Kế toán, kiểm toán - Chapter 11: Completing the audit

Roll-forward procedures: Extend work from interim period to date of the financial statements Perform analytical procedures to identify unusual or unexpected relationships not previously identified Review accounts for “miscellaneous”, “other,” and “clearing” accounts (may relate to earnings management) Evaluate management estimates and process for developing estimates for reasonableness

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Auditing & Assurance Services, 6eChapter 11Completing the Audit“It ain’t over till it’s over.”– Yogi Berra, former catcher for the New York Yankees11-*Timeline for Major Activities in AuditDate of the auditors’ report(audit completion date)Beginningof yearYear-End Date(date of the financial statements)Audit reportrelease dateInterim testing (tests of controls and substantive procedures)Complete substantive proceduresAttorney’s lettersWritten representationsGoing-concern assessmentAdjusting journal entriesAudit documentation reviewSubsequent eventsSubsequently discovered factsSubsequently discovered factsOmitted audit proceduresManagement letterCommunications with those charged with governance11-*Completing Substantive ProceduresRoll-forward procedures: Extend work from interim period to date of the financial statementsPerform analytical procedures to identify unusual or unexpected relationships not previously identifiedReview accounts for “miscellaneous”, “other,” and “clearing” accounts (may relate to earnings management)Evaluate management estimates and process for developing estimates for reasonableness11-*Procedures for Litigation, Claims, and Assessments Inquiry of clientsReview minutes of meetings of stockholders, directors, and committeesReview contracts, loan agreements, and correspondence from taxing and governmental agenciesObtain information concerning guarantees from bank confirmationsReview documentation related to legal servicesAttorney’s letters11-*Attorney’s LettersContents of Attorney’s LetterResponsibilities for Attorney’s LetterListing of pending litigation, claims, and assessmentsDescription of each item or case included in the listingEvaluation of the likelihood of an unfavorable outcomeEstimate of the range of potential lossUnderstanding regarding unasserted claimsAuditorsInitiate request for attorney letterSend letter to attorney including information related to litigation, claims, and assessmentsClientPrepare listing, description, and evaluation of litigation, claims, and assessments for letterAttorneyRespond to auditors directly regarding client’s description of litigation, claims, and assessments contained in attorney letter11-*Written RepresentationsProvided by management to auditorsDated using date of auditors’ reports (audit completion date)Broad purposeImpress upon management its primary responsibility for the financial statementsMay establish auditors’ defense if a question related to inquiries subsequently arisesQualify or disclaim an opinion if not provided by the client11-*Contents of Written RepresentationsInformation related to financial statementsManagement’s responsibility for F/S and internal control over financial reportingAppropriate disclosure, presentation, and reasonableness of itemsStatement that uncorrected misstatements are immaterialInformation provided to auditors by managementInternal control over financial reporting (for public entities)11-*Other Procedures Performed Prior to Date of Auditors’ ReportConsider whether evidence obtained during audit raises questions about ability to continue as a going concernAccumulate identified misstatements and evaluate need for adjustments to financial statementsRollover method considers the current period income effect(s) of misstatementsIron curtain method considers the aggregate effect of the adjustments on the entity’s balance sheetReview of audit documentationSupervisor: Have all steps been performed?Manager and partner: Scope of audit and support for conclusionsReviewing partner: Consistency of work and reporting with quality standards of the firm (engagement quality review)11-*Timeline and TermsDate of the auditors’ report(Audit completion date)Beginningof yearYear-End Date(Date of the Financial Statements)Audit reportrelease dateSubsequent EventsSubsequently Discovered FactsSubsequent events occur between the date of the financial statements and date of the auditors’ reportSubsequently discovered facts become known after the date of the auditors’ report11-*Procedures to Identify Subsequent EventsObtain understanding of procedures management performs to identify subsequent eventsInquire of management and those charged with governanceRead minutes of meetings of owners, management, and those charged with governanceReview entity’s interim financial statements11-*Auditors’ Response to Subsequent EventsIf discovered prior to date of auditors’ reports, perform procedures and evaluate disclosureIf discovered prior to audit report release date, perform proceduresRevise date of auditors’ reports to reflect new completion date Dual date auditors’ reportsIf discovered following audit report release date: If facts would result in revision of auditors’ report or F/S and individuals are relying on F/SNotify individuals relying on F/S Issue revised F/S which provide disclosure of facts11-*Omitted ProceduresPerform procedures if:Omitted procedures are importantIndividuals are currently relying on financial statements and auditors’ reportsIf previous opinion can be supported, no further action necessaryIf previous opinion cannot be supportedWithdraw the original reportIssue revised reportsInform persons currently relying on the financial statements11-*Communication with Individuals Charged with GovernanceAuditors’ responsibility under GAASOverview of planned scope and timing of auditJudgment about quality of accounting policies, estimates, and disclosuresSignificant difficulties encountered during auditUncorrected misstatementsDisagreements with managementMaterial, uncorrected misstatementsRepresentations requested from managementManagement consultations with other auditorsSignificant issues discussed with managementOther findings or issues significant and relevant to those charged with governance11-*Summary of Audit CommunicationsTypeFromToTimingMethodEngagement letterAuditorsClientBefore engagementWrittenAcceptance letterClientAuditorsBefore engagementWrittenAttorney letter responseAttorneyAuditorsNear date of auditors’ reportWrittenWritten representationsClientAuditorsDate of auditors’ reportWritten11-*Summary of Audit Communications (Continued)TypeFromToTimingMethodInternal control deficienciesAuditorsIndividuals charged with governanceFor public entities, prior to audit report release dateWrittenCommunication with those charged with governanceAuditorsIndividuals charged with governanceAfter auditOral or written*Management letterAuditorsClientAfter auditOral or written11-**If oral communication, document in audit documentation.