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