Chapter 24 Slides

Chapter 24 Slides - 24 - 1 Click to edit Master subtitle...

Info iconThis preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 24 - 1 Click to edit Master subtitle style 24 - 1 Completing the Audit Chapter 24 24 - 2 Four Phases of a Financial Statement Audit Phase I Plan and design an audit approach Phase II Perform tests of controls and substantive tests of transactions Phase III Perform analytical procedures and tests of details of balances Phase IV Complete the audit and issue an audit report 22 Acct 4510/5510 24 - 3 Phase IV Completing the Audit 1. Perform additional tests for presentation and disclosure objectives 2. Review for contingent liabilities 3. Review for subsequent events 4. Accumulate final evidence 5. Evaluate results 6. Issue audit report 7. Communicate with audit committee and management 24 - 4 Presentation and Disclosure Audit Objectives (page 761) Occurrence and rights and obligations : Disclosed events and transactions have occurred and pertain to the entity. Completeness: All disclosures that should have been included in the financial statements have been included. Classification and understandability: Financial information is appropriately presented and described and disclosures are clearly expressed. Accuracy and valuation: Financial and other information are disclosed fairly and at appropriate amounts. 24 - 5 Contingent Liabilities Material contingent liabilities must be disclosed in the footnotes. Three conditions are required for a contingent liability to exist. 1. There is a potential future payment to an outside party or the impairment of an asset that resulted from an existing condition 2. There is uncertainty about the amount of the future payment or impairment 3. The outcome will be resolved by some future event or events 24 - 6 Contingency Likelihood of Occurrence and Financial Statement Treatment Reasonably possible (more than remote, but less than probable) Footnote disclosure is necessary Probable (likely to occur) If the amount can be reasonably estimated, financial statement accounts are adjusted . If the amount cannot be reasonably estimated, note disclosure is necessary. Remote (slight chance) No disclosure is necessary Likelihood of Occurrence of Event Financial Statement Treatment 24 - 7 Auditors Concerns Pending litigation for patent infringement, product liability, or other actions Income tax disputes Product warranties Notes receivable discounted Guarantees of obligations of others Unused balances of outstanding letters of credit 24 - 8 Audit Procedures for Finding Contingencies Inquire of management about the possibility of unrecorded...
View Full Document

Page1 / 28

Chapter 24 Slides - 24 - 1 Click to edit Master subtitle...

This preview shows document pages 1 - 9. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online