Lecture_11_S22009 - The University of Sydney ACCT3014 -...

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1 1 The University of Sydney ACCT3014 - Auditing and Assurance Semester 2, 2009 Week 11 Lecture ICCA Manual Ref: p319, p335-341 Completing the Audit Process: Subsequent Events Going Concern Audit Reporting 1. Pre-engagement activities 1.1 Accept / reject new client 1.2 Established terms of engagement 1.3 Engagement let er 2. Planning activities 2.1 Obtain knowledge of the business 2.1.1 Preliminary analytical procedures 2.2 Appraisal of risks, including fraud risk going concern ASA 570 2.3 Estimate of materiality 2.4 Review of control components 2.4.1 Preliminary evaluation of control environment 2.5 Develop overal audit plan (i.e. develop an audit strategy) in response to risks 2.5.1 Determine reliance on internal controls 2.5.2 Determine extent and nature of testing 2.5.3 Write audit plan 2.6 Assignment of staf 3. Audit evidence 3.1 Tests of control 3.1.1 Conducts tests 3.1.2 Make final evaluation of internal control 3.1.3 Modify audit approach 3.2 Substantive testing activities 3.2.1 Conduct substantive tests of transactions and balances 3.2.2 Conduct substantive analytical procedures 3.2.3 Evaluate results of substantive procedures 3.2.4 Modify audit approach 3.3 Obtain representations 3.3.1 Management 3.3.2 Solicitors 3.3.3 Bank 4. Opinion formulation and reporting activities 4.1 Review financial report 4.5 Related party transactions 4.2 Review audit results 4.6 Formulate audit opinion ASA 700 / ASA 701 4.3 Subsequent events ASA 560 4.7 Draft issue reports 4.4 Fraud and error 5. Continuous activities 5.1 Supervise conduct of examinations 5.2 Review work of assistants 5.3 Consider appropriateness of continuing relationship with client 5.4 Make required special communication 5.4.1 Material weaknesses of internal accounting control 5.4.2 Material errors or irregularities 5.5 Consult with appropriate persons in connection with special problems 5.6 Document work performed, findings, and conclusions in appropriate working papers 5.7 Consider going concern ASA 570 A U D I T P R O C E S S 3 Events Occurring after the Balance Sheet Date What is an after the balance sheet date event? Defined in AASB 110 as: (a) a circumstance that has arisen; or (b) information that has become available after balance date, but prior to completion of the Directors’ Declaration ASA 560 para 8 extends auditor’s responsibility up to the date of the auditor’s report
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2 4 Types of after the balance date events (i.e. subsequent events) Two Types: Adjusting events Events which related to a condition which existed at balance date. Impact must be reflected in the financial statements Non-adjusting events Events creating new conditions Financial effect is not related to year under audit If auditor considers event is material to Financial Statement user should be disclosed in notes to the accounts and Director’s report. 5
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This note was uploaded on 11/18/2010 for the course ACCT 3014 taught by Professor - during the Three '09 term at University of Sydney.

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Lecture_11_S22009 - The University of Sydney ACCT3014 -...

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