Modern

Modern Auditing:
Auditing:

Assurance
Assurance Services
Services and
and the
the Integrity
Integrity
th
of
Financial
Reporting,
8
of Financial Reporting, 8th Edition
Edition
William C. Boynton

California Polytechnic State

University at San Luis Obispo

Raymond N. Johnson
Portland State University

Chapter 19 Completing the Audit and Postaudit

Responsibilities

Chapter
Chapter Overview
Overview

Completing
Completing the
the Audit
Audit
Do not pertain to specific transaction
cycles or accounts
Performed after the balance sheet date
Involve many subjective judgments
Usually performed by audit managers or
other senior members of the audit team

Completing
Completing the
the Fieldwork
Fieldwork
Making Subsequent Events Review
Types of Events

Type 1 subsequent events

Type 2 subsequent events

Auditing Procedures in the Subsequent

Period
Effects on Auditors Report

Subsequent
Subsequent Events
Events

Completing
Completing the
the Fieldwork
Fieldwork
Reading Minutes of Meetings
Obtaining Evidence Concerning
Litigation, Claims, and Assessments
Audit Considerations

Letter of Audit Inquiry

Effects of Responses on Auditors Report

Completing
Completing the
the Fieldwork
Fieldwork
Obtaining Client Representation
Letter
Content of Representation Letter
Effects on the Auditors Report

Performing Analytical Procedures

Overall Review

Evaluating
Evaluating the
the Findings
Findings
Making Final Assessment of Materiality and
Audit Risk
Known Misstatements

Projected Uncorrected Misstatements (Sampling

Techniques)
Estimated Uncorrected Misstatements
(Analytical Procedures)
Likely Misstatement
Aggregate Likely Misstatement

Evaluating
Evaluating the
the Findings
Findings
Evaluating Going Concern
Substantial Doubt Exists

Obtain information of managements plans

Assess likelihood of effective
implementation

Substantial Doubts Persists

Consider adequacy of disclosure

Include explanatory paragraph

Evaluating
Evaluating the
the Findings
Findings
Making Technical Review of
Financial Statements

Financial Statement Checklist

Formulating Opinion and Drafting

Audit Report on Financial
Statements

Evaluating
Evaluating the
the Findings
Findings
Formulating Opinion and Drafting Audit
Report on Internal Controls Over
Financial Reporting
Opinion about fairness of managements
assertion on internal controls
Opinion about adequacy of internal controls

Making Final Reviews of Working Papers

First-level
Manager
Partner
Cold Review

Study
Study Break
Break
1. These types of events provide evidence
with respect to conditions that did not
exist at the date of the balance sheet
but arose subsequent to that date.
A.
B.
C.
D.

Type 1 subsequent events

Type 2 subsequent events
Overall review
Balance sheet date

B. Type 2 subsequent events

Study
Study Break
Break
2. This item is obtained to complement
other audit procedures, including
confirmation of oral representations
given to the auditor by management.
A.
B.
C.
D.

Client representation letter

Letter of audit inquiry
Final review
Auditors report

A. Client representation letter

Study
Study Break
Break
3. The total of uncorrected
misstatements, projected uncorrected
misstatements, and estimated
misstatements for an account is called
______.
A.
B.
C.
D.

Known misstatement
Likely misstatement
Aggregate likely misstatement
Tolerable misstatement

B. Likely misstatement

Communicating
Communicating with
with the
the Client
Client
Communicating Internal Control
Matters
Significant Deficiency

Material Weakness

Communicating
Communicating with
with the
the Client
Client
Communicating Matters Pertaining to
Conduct of Audit
Auditors responsibility under GAAS
Significant accounting policies
Auditors judgment about the quality of the
entitys accounting principles
Management judgments and accounting
estimates

Communicating
Communicating with
with the
the Client
Client
Communicating Matters Pertaining to
Conduct of Audit
Significant audit adjustments

Disagreements with management

Consultation with other accountants
Major issues discusses with management prior
to retention
Difficulties encountered in performing the audit

Communicating
Communicating with
with the
the Client
Client
Preparing Management Letter
Internal Control Matters

Recommendations regarding the

management of resources

Tax-related Matters

Summary
Summary of
of Completing
Completing the
the
Audit
Audit

Postaudit
Postaudit Responsibilities
Responsibilities
Subsequent Events Between Report
Date and Issuance of Report

Discovery of Facts Existing at Report

Date

Discovery of Omitted Procedures

Study
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Break
4. This is an internal control deficiency
that adversely affects the companys
ability to initiate, record, process or
report external financial data reliably in
accordance with GAAP.
A.
B.
C.
D.

Material weakness
Corroboration
Misappropriation
Significant deficiency

D. Significant deficiency

Study
Study Break
Break
5. The management letter may
include all of the following items,
except:
A.
B.
C.
D.

Internal control matters

Management recommendations
Tax-related matters
All of the above

D. All of the above