lecture_11 4240

lecture_11 4240 - ACCT 4240 - Auditing Completing the Audit...

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ACCT 4240 - Auditing Completing the Audit
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Audit Procedures that Cannot be Completed before the End of Audit Field Work Obtain the letter of inquiry from the client’s legal counsel Obtain the client representations letter Perform other procedures to identify subsequent events Complete the review of the audit working papers Review the form and content of the financial statements Analytical procedures
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Search for commitments and/or contingencies Obtain a summary of letters of credit in force at balance sheet date and confirm used and unused balances Review contracts, loan agreements, leases, etc., for indication of other guarantees Review IRS agent’s reports for evidence of tax settlements or disagreements
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Search for commitments and/or contingencies Review correspondence with financial institutions for evidence of endorsements of indebtedness of others, guarantees of indebtedness, or sales or assignments of accounts receivable Review minutes of meetings of board of directors and stockholder’s meetings for indications of lawsuits and other contingencies Analyze legal expense to identify all lawyers consulted and review invoices from lawyers to identify potential contingencies
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Lawyer’s Letter Send audit inquiry letter to client’s lawyer inquiring about: Asserted claims Unasserted claims that are probable of assertion and are reasonably possible or probable of an unfavorable outcome The lawyer’s advisory responsibility pertaining to undisclosed unasserted claims
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Lawyer’s Letter Lawyers can disclose to auditor asserted claims not disclosed by the client Lawyers cannot disclose unasserted claims - only the client can disclose If client refuses to disclose an unasserted claim to auditor, lawyer may resign
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Attorney Letters: Responsibilities Auditor Initiate request for attorney letter Client Prepare listing, description, and evaluation of litigation,
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lecture_11 4240 - ACCT 4240 - Auditing Completing the Audit...

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