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F8
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ACCA
edit Master
F8 Audit
title style
and assurance
Internal audit
Internal control
Audit evidence
Review
Reporting
Click to edit
Examiner
and
Master
Examtitle
Format
style
Question 1
Question 2
Question 3
Question 4
Question 5
Total
30
10
20
20
20
100
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Click to edit
Elements
of Master
an assurance
title style
engagement
There are the five elements in an assurance engagement:
A three party relationship involving a practitioner, a
responsible party, and intended users
An appropriate subject matter
Suitable criteria
Sufficient appropriate evidence
A written assurance report in the form appropriate
Click
Three
to party
edit Master
relationship
title style
Practitioner: for example an auditor. Responsible for
determining the nature, timing and extent of procedures
and must pursue doubts and queries
A responsible party: the person responsible for the
information and assertions
The intended users: the person(s) for whom the
practitioner prepares the assurance report. The
responsible party can be one of the intended users.
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Click
Appropriate
to edit Master
subjecttitle
matter
style
Many types:
Financial performance
Non-financial performance eg the key indicators of efficiency
and effectiveness.
Physical characteristics eg capacity of a facility.
Systems and processes eg an entitys internal control or IT
system
Behaviour eg corporate governance, compliance with
regulation
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Click
Suitable
to edit
criteria
Master title style
Suitable criteria exhibit the following characteristics:
10
11
Click to editreport
Assurance
Master title style
A written report containing a conclusion.
Positive form (reasonable assurance engagement): In
our opinion internal control is effective, in all material
respects, based on XYZ criteria.
Negative form (limited assurance engagement):
Based on our work described in this report, nothing
has come to our attention that causes us to believe
that internal control is not effective, in all material
respects, based on XYZ criteria.
12
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Assurance
to edit report
Master title style
A practitioner does not express an unqualified
conclusion for either type of assurance engagement
when:
There is a limitation on the scope of the
practitioners work.
The assertion is not fairly stated, and the subject
matter information is materially misstated.
13
Click to editgovernance
Corporate
Master title style
Corporate governance: the system by which
Click to Corporate
Recent
edit MasterFailures
title style
15
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Click toPrinciples
OECD
edit Master
of title
Corporate
style Governance
Fairness, including foreign and minority shareholders
Disclosure and transparency
Independence
Probity, honesty
Responsibility and accountability
Reputation
Judgement
Integrity
16
ClickUK
The
to edit
Corporate
MasterGovernance
title style Code
The purpose of corporate governance is to facilitate effective
entrepreneurial and prudent management that can deliver longterm success of the company
Main principles
Leadership
Effectiveness
Accountability
Remuneration
Relations with shareholders
ClickUK
The
to edit
Corporate
MasterGovernance
title style Code
Leadership
Every company should be headed by an effective board which is
collectively responsible for the long-term success of the company.
There should be a clear division between the running of the board
and the executive responsibility for the running of the companys
business. No one individual should have unfettered powers of
decision. [Split roles of CEO and Chairman]
The chairman is responsible for leadership of the board
Non-executive directors [NEDs] should constructively challenge and
help develop proposals on strategy.
18
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The
to edit
Corporate
MasterGovernance
title style Code
Effectiveness
Appropriate balance of skills, experience, independence and
knowledge. [NEDS 50% board; 2 in small companies ]
A formal, rigorous and transparent procedure for the appointment of
new directors to the board [Nomination committee]
All directors should be able to allocate sufficient time
Induction on joining the board and update and refresh their skills and
knowledge.
The board should be supplied in a timely manner with necessary
information.
The board should undertake a formal and rigorous annual evaluation
of its own performance and that of its committees and individual
directors.
19
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The
to edit
Corporate
MasterGovernance
title style Code
Accountability
The board should present a balanced and understandable
assessment of the companys position and prospects.
The board is responsible for determining the significant risks
should maintain sound risk management and internal control
systems.
The board should establish formal and transparent arrangements for
applying the corporate reporting, risk management and internal
control principles, and for maintaining an appropriate relationship
with the companys auditor. [Audit committee. Must examine internal
control. Must consider need for internal audit].
20
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The
to edit
Corporate
MasterGovernance
title style Code
Remuneration
Levels of remuneration should be sufficient to attract, retain and
motivate directors of sufficient quality but avoid paying more than
is necessary.
A significant proportion of executive directors remuneration should
be structured so as to link rewards to corporate and individual
performance.
There should be a formal and transparent procedure for developing
policy on executive remuneration and for fixing the remuneration
packages of individual directors. No director should be involved in
deciding his or her own remuneration. [Remuneration committee]
21
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The
to edit
Corporate
MasterGovernance
title style Code
Relations with shareholders
There should be a dialogue with shareholders based on the mutual
understanding of objectives. The board as a whole has responsibility
for ensuring that a satisfactory dialogue with shareholders takes
place.
The board should use the AGM to communicate with investors and
to encourage their participation.
22
Click to
Audit
committee
edit Master title style
Financial
Statements
Liaison with external auditors:
Scope of external audit
Review of internal
audit
Review of internal control
Special
investigations
23
Click to edit
Internal
auditMaster title style
Internal audit is an appraisal or monitoring activity
established by management and directors for the review of
internal control as a service to the entity.
It functions by examining, evaluating and reporting to
management and the directors on the adequacy and
effectiveness of internal control.
It is a key part of effective corporate governance.
Importance referred to in UK Combined Code of Corporate
Governance directors must review need for internal audit
department
Would normally report to the audit committee
24
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Internal
auditMaster title style
Helps achievement of corporate objectives
Aids risk assessment and management
Improves efficiency, effectiveness and economy
Designs internal control system
Checks operation of internal controls system
Value for money audits
Test IT controls
Liaises with external auditors/shares work
25
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Definition
of Master
an audittitle style
26
Click to edit
Positive
andMaster
negative
title
assurance
style
Positive
The accounts show a true and fair view
The cash flow forecast is correct
The appointment of the employee was fair
Negative
We have discovered nothing wrong with the accounts
The basis of the forecast is not unreasonable
There is no evidence of discrimination in the appointment.
27
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Click to editgovernance
Corporate
Master titlestyle
the purpose of an external audit
Corporate governance: the system by which companies
are directed and controlled
Appoint independent
Auditor
Adds credibility
Measure
performance
Financial
Statements
Prepare FS
Appoint
Shareholders
Own
Directors
Manage
Company
28
Click to of
Stages
edit
anMaster
audit title style
Plan the audit
Understand entity
Assess risk of material misstatement
Respond to risk
Satisfactory
Restricted substantive
tests
29
Auditors report
Click to and
Interim
edit final
Master
audit
title style
1January
Planning
visit
Interim audit.
Document system,
procedural tests
31December
30
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Click
to editresponsibility
Master title style
Auditors
planned and performed the audit to obtain
reasonable assurance whether the financial
statements are free from material misstatement.
.in our opinion the financial statements show a
true and fair view.
No guarantees
Not every error discovered
Not certifying accuracy
31
Click to edit
Relevant
to all
Master
companies?
title style
Should it be a legal requirement that the financial statements
of small entities be subjected to an audit?
Small entities:
Managers and owners the same
Simple trading
Simple records
Limited internal controls which management can override
32
Click
Auditors
to edit
rights
Master title style
Access to records
Information and explanations
Attendance at and notice about general meetings
Right to speak at general meetings on relevant matters
Rights to receive proposed resolutions
Right to resign before audit completion
Right to have information circulated to the shareholders
33
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Auditors
to edit
duties
Master title style
Typical duties:
To issue an audit report, giving opinions on:
>truth and fairness of the Financial Statements
>whether the Financial Statements are properly prepared
>any other opinions required.
When leaving a client, to issue a Statement of Circumstances
After resignation, to supply information to the new auditors.
34
35
Click
Appointment,
to edit Master
resignation
title style
and removal
Resignation
Auditors give written notice and statement of circumstances
Written notice sent to regulatory authority by company
Statement of circumstances sent to members by company;
regulatory authority by auditors.
Auditors can require directors to call an EGM.
Auditors can receive all notices relating to general meetings
relating to their resignation and can speak at those meetings.
36
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37
Click can
Who
to edit
be Master
an auditor?
title style
38
Click
Regulation
to edit of
Master
auditors
title style
International level
National level
The profession
39
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Regulation
to edit of
Master
auditors
title style
Education and work experience
Eligibility,
such as
membership
of a supervisory
body
Supervision
and monitoring
40
Click
Auditing
to edit
standards
Master title
and style
Quality Control
Recognised Statutory Body
For example ACCA
National Standards
In UK, set by Auditing Practices Board
International Standards on Auditing
Set by International Auditing and Assurance Standards
Board (IAASB) part of the International Federation od
Accountants (IFAC)
41
Threats
Safeguards
42
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43
Click to edit
Threats
to objectivity,
Master title
integrity
style and independence
Threats arise from:
Self-interest
Self-review
Familiarity
Advocacy
Intimidation
Management
44
Click to edit
Threats
to objectivity,
Master title
integrity
style and independence
Self-interest threats
Financial. For example, owning shares in the client,
Close business relationships. For example,
Employment (ex-partners >2 years)
Partner on client board
Family and personal relationships
Loans and guarantees
Overdue fees
Contingent fees
High percentage fees
Low-balling
Recruitment for the client
45
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Click to edit
Threats
to objectivity,
Master title
integrity
style and independence
Self-review threats
Recent service with assurance client
Other services
Preparing accounting records and accounts
Valuation services
Taxation services
Internal audit services
Corporate finance
Other service
46
Click to edit
Threats
to objectivity,
Master title
integrity
style and independence
The problem of supplying multiple services
For example: taxation, payroll, IT, management consultancy.
A controversial issue: pros and cons.
Large firms can use separate departments.
In the US listed companies are not allowed to obtain other
services from their auditor.
In most jurisdictions, no hard and fast rules.
47
Click to edit
Threats
to objectivity,
Master title
integrity
style and independence
Familiarity threats
Because of a close relationship, members of the assurance
firm become too sympathetic to members of the client firm,
so that objectivity and scepticism are lost
Care needed where senior audit staff have a long
association with the client.
ACCA suggest that the lead partner should be changed at
least every 5 years.
Other partners involved changed at least every 7 years.
48
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Click to edit
Threats
to objectivity,
Master title
integrity
style and independence
Advocacy threats
Where the assurance firm promotes a point of view or
opinion to the extent that subsequent objectivity is
compromised
49
Click to edit
Threats
to objectivity,
Master title
integrity
style and independence
Intimidation threats
Where the assurance team is deterred from acting properly
by actual or perceived threats.
Examples are actual/threatened litigation. In some cases
there might be physical intimidation.
50
Click to edit
Threats
to objectivity,
Master title
integrity
style and independence
Management threats
Where the auditor begins to make management decisions
for the client.
51
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Yes
Make own decision
No
Permission
to contact old auditor?
No
Yes
Write for information
Permission for old
auditors to reply?
Decline appointment
No
Yes
Relevant information
provided?
No
Yes
Accept/reject
53
54
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55
Click to of
Stages
edit
anMaster
audit title style
Plan the audit
Understand entity
Assess risk of material misstatement
Respond to risk
Satisfactory
Restricted substantive
tests
56
Auditors report
Click300
ISA
to edit
Audit
Master
planning
title style
Plan audit work..effective manner
General strategy
detailed approach
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Business risk
Financial risk
Total risk
Operational risk
Compliance risk
Audit risk = risk of inappropriate opinion
58
Click assessment
Risk
to edit Master
audit
title style
risk model
Risk of material misstatement
AR = IR x CR
Audit Risk
x DR
Control risk
Inherent Risk
Detection Risk
Sampling Risk
Non-sampling Risk
59
Click to editrisk
Assessing
Master
ISA 330
title style
To reduce audit risk to an acceptable level determine
responses at the financial statement level and the
assertion level
Financial statement level: more experienced staff, more
supervision, professional scepticism
Assertion level: design and perform audit procedures
whose nature, timing and extent are responsive to the
assessed risks of material misstatement.
60
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Click assessment
Risk
to edit Master
audit
title style
risk model
Inherent risk susceptibility to
misstatement that could be
materialassuming no related
internal controls
Complex transactions,
inexperienced staff, cash-based
business, pressure to perform
61
Click to edit
Analytical
procedures
Master title style
Ratio analysis: comparison with previous years, industry
standards, budgets.
Risk assessment eg risk of misstatement
Are FS consistent with our understanding of entity?
Source of substantive testing eg do figures look
reasonable?
62
Click to edit
Analytical
procedures
Master title style
Ratio analysis: comparison with previous years, industry
standards, budgets.
Reason
Artefact
Test
Implications
Other effects
63
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Analytical
procedures
Master title- style
RATIO
Gross profit %
2009
2008
21%
30%
Reason
Artefact
Test
Implications
Other effects
64
Click to edit
Analytical
procedures
Master title- style
RATIO
Receivables collection period
2009
2008
54 days
40 days
Reason
Artefact
Test
Implications
Other effects
65
66
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67
Click to editofMaster
Evaluation
misstatements
title style identifies
All communicated to management
Management asked to correct them or explain why not
Assess materiality of uncorrected misstatements
Obtain written representations from management that they
believe uncorrected misstatements are not material:
68
Click to edit
Gaining
an understanding
Master title style
of the entity (ISA 315)
Nature of the entity
Industry, regulator
Accounting policies
Objectives and strategies
Internal controls
Control environment
How entity identifies business risks
Measurement of financial performance.
69
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Click to of
Stages
edit
anMaster
audit title style
Plan the audit
Understand entity
Assess risk of material misstatement
Respond to risk
Satisfactory
Restricted substantive
tests
70
Auditors report
Clickuse
The
to edit
of assertions
Master title(ISA
style
315)
Accuracy
Completeness
Cut off
Allocation
Classification and understandability
Occurrence
Valuation
Existence
Rights & obligations (ownership)
(ACCA COVER)
71
Clickuse
The
to edit
of assertions
Master title style
ISA 315, Audit evidence divides assertions into
Transactions and events
Account balances
Presentation and disclosure
72
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Clickuse
The
to edit
of assertions
Master title style
If it relates to a transaction, then verify (controls and
substantive evidence) the assertions of:
Occurrence
Completeness
Accuracy
Cutoff
Classification
73
Clickuse
The
to edit
of assertions
Master title style
If it relates to a year end balance then verify (controls and
substantive tests) the assertions of:
Existence
Rights and obligations
Completeness
Valuation
Allocation
74
Clickuse
The
to edit
of assertions
Master title style
If it relates to the presentation and disclosure in the FS:
Occurrence
Rights and obligations
Completeness
Classification and understandability
Accuracy
Valuation
75
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Click to edit
Sources
of evidence
Master title style
Procedures for obtaining audit evidence
Analytical Procedures
Enquiry and confirmation
Inspection
Observation
recalcUlation and reperformance
76
Click much
How
to editaudit
Master
evidence?
title style
ISA500: Sufficient appropriate audit evidence to be able to draw
reasonable conclusions on which to base an audit opinion.
Sufficient = quantity
77
rd parties
Click to edit
Relying
on 3Master
title style
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rd parties
Click to edit
Relying
on 3Master
title style
Click to
Audit
documentation
edit Master title style
It is essential that the entire audit process is documented to:
Document show that the audit work has been done properly
Enable senior staff to review the work of junior staff
Help the audit team in future years
Encourage a methodical, high-quality approach.
Working papers will be retained for some years (at least 7) for safety.
80
81
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Click toofedit
Types
sampling
Master title style
Random selection
Systematic selection
Haphazard selection
Sequence/block selection
Monetary unit sampling
Stratification
82
Click to edit
Monetary
unit
Master
sampling
title style
say 4 items wanted
80
80
70
150
400
550
90
640
1,600
2,240
20
2,260
700
2,960
50
3,100
1,010
4,020
80
4,100
30
4,130
600
4,730
380
5,110
5,000/4 = 1,250
Choose first at random say, 605
Then:
1,855
3,105
4,455
83
Click of
Size
to sample
edit Master title style
Sampling risk: risk that conclusion based on sample is
different to conclusion if all items examined. Reduced as
sample size increased.
Non-sampling risk: risk of wrong conclusion arising from
reasons other than sampling. Reduced by proper planning
supervision and review
84
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Click to edit
Sampling
risk
Master
teststitle
of style
control
85
Click to edit
Sampling
risk
Master
substantive
title styleprocedures
Risk of
Risk of incorrect acceptance: sample implies that
balance is non materially misstated, but in fact it is
materially misstated.
86
Click to
Tests
ofedit
control
Master title style
Evaluation of systems (enquiry, analytical procedures,
observation, inspection)
Tests of controls should be carried out if suitable
controls exist.
Controls must be operating effectively
Otherwise:
Substantive procedures
Substantive procedures might be more efficient if there
are relatively few large transactions.
87
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Click to activities
Control
edit Master title style
Segregation of duties
Comparison
Authorisation
Accounting reconciliations
Computer controls
Arithmetic controls
Physical
Maintaining a trial balance and control accounts
89
Click to edit
Inherent
limitations
Master of
title
internal
style control
Human error
Collusion
Bypass of controls
Costs > benefits
Non-routine transactions
90
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Click to editand
Recording
Master
assessing
title style
the accounting system
Narrative notes
Flowcharts
Questionnaires
Internal control questionnaires (ICQs)
How good is the system? Yes = good; No = bad
91
Click to editinternal
Assessing
Mastercontrol
title style
Record the system
Assess the system
Test the system
Consider changing to substantive testing
Report weaknesses in a management letter (emphasise
that other problems might also exist).
Weakness
Consequences Recommended
action to
remove
weakness
92
93
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Click to objectives,
Control
edit Masterprocedures,
title style tests
Control objective: unauthorised overtime cannot be paid
Control procedure: all time sheets are authorised by a manager
Control tests: auditor inspects time sheets, enquires of the wages
department, traces large payments of wages back to authorised
time sheets.
94
Click to
Tests
ofedit
control
Master
- methods
title style
Enquiries, including management views
Inspection
Observation
Re-calculation and re-performance
95
Click tosystem
Sales
edit Master title style
Ordering/granting - Despatch/invoicing - Recording/credit
credit
control
96
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Click to editsystem
Purchases
Master title style
Ordering/granting Receipt/invoicing - Recording/payment
97
Click to system
Wages
edit Master title style
Hiring and rates authorised
Correct employees paid
Paid authorised amounts for work done
Deductions properly made and recorded
Deductions paid to authorities; net paid to employees
98
Click to expenditure
Capital
edit Master title
system
style
Expenditure authorised
Tenders received
Goods received
Invoices authorised
Recorded as capital expenditure in main ledger and fixed
asset (non-current asset) register
Physical inspection
99
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Click to
Cash
system
edit Master title style
All monies are received, banked, recorded and safeguarded
against loss/ theft.
All payments are authorised and made to correct payees.
Payments are not made twice for same liability.
100
Click to edit
Inventory
system
Master title style
All inventory movements authorised
Inventory properly recorded
Cut-off correct
Physical safeguards against loss, theft, damage
Proper valuation procedures
Reasonable levels of inventory
101
102
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103
Click to edit
Inventory
counts
Master title style
Inventory is difficult to audit: quantity, description, condition,
value, ownership
sheet.
Click to-edit
Cut-off
purchases
Master title style
Year end
Before
After
GRN
GRN
Included in?
Purchases !
Payables
!
Inventories !
Included in?
Purchases
Payables
Inventories
X
X
X
105
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Click to-edit
Cut-off
sales
Master title style
Year end
Before
After
GDN
GDN
Included in?
Sales
Receivables
Inventories
!
!
X
Included in?
Sales
Receivables
Inventories
X
X
!
106
107
108
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109
110
111
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Click to edit
Computer
systems
Master title style
General controls development, prevention of unauthorised
changes etc., backup. Can be classified as development and
administrative controls.
Application controls initiation, recording, processing and
recording transactions.
112
Click to edit
Computer
systems
Master title style
Input controls
Processing controls
Controls over standing data
Controls over output
113
Click to edit
Real-time
systems
Master title style
Access controls
Controls over passwords
Programming controls
Firewalls
Transaction logs
File controls
Balancing
Pre-processing authorisation
System development/maintenance controls
114
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Click to edit
Computer
assisted
Master audit
title style
techniques (CAAT)
Audit programmes: interrogate accounting data.
Select samples to investigate
Re-perform calculations
Look for unusual items
Test data: operated on by clients programs.
Are programs operating correctly?
Are controls operating?
115
Click to
Audit
report
edit Master title style
Definition
A clear expression of opinion on the financial
statements as a whole.
Based on review and assessment of conclusions drawn
from evidence obtained in the course of the audit.
The financial statements should have been prepared in
accordance with the International Financial Reporting
Standards (IFRSs) or International Accounting Standards
(IASs) where there is not yet an IFRS.
116
Click to edit
Financial
statements
Master title style
Statement of financial position
Income statement
Statement of changes in equity
Cash flow statement
Notes
Any other material identified as being part of the financial
statements
117
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Click to
Basic
Unqualified
edit Master
Report
title style
Title
INDEPENDENT AUDITOR'S REPORT
Addressee
Financial
statements
audited
Introductory
paragraph
118
Click to edit
Concepts
in Master
reporting
title style
Auditor's Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in
accordance with International Standards on Auditing. Those
Standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable
assurance whether the financial statements are free from
material misstatement.
119
Click to
Basic
Unqualified
edit MasterReport
title style
(contd)
Opinion
In our opinion, the financial statements give a true and fair view
of ("or present fairly, in all material respects,") the financial
position of ABC Company as of December 31, 20X8, and of its
financial performance and cash flows for the year then ended in
accordance with International Financial Reporting Standards.
120
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Click to
Basic
Unqualified
edit Master
Report
title style
(contd)
Opinion
paragraph
Equivalent terms
Auditors
signature
Click to
True,
fairedit
and
Master
reasonable
title style
assurance
True: the information is factual and conforms with reality.
Fair: Information is free from discrimination and bias and is in
compliance with expected standards and rules. Reflect the
commercial substance of the transactions.
An audit gives reasonable assurance that the accounts are
free from material misstatement auditors judgement is
vital.
A matter is material if it omission or misstatement would
reasonably influence the decisions of an addressee of the
audit report
122
123
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Click to edit
Auditors
Reports
Master title style
Unmodified, or
Modified
Modified
Matters that do
not affect the
auditors opinion
Matters that do
affect the
auditors opinion
Qualified opinion:
Emphasis of matter
and other matters
124
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Emphasis
ofMaster
matter title style
A paragraph in an auditors report used when the auditor
specifically wishes to draw the readers attention to some
matter already properly and clearly disclosed within the
financial statements and which is fundamental ti users
understanding of the FS
Such a paragraph does not constitute a qualification of the
auditors opinion.
Without qualifying our opinion above, we draw attention to
Note 10 to the financial statements. Five days before the
directors formally approved the financial statements, the
company received notification that they are to be named as
defendants in a proposed legal action . At this early stage
it is not possible to estimate the ultimate outcome of this
matter, and no provision has been included within the
financial statements.
125
Click tomatters
Other
edit Master title style
A paragraph in an auditors report used to refer to a matter
not presented or disclosed in the FS that is relevant to
users understanding of the audit, auditors responsibility or
the audit report.
Such a paragraph does not constitute a qualification of the
auditors opinion.
Without qualifying our opinion above, we draw attention to
the fact that we were appointed as auditors 11 months into
the financial year
126
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Going
edit Master title style
Should assess going concern over the 12 months from the
balance sheet date
Negative operating cash flows
Inability to pay suppliers when due
Operating losses
Borrowing facilities not agreed
Loss of key staff/key customers
Technology changes
Legislative changes
Non-compliance with regulations
127
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Going
edit Master title style
Effect on audit report if going concern in doubt:
If disclosed emphasis of matter
If not disclosed disclaimer, adverse, limitation in scope if
directors do not adequately make an assessment of going
concern
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Material but
not pervasive
Pervasive
FS contain a
material
misstatement
Except for
might
Adverse opinion
Unable to
obtain
sufficient,
appropriate
evidence
Except for
Disclaimer of
opinion
129
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Click to editevidence
Insufficient
Master title
qualified
style
opinion
130
Click to editevidence
Insufficient
Master title
disclaimer
style
of opinion
131
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Material
misstatement
Master titlestyle
qualified opinion
132
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Material
misstatement
Master titlestyle
adverse opinion
133
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ISA
to edit
Events
Masterafter
titlethe
style
reporting period
Events occurring between the period end and the date of
the auditors report and also facts discovered after the
audit report has been issued
Adjusting events: evidence of conditions that existed at the
date of the statement of financial position.
Non-adjusting events: conditions arose after the date of the
statement of financial position.
If accounts already issued, may have to take steps to prevent
users relying on the accounts
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IAS
toedit
Contingent
Master title
liabilities
style and assets
Contingent liability: possible liability arising from past
events. existence confirmed by future events
Present obligation probably requiring outflow of resources:
provision recognised and disclosures required
Possible obligation, or present obligation that will probably not
require outflow of resources: no provision, but disclosure
Possible obligation, or present obligation where likelihood of an
outflow is remote: no provision, no disclosure.
135
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IAS
toedit
Contingent
Master title
liabilities
style and assets
Contingent asset: possible asset arising from past
events. existence confirmed by future events
Inflow of economic benefits virtually certain: asset is not
contingent
Inflow of economic benefits is probable but not virtually certain:
no asset recognised but disclosures
Inflow is not probably: no asset recognised and no disclosure
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Click to representations
Written
edit Master title style
Examples of letter of representation paragraphs:
No material irregularities
Disclosed all liabilities
No subsequent events
No plan to shut down any part of operations
No inventory is valued an more than its NRV
All charges on assets have been disclosed
138
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Clickhave
You
to edit
a VeSTeD
Master title
interest
style in good answers
Verbs
Scenario
Time
Detail
139
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