Transcript COMPLETING THE AUDIT

COMPLETING THE AUDIT
REPRESENTATION LETTERS
• CLIENT REPRESENTATION LETTER
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SAS 85 REQUIRES
PSYCHOLOGICAL
NOT COMPETENT EVIDENCE
CONFIRM ORAL REPRESENTATIONS
REDUCE POSSIBILITY OF
MISUNDERSTANDINGS
– REMIND MANAGEMENT OF ITS
RESPONSIBILITIES
– CONFIRM MANAGEMENT INTENT
– SIGNED BY CEO, CFO
– REFUSAL TO SIGN IS A SCOPE
LIMITATION
– DATED END OF FIELD WORK
LEGAL LETTERS
• FASB 5 - MARCH 1995
– CONTINGENT LIABILITIES
• ABA - DECEMBER 1995
– OVERTLY THREATENED OR PENDING
LITIGATION
– CONTRACTUALLY ASSUMED
OBLIGATION
– UNASSERTED CLAIMS
• SAS 12 - JANUARY 1996
– MANAGEMENT IS PRIMARY SOURCE OF
EVIDENCE
– LAWYER LETTER IS SUFFICIENT,
COMPETENT EVIDENCE
SUBSEQUENT EVENTS
• OCCUR AFTER BALANCE SHEET DATE AND
BEFORE AUDITOR’S REPORT IS ISSUED
• TYPE I (ADJUST)
– ADDITIONAL EVIDENCE AFTER BALANCE
SHEET DATE ABOUT CONDITIONS THAT
EXISTED AT BALANCE SHEET DATE
• TYPE II (DISCLOSE)
– ADDITIONAL EVIDENCE AFTER BALANCE
SHEET DATE ABOUT CONDITIONS THAT DID
NOT EXIST AT BALANCE SHEET DATE
• AUDITOR’S RESPONSIBILITY
– ACTIVE FROM BALANCE SHEET DATE
TO REPORT DATE
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READ INTERIM FINANCIAL STATEMENTS
READ MINUTES
INQUIRE OF MANAGEMENT
CLIENT REPRESENTATION LETTER
LEGAL LETTER
SUBSEQUENT CASH RECEIPTS AND
DISBURSEMENTS
– PASSIVE BETWEEN REPORT DATE AND
ISSUE DATE
• EXCEPTION FOR REGISTRATION
STATEMENT UNDER SEC ACT OF 1933
• TYPE I EVENT - ADJUST THE FINANCIAL
STATEMENTS AND USE ORIGINAL REPORT
DATE
• TYPE II EVENT - CHANGE REPORT DATE OR
DUAL DATE REPORT
• SUBSEQUENT DISCOVERY OF FACTS
EXISTING AT DATE OF AUDITOR’S REPORT
BUT NOT KNOWN UNTIL AFTER REPORT IS
ISSUED
– IS THE INFORMATION IMPORTANT AND DOES
IT AFFECT THE AUDIT REPORT
– ADVISE CLIENT TO DISCLOSE
• CLIENT TO ISSUE REVISED FINANCIALS AND AUDIT
REPORT
• IF CLIENT WILL NOT DISCLOSE, AUDITOR TO NOTIFY
REGULATORY AUTHORITIES, USERS, SEC
• CONSIDERATION OF OMITTED
PROCEDURES AFTER REPORT DATE
– AUDITOR DETECTS OMITTED AUDIT
PROCEDURES
– CONSULT LEGAL COUNSEL
– WAS PROCEDURE IMPORTANT
– ARE INDIVIDUALS RELYING ON THE
AUDITOR’S REPORT
– CAN PROCEDURE (OR ALTERNATIVE) BE
PERFORMED
– DO RESULTS INDICATE THAT FACTS MAY HAVE
EXISTED AT DATE OF REPORT THAT AFFECT
THE REPORT
FINAL WRAP UP
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ANALYTICAL REVIEW
WORKPAPER REVIEW
REPORTABLE CONDITIONS
SUGGESTIONS TO MANAGEMENT
EVALUATE PERSONNEL
INDEPENDENT PEER REVIEW