ACCT_404_Chap11

ACCT_404_Chap11 - ACCT 404 CHAPTER 11 Completing the Audit...

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ACCT 404 CHAPTER 11 Completing the Audit LEARNING OBJECTIVES Review Checkpoints Exercises, Problems, and Simulations 1. Describe the approach used to examine major revenue and expense accounts. 1, 2, 3, 4 2. Identify procedures performed by auditors to evaluate contingencies, including the use of an attorney letter, during the completion of the audit. 5, 6, 7 52, 53, 56, 66, 67 3. Explain why auditors obtain management representations and list the key components of management representations. 8, 9, 10, 11 48, 49, 50, 51, 59 (partial), 65 (partial) 4. Identify the two major categories of subsequent events and describe the proper handling of these events by auditors. 12, 13, 14, 15 55, 58 (partial), 59 (partial), 60, 61, 64 (partial), 65 (partial) 5. Identify the final steps in the completion of an audit. 16, 17, 18, 19, 20, 21 54, 65 (partial), 68 6. Following the audit report release date, identify auditors’ responsibilities for (1) facts that may have existed at the date of the auditors’ reports and (2) omitted audit procedures. 22, 23, 24 57, 58 (partial) 62, 63, 64 (partial), 65 (partial) 7. Summarize important communications made by auditors following completion of the audit and audit report release date. 25, 26 69 Page 1 of 29
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ACCT 404 SOLUTIONS FOR REVIEW CHECKPOINTS 11.1 The four primary time periods in an audit examination and the tasks and activities that fall within each time period are: 1. Between the beginning of the year and end of year: Interim tests of controls and substantive procedures. 2. Between the end of the year and the audit completion date: (1) roll-forward work; (2) examination of revenue and expense accounts; (3) attorney letters; (4) management representations; (5) going- concern assessment; (6) adjusting journal entries; (7) audit documentation review; (8) subsequent events. 3. Between the audit completion date and audit report release date: subsequent events. 4. Following the audit report release date: (1) subsequent discovery of facts; (2) omitted audit procedures; (3) management letters; (4) communications with those charged with governance. 11.2 Revenue and Expense Account Balance Sheet Account Transaction Cycle Sales Revenue and Sales Returns Receivables Revenue/Collection Dividend and Interest Revenue Receivables, Investments Finance/Investment Gain or Loss on Asset Disposals Property, plant and equipment Receivables Investments Acquisition/Expenditure Finance/Investment Cost of Goods Sold Inventories Production Interest Expense Liabilities Acquisition/Expenditure Finance/Investment 11.3 In addition to work with the related balance sheet accounts and transaction cycles, auditors (1) use analytical procedures to examine the revenue and expense accounts and (2) scan revenue and expense accounts for large and unusual entries.
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This note was uploaded on 12/04/2011 for the course ACCT 404 taught by Professor T during the Spring '11 term at Lee.

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ACCT_404_Chap11 - ACCT 404 CHAPTER 11 Completing the Audit...

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