurance Services and the Integrity of Financial Reporting, 8th EditionWilliam C. BoyntonCalifornia Polytechnic State University at San Luis ObispoRaymond N. JohnsonPortland State UniversityChapter 19 Completing the Audit and Postaudit Responsibilities

  • Chapter Overview

  • Completing the AuditDo not pertain to specific transaction cycles or accounts

    Performed after the balance sheet date

    Involve many subjective judgments

    Usually performed by audit managers or other senior members of the audit team

  • Completing the FieldworkMaking Subsequent Events ReviewTypes of EventsType 1 subsequent events

    Type 2 subsequent events

    Auditing Procedures in the Subsequent Period

    Effects on Auditors Report

  • Subsequent Events

  • Completing the FieldworkReading Minutes of Meetings

    Obtaining Evidence Concerning Litigation, Claims, and AssessmentsAudit Considerations

    Letter of Audit Inquiry

    Effects of Responses on Auditors Report

  • Completing the FieldworkObtaining Client Representation LetterContent of Representation Letter

    Effects on the Auditors Report

    Performing Analytical ProceduresOverall Review

  • Evaluating the FindingsMaking Final Assessment of Materiality and Audit RiskKnown Misstatements

    Projected Uncorrected Misstatements (Sampling Techniques)

    Estimated Uncorrected Misstatements (Analytical Procedures)

    Likely Misstatement

    Aggregate Likely Misstatement

  • Evaluating the FindingsEvaluating Going ConcernSubstantial Doubt ExistsObtain information of managements plansAssess likelihood of effective implementation

    Substantial Doubts PersistsConsider adequacy of disclosureInclude explanatory paragraph

  • Evaluating the FindingsMaking Technical Review of Financial StatementsFinancial Statement Checklist

    Formulating Opinion and Drafting Audit Report on Financial Statements

  • Evaluating the FindingsFormulating Opinion and Drafting Audit Report on Internal Controls Over Financial ReportingOpinion about fairness of managements assertion on internal controlsOpinion about adequacy of internal controls

    Making Final Reviews of Working PapersFirst-levelManagerPartnerCold Review

  • Study BreakThese types of events provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date.Type 1 subsequent eventsType 2 subsequent eventsOverall reviewBalance sheet date

    B. Type 2 subsequent events

  • Study BreakThis item is obtained to complement other audit procedures, including confirmation of oral representations given to the auditor by management.Client representation letterLetter of audit inquiryFinal reviewAuditors report

    A. Client representation letter

  • Study BreakThe total of uncorrected misstatements, projected uncorrected misstatements, and estimated misstatements for an account is called ______.Known misstatementLikely misstatementAggregate likely misstatementTolerable misstatement

    B. Likely misstatement

  • Communicating with the ClientCommunicating Internal Control MattersSignificant Deficiency

    Material Weakness

  • Communicating with the ClientCommunicating Matters Pertaining to Conduct of AuditAuditors responsibility under GAAS

    Significant accounting policies

    Auditors judgment about the quality of the entitys accounting principles

    Management judgments and accounting estimates

  • Communicating with the ClientCommunicating Matters Pertaining to Conduct of AuditSignificant audit adjustments

    Disagreements with management

    Consultation with other accountants

    Major issues discusses with management prior to retention

    Difficulties encountered in performing the audit

  • Communicating with the ClientPreparing Management LetterInternal Control Matters

    Recommendations regarding the management of resources

    Tax-related Matters

  • Summary of Completing the Audit

  • Postaudit ResponsibilitiesSubsequent Events Between Report Date and Issuance of Report

    Discovery of Facts Existing at Report Date

    Discovery of Omitted Procedures

  • Study BreakThis is an internal control deficiency that adversely affects the companys ability to initiate, record, process or report external financial data reliably in accordance with GAAP.Material weaknessCorroborationMisappropriation Significant deficiency

    D. Significant deficiency

  • Study BreakThe management letter may include all of the following items, except:Internal control mattersManagement recommendationsTax-related mattersAll of the above

    D. All of the above