L andT OUTLINE_Lecture 9 (Parts 1 and 2) S1_2019.pdf

L andT OUTLINE_Lecture 9 (Parts 1 and 2) S1_2019.pdf -...

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1 LECTURE 9 (PART 1): COMPLETION AND REVIEW WEEK OF MAY 13 th 2019 1: INTRODUCTION: Lecture 9 (Part 1) continues the detailed coverage of the audit methodology by examining the process of completion and review. Auditors have a number of responsibilities after the auditee has closed its books for the year. While many substantive tests can be carried out prior to balance date, some must be completed after that time. Furthermore, some events that occur subsequent to balance date must be taken into account by the auditor. As well, the auditor is required to obtain representation letters from the auditee’s management and from their solicitors. The auditor then makes a final assessment of materiality and audit risk, a review of the financial report and other information contained in the annual report, a review of the working papers, and undertakes some important communications with those charged with governance. 2: LEARNING OBJECTIVES 1. Understand the auditors’ responsibilities after balance date. 2. Define subsequent events and know the procedures required to identify them. 3. Understand the nature and purpose of management and solicitors’ representations. 4. Understand the process of reviewing audit working papers. 5. Understand the final assessment of materiality and audit risk. 3: REQUIRED READING: Textbook : Audit Assurance (First Edition): Ch. 13. Auditing Handbook ASA 260 Communication with those Charged with Governance ASA 265 Communicating Deficiencies in Internal Control to Those Charged with Governance and Management ASA 520 Analytical Procedures ASA 560 Subsequent Events ASA 570 Going Concern ASA 580 Management Representations Accounting Handbook AASB110 Events after the Reporting Period Film A few minutes with… Film 12 Completion and Review.
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2 LECTURE 9 (PART 2): THE AUDITOR’S REPORTING OBLIGATIONS WEEK OF MAY 13 th 2019 1: INTRODUCTION Auditors have obligations to form an opinion and to report it. The audit report must be based on sufficient appropriate evidence. The primary form of communication by auditors is the audit report to the shareholders. However, the auditor may also communicate directly with shareholders at the Annual General Meeting (AGM). The auditor also reports on a number of matters to those charged with governance of an entity, and those effecting executive management of an entity. In some situations the auditor will also report to lenders and to ASIC. Reporting requirements arise under legislation, (for companies, this is Corporations Act 2001), professional requirements; and under the auditing standards. Our main focus is on the reporting requirements under the auditing standards to the members, those charged with governance and management. While we consider the range of audit reports that may be provided and the reasons for doing so, it should be kept mind that, in practice, the overwhelming majority of audit reports for listed companies are unmodified. The table on page 560 of Gay and Simnett (2016) illustrates this.
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