Chapter 12 _ Completing and reporting on the audit.docx

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Published on 29 Jun 2013
School
UTSC
Department
Financial Accounting
Course
MGAD10H3
Professor
Chapter 12 Completing and reporting on the audit
Learning Objectives:
1. Explain the procedures performed as part of the engagement wrap-up, including gathering and
evaluating audit evidence
2. Understand the considerations when assessing the going concern assumption used in the
preparation of the financial statements
3. Understand the purpose of and the procedures performed in the review for contingent liabilities
and commitments
4. Compare the two types of material subsequent events to determine what effect they have on
the financial statements
5. Analyze misstatements and explain the difference between quantitative and qualitative
considerations when evaluating misstatements
6. Evaluate conclusions obtained during the performance of the audit and explain how these
conclusions link to the overall opinion formed on the financial statements
7. Describe the components of an audit report
8. Identify the types of modifications to an audit report
9. Explain what reporting is required to management and those charged with governance
12.1 Engagement Wrap up
1. Review audit file to ensure completeness and accuracy; review comments are left
2. All significant issues are documented and conclusions are reached
3. Clearing all review notes
4. Removing all notes and unnecessary documentation
5. For multi-locations engagements, ensure all documents from other locations are requested
6. Determine if there are any changes to materiality; as good practice, auditors should reassess the
materiality throughout the audit
7. Reconsider the assessments of internal controls and the entity environment
8. Revisit the planning documentation to ensure all significant issues are addressed
9. Perform analytical procedures on the adjusted financial statements and corroborate the
analytics
10. Review contingent liabilities and commitments to ensure they are properly accounted and
disclosed
11. Perform subsequent events procedures to identify events occurring after year end
12.1.1 Sufficient appropriate audit evidence
Factors to consider in evaluating sufficiency:
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Document Summary

Chapter 12 completing and reporting on the audit. Identify the types of modifications to an audit report. Factors to consider in evaluating sufficiency: materiality of misstatements, management responses, previous experience, results of audit procedures, quality of information, persuasiveness of audit evidence, whether evidence contradicts results of risk assessment. When misstatements or deviations from controls are found, the following should be considered: the reason, the impact, the need to do additional testing, A change in materiality could be a result of: new information, changes in understanding the environment and entity, and new circumstances. Factors to consider when assessing going concern: Judgement is based on information available and subsequent events: the more future the event, the greater the uncertainty, size and complexity of the entity, material obligations (i. e. bank loan) Require to record or disclose likely or probable and measurable events. Should inquire with management, review meeting minutes, review with taxation authorities, management rep letters, review legal expenses, legal confirmations.

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