C. Other Specific Audit Evidence Topics–Reconcile A/R -> Sales, Notes Receivables -> Interest, Investments -> Interest, dividends, gains on sales, and PPE -> Rent, gains on sales–Related-party transactions•Expenses– Understatement–Reconcile A/R -> bad debt expenses, Inventories -> Purchase, COGS, payroll, PPE -> Depreciation, repairs, and maintenance, and Accrued Liabilities -> commissions, fees, product warranty expenses•Client Representation Letter–Must have one–Be clear with the responsibilities•Using the Work of a Specialist
C. Other Specific Audit Evidence Topics–Treat them as your staff– Independent•Subsequent Events and Subsequent Discovery of Facts Existing at the Date of the Audit Report–Adjustment to the F/S as the findings affect the F/S preceding the date of audit report–Disclosure only for those not having direct effect on the date of audit report•Omitted Procedures Discovered after the Report Date–Better late than never
D. Completing the Audit•Search for unrecorded liabilities•Review minutes of meetings of shareholders, board of directors, and the audit committee•Perform final review stage analytical procedures•Perform procedures, including the inquiry of client’s lawyers, to identify loss contingencies•Perform review for subsequent events•Obtain representation letter•Evaluate audit findings•Review adequacy of disclosures using a disclosure checklist that lists all specific disclosures required by GAAP and the SEC
D. Completing the Audit•Review of working papers performed by manager, partner, and possibly a second partner review performed by a partner who is not otherwise involved in the engagement but to provide an independent review of the work performed. The review process helps provide assurance that audit risk is an appropriately low level, working paper documentation is adequate, and that the evidence supports the opinion being rendered.•Communicate with the audit committee.
E. Other Related Topics•Operational auditing is usually performed by internal auditors.