AUDITING 9TH EDITION

The late A H Millichamp BA. MSocSc, FCA, FCCA. ATII

Alan Millichamp taught at the Universities of Wolverhampton and Birmingham, at the Open University Business School and in the private sector. He was a former examiner and assessor in auditing to the Association of Chartered Certified Accountants and was also a member of the examining panel of the ACCA.

J R Taylor MA, FCA

John Taylor teaches at Leeds Metropolitan University on professional accounting courses. He was a professional auditor for many years and the former financial director of a PLC based in Leeds. He is the author of Implementing Audit Procedures, published by Osborne Books and Business Finance for the Institute of Chartered Secretaries and Administrators.

~ .. ,~ SOUTH-WESTERN ,- (ENGAGE Learning'

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BRIEF CONTENTS

AcknQwledgements xi Prefa~ xiii How To Pass Auditing Examinations xvi

2

3

4

5

Introduction to auditing - the why.of auditing 1

Corporate governance 11

The statutory framework for auditing 22

Accounting requirements of the Companies Act 38

Auditing and accounting standards and guidelines 50

6 Rules of professional conduct 57

7 Quality control in audit firms 71

8 Accepting appointment as auditors 78

9 Accounting systems and internal controls 85

10 Audit planning, audit risk and materiality 102

11 Audit evidence and using the work of an expert 134

12 Audit testing, sampling and analytical procedures 145 :

13 Systems-based auditing 164

14 Business risk approach to auditing 184

15 The audit of assets 199

16 The audit of liabilities 228

t j...

17 Auditing and computers 240

18 Audit working papers 247

19 Internal audit 262

20 Errors, frauds and unlawful acts 270

21 Related parties 288

22

23

24

25

26

Service organisations 294

Evaluation and review 301

Going concern 312

Management representations 320

The final review stage of the audit 327

27 Auditors' reports to shareholders 333

28 Auditors' reports to directors and management 351

29 Group accounts_ 3~2

30 Small company audits 372

31 Auditors' liability 380

32 Non-audit assurance services 394

33 Value for money, performance evaluation, environmental reporting and corporate social responsibility reporting assignments 423

34 Current issues. 438

Appendix 1 445

Appendix 2 447

Index 449

v

FULL CONTENTS

Ac/fflowledgements xz Pr/face xiii How To Pass Auditing Examinations xvi

Introduction to aUditing - the wtly of auditing 1

Introduction 1

Agency theory Financial statements 2

Why is there a need for an audit? 3

Objectives of auditing 4

The auditors' report 5

Directors' responsibility 6 Auditors' responsibility 6 Organisation of the auditing profession 6 Qualities required of auditors 7

Types of audit 7

2 Corporate governance 11

Introduction 11

Cadbury and after 11

Companies Act 2006 12

Sarbanes Oxley - 2002 12

Combined code on corporate governance -2003 13 E

Substance over form 14

Report on the directors' responsibilities for the financial statements 15

Auditors' responsibilities 16 Auditors' duties in respect of compliance with the

combined code 16 Directors' report on internal controls 17

Directors' remuneration disclosure 18 Audit committees 18

3 The statutory framework for aUditing 22

Introduction 22

The Companies Act 2006 22

Requirement to have auditors 23

Who can be an auditor? 23

The rights and duties of an auditor under the Companies Act 2006 27

Appointment of auditors 27

Remuneration of auditors 28

The removal of an auditor 28

Resignation of auditors 30 Auditors' duties 31

Auditors' rights 32

The Auditors' report 33

Auditors' rights to attend meetings 36 Powers of an auditor 36 .

4 Accounting requirements of the Companies Act 38

Introduction 38

Accounting and accounting records 38

Statutory books 40

Accounting requirements 41

Accounting principles 43

Content - disclosure requirements 43

True and fair override 44

Procedure on completion of the financial staterrients 44

Period allowed for fIling accounts 45

Abbreviated accounts 45

Publication of accounts 46

Summary accounts 46

Dormant compani~s 46

5 Auditing and accounting standards and guidelines 50

Introduction 50

International standards on auditing 50

Practice notes 51

Bulletins 52

Accounting standards 53

6 Rules of professional conduct 57

Introduction 57

Fundamental principles 57

Ethics -general rules 58 Threats 59

Independence 59

Commissions and fees 61 Conflicts of interest 62

vii

,

1III

'!

1.111

viii Full contents

Advertising and publicity 63 Remuneration 63 Insider dealing 64

Money laundering 64

Suspicious transactions 65

Whistleblowing 66

" 7 it Quality control in audit firms 71

Introduction 71

Audit firm organisation 71

Individual audits 73

Reviews 74

8 Accepting appointment as auditors Introduction 78

Client screening 78

Professional etiquette 79

Letters of Engagement 80

9 Accounting systems and internal controls 85

Accounting systems 85

Internal controls ,86

Control procedures ' 89

Control activities in specific areas of a . business 92

Limitations of internal controls 98

10 Audit planning, audit risk and materiality 102

Introduction 102 1.

Objectives 102

Required procedures 103

Influence~ on an audit 104

Stages in the audit 105

Planning the audit 105

Internal control system review 109

Planning the audit work 116 Audit strategies 120

Analytical review procedures 122 The timing of audit work 122

Audit risk 124

Materiality 127

' ..

78

11 Audit evidence and using the work of an expert 134

Introduction 134

Financial statements and assertions 135

Sources of evidence 136

12

13

Basic techniqu,es for collecting eviden,ce 137

Using the.work of an expert 139

Audit testing, sampling and analytical procedures 145

Introduction 145

Forms of audit testing 145

Audit sampling 147

Analytical procedures 155

Systems-based auditing 164

Introduction 164

Testing system components 165

The purchases and expenses system 167

The sales system 171 .

Cash sales 175

The payroll system 176

14 Business risk approach to auditing 184

Introduction 184

External risks 184

Internal risks 187

The client's approach to risk 188

Actions to mitigate risk 190

Why use a business risk approach to auditing? 191

Understanding the business risk approach 192

The implications of the business risk approach for the audit 193

15 The audit of assets 199

Introduction 199

Aspects to be verified 200

Verification 'of non-current assets 201

Current assets 205

Stock and work in progress 206

Cut-off 213

Debtors 215

Bank balances 219

Loans 221

Cash 222

16 The audit of liabilities ,228

Introduction 228

Verification procedures 228

Trade creditors 229

Accruals 229

Provisions 230

Bank overdrafts and short-term loans 230

Amounts due to group and related companies 231

Long-term liabilities 231

Share capital and reserves 231

Inclusion of all liabilities 232

Contingent liabilities 233

Accounting estimates 235

17 Auditing and computers 240

nntroduction 240 .~ Audit risk and the CIS 241

The control environment 241

The audit approach to computerised system~ 242

18 Audit working papers 247

Introduction 247

Purposes 248

Evidence of work carried out 248

Nature and content of working papers 249

Departure from basic principles 250

Content of working papers 250

Sample working papers 250

Standardisation of working papers 256

Finalisation 256

Ownership of books and papers 256

Accountant's lien 257

Retention of working papers 257

19 Internal audit 262

Introduction 262

Role of internal audit 262

Differences between internal and external audit 263

Public sector 264

External auditors and internal audit 264

Outsourcing internal audit services 265

20 Errors, frauds and unlawful acts 270

Introduction 270

21

Errors 270

Fraud and other irregularities 271

The audit approach 274

Audit tests and fraud 275

Unlawful acts of clients and their staff 278

Audit issues arising from non-compliance 280

Related parties 288

Introduction 288

Disclosure 288

The auditor's duties re related parties 289

Audit procedures 290

Control of the ep.tity· 291

Qualified audit reports 291

22 Service organisations 294

Introduction 294

Why do firms outsource? 294

Audit planning issues 295

Accounting records 297

Audit evidence 297

Full contents ix

Reports by service organisation's auditors 298

23 Evaluation and review 301

Opening balances and comparatives 301

The auditors' interest 302

Subsequent events review 303

Adjusting and non-adjusting .events 304

24 Going concern 312

Introduction 312

Indicators of problems 312

Consequences of going concern 313

Directors' duties 314

The auditors' procedures 314

If events are identifiea j 15

Effect on audit reports 316

25 Management representations 320

Introduction 320

Contents of a letter 320

Reliance on letter of representation. 321

Example of a management representation letter 321

Refusal to co-operate 323

26 The final review stage of the audit 327

Introduction 327

Final accounts 327

Procedures 328

27 Auditors' reports to shareholders 333

Introduction 333

Contents of an auditors' report 333

When is an unqualified report appropriate? 336

Qualified audit reports 336

Effect of a qualified audit report 337

Issuing modified audit reports 337

Wording modified auditors' reports 339

'Except for' qualifications 340

Listed companies - special provisions 344

x Full contents

28

29

Emphasis of matter 345 Audit reporting - special circumstances 346

Auditors' liability in respect of audit reports 346

Third parties - disclaimers of liability 347

Auditors' reports to directors and management 351

Introduction 351

Those charged with governance 351 Formal and informal communication 351

The management letter 352

Response by management 355

The report and third parties 356

Example of a management letter 356

Group accounts 362

Introduction 362 Audit considerations 363

Reliance on other auditors 364

Auditing investments in subsidiaries and other undertakings 365

Auditing the consolidation 365

Modified auditors' reports 366

Foreign subsidiaries 366

Joint audits 367 Support letters to subsidiaries 368

30 Small company audits 372

Introduction 372

Small company audit exemption 372 Advantages and disadvantages of an audit 373

Ethical standards 373 The audit of small businesses 374

Specific audit considerations 376

31 Auditors' liability 380

Introduction 380

Criminal law 381

32

Civil liability- under the common law 383

Liability ~nder contract law 384

Liability in tort 385 Minimising risk to audit firms 389

Limited liability partnerships (LLPs) 389

Limiting auditors' liability 390

The future 391

Non-audit assurance services 394

Review engagements 394

Negative assurance 400 Prospective financial information 405

Assurance engagements 411

Levels of assurance 416

I

33 Value for money, performance evaluation, environmental reporting and corporate social responsibility reporting assignments 423

Introduction 423

Value for money 423 Economy, efficiency and effectiveness 424

Performance evaluation 426

Environmental reporting 427 Environmental reporting assignment 429

Corporate social responsibility 433

34 Current issues 438

Introduction 438 Auditing issues 438

Audit challenges 439

Independence 440 Ethics and 'quality issues 440

Corporate governance 441 New opportunities, new problems 441

Appendix 1 445

Appendix 2 447

Index 449

INDEX

abbreviated accounts 45-6 acceptance and reappointments as

auditor 72 accouftability

an~ audit 14 public sector 264

Accountancy & Actuarial Discipline Board (AADB) 26

accountant's lien 257 Woodworth v Conroy (1976) 257

accounting estimates 235-6 ISA540 235

accounting principles 43 accruals basis 43 consistency 43 departure from principles 43 going concern 43 prudence 43

accounting records 38-40, 137 accounting reference date 41-2 accounting requirements 41-3

accounting reference date 41-2 company accounts 42-3 financial statements 42

accounting requirements of Companies Act 2006 38-49

abbreviated accounts 45-6 accounting principles 43 accounting records 38-40 accounting requirements 41-3 disclosure 43-4 dormant companies 46 filing accounts 45 financial statements 44--5 -publication of accounts 46 statutory books 40-1 summary accounts 46 true and fair override 44

accounting standards 53-4 accounting standard setting 53 and auditing 54 current standards 3 small companies 53-4

Accounting Standards Board (ASB) 53

Statement of Principles for Financial Reporting 54

accounting systems 85-6, 137 need for controls 86

accounting systems and internal controls 85-101

accounting systems 85-6 control activities 92-8 control procedures 86-92

internal controls 86-9 internal controls limitations 98

accruals 229-30 basis 43

acquisition audit 431-2 adjusting and non-adjusting events

304--6 audit tests for subsequent events

review 305-6 ISA560 305

ADT Ltd v BDO Binder Hamlyn (1995) 388

adverse conclusion 418 adverse opinion 338-9 advertising and publicity 63

lowballing 63 Advertising Standards Authority (ASA) 63 agency theory 1-2 agreed-upon procedures engagements

396-8 example 397-8

Allied Crude Vegetable Oil Refining Corporation of New Jersey (1963) 214--15

amounts due to group/related companies 231

analytical procedures 155-9 case study 158-9 definition 156 extent of use 157 ISA520 155 procedures 157-9 timing 156

analytical review 212, 217 procedures 122

Annual General Meeting (AGM) 27, 44-5

appointment 27-8, 78-84 client screening 78-9 ISA 78,315 letters of engagement 80-2 private companies 27-8 professional etiquette 79-80 public companies 27

appropriateness 134, 138 arithmetical procedures 91 Arthur Andersen 12, 441

limited liability partnerships (LLPs) 390

assertions about account balances at period

end 135, 200-1 about classes of transactions 135 about presentations and disclosure 135

assets see audit of assets assignment risk 413

control risk 413 detection risk 413 inherent risk 413

Association of Authorised Public Accountants (AAPA) 24-5

Association of Chartered Certified Accountants (ACCA) 25, 347

assurance engagements 411-16 approach 412-13 assignment risk 413 assurance report content 414--16 ISA240 412 process 413-14

assurance levels 416-18 limited assurance 417-18 qualified conclusions 418 reasonable assurance 416-17

assurance report content addressee 415 conclusion 416 date 416 identification of criteria 415 identification of subject matter

415 inherent limitations 415 name and address of firm 416 statement identifying responsible

party 416 statement re performance 416 statement restricting use 416 title 414

attest functions 394--5 attribute sampling 154 audit

need 3-4 visits 122

audit approach, prospective financial information 407-8

audit of assets 199-227 assertions about account balances at

period end 200-1 bank balances 219-21 cash 222-3 current assets 205-6 cut-off 213--15 debtors 215-19 loans 221-2 non-current assets 201-5 stock and work in progress 206-12

audit committees 18-19 advantages 19 disadvantages 19

449

450 Index

audit completion checklists 73 audit considerations, group accounts

363-4 audit evidence, contingent liabilities 233 audit evidence and using work of expert

134--44 appropriateness 134 evidence collection 137-9 fi1;!ancial statements and assertions t 135-6

IS'A 500134 sources of evidence 136-7 sufficiency 134 using work of expert 139-41

audit firm organisation 71-3 acceptance and reappointments as

auditor 72 consultation 73 control policies and procedures 72 monitoring quality control 73 on-the-job training 73 professional ethics 72 recruitment 72 skills and competence 72 technical training and updating 72-3

audit of liabilities 228-39 accounting estimates 235-6 accruals 229-30 amounts due to group/related

companies 231 bank overdrafts and short-term

loans 230 contingent .liabilities 233-5 inclusion of all liabilities 232-3 long-term liabilities 231 provisions 230 share capital and reserves 231-2 !

verification procedures 228-9 audit objectives

payroll system 176-7 purchases and expenses system 167 sales system 171

audit planning, audit risk and materiality 102-33

analytical review procedures 122 audit risk 124-7 audit strategies 120-2 influences on audit 104-5 internal control system review

109-16 ISA200102 materiality 127-8 objectives 102-3 planning audit 105-8 planning audit work 116-20 required procedures 103-4 stages in audit 105 timing of audit work 122-4

Audit Planning Memorandum 117, 124, 447-8

audit procedures, tangible assets 202 audit programme 253-5

example 254-5 audit risk (AR) 124-7, 192

control risk (CR) 125-6 detection risk (DR) 126 evaluating audit risk 126-7 inherent risk (IR) 125 ISA200124 ISA315124

audit risk and CIS 241 control risk 241 inherent risk 241

audit shmpling 147-55 attribute sampling 154 error definition 149 estimation sampling for variables 154 objective aftest 148 projecting error into population

154-5 sample design 150-1 sample population 149 sample unit 149 sampling bases 147-50 sampling inappropriate 148 sampling methods 151-4 sampling risk 149 statistical sampling 150 working papers 155

audit strategies 120-2 risk-based auditing 120-1 substantive approach 120 systems-based auditing 120

audit testing: purchases and expenses system 170-1

audit work 170-1 audit testing 145-7

analytical review 146-7 compliance tests 145-6 payroll 179-80 payroll system 176 sales system 171, 174-5 substantive testing 146-7

audit tests and fraud 275-7 action on fraud discovery 276 Financial Services and Markets Act

277,2000 ISA 240275,277 ISA 250 275, 277 limitations on procedures 276 Management Letter 277 procedures 275-6 reporting 277

audit types 7-8 assurance assignments 8 internal 7-8 statutory 7

auditing 1-10 t -. agency theory 1-2

audit need 3-4 audit types 7-8 auditor qualities 7 auditors' report 5 auditors' responsibility 6 directors' responsibility 6 financial statements 2-3 objectives 4-5 organisation of auditing profession

6-7 auditing and computers 240-6

advantages and disadvantages 240-1

audit risk and CIS 241 computer information systems (CIS)

240 Computer-Assisted Audit

Techniques (CAATs) 241 computerised systems 242-4 control environment 241-2

auditing issues 438-43 audit challenges 439 convergence 438 corporate governance 441 ethics and quality issues 440-1 independence 440 opportunities and problems 441

auditing objectives 4-5 primary 4 secondary 4-5

Auditing Practices Board (APB) 4, 7, 50,347

documents 53 Auditing Standards, Guidelines and

Bulletins 7 auditor and internal control

eontrol activities 89 control environment 87-8 information system 88-9 monitoring controls 89 risk assessment process 88

auditor qualities 7 competence 7 independence 7 integrity 7

auditor rights and duties 27 auditor status 23-6

appropriate qualifications 25 disciplinary rules 26 ineligible persons 24 professional body rules 25-6 qualifying bodies 25 Recognised Supervisory Bodies

(RSBs) 24-5 auditor-derived evidence 136 auditors' duties 16-17, 31-2

Combined Code 16-17

read only requirement 17

reviewing statement of compliance

17 auditors' interest 40-1

audit procedures 302-3

evaluation and review 302-3

auditors' legal position 278

auditors' procedures, going concern

~14-15 audito~' report 5, 33-6, 44

Annual General Meeting (AGM) 34

auditors' opinion 5 publication 35-6 statutory auditors 23 true and fair 5, 34

auditors' reports to directors and management 351-61

communication 351-2 governance 351 ISA260 351 Letter of Engagement 351

Letter of Weakness 351

Management Letter 352-5 management response 355

third parties 356 auditors' reports to shareholders 333-50

effect of qualified reports 337

emphasis of matter 345-6

except for qualifications 340-4

ISA 700 333, 336 liability for audit reports 346

listed companies 344-5

modified reports 337-9 qualified reports 336-7

report contents 333-6 special circumstances 346

third parties: disclaimers of liability 347 !

unqualified reports 336

wording modified reports 339

auditors' responsibilities 6, 16

auditors' rights 32-3 to attend meetings 36

authorisation and approval 90

bad and doubtful debts 216-17

balance sheet 42, 44 bank balances 219-21

completeness 219 compliance tests 220 existence 219 rights and obligations 219

substantive tests 220-1 valuation and allocation 219

Bank of Credit & Commerce International 11

bank loans and overdrafts 228

bank overdrafts and short-term loans

230

block sampling 153 budgets and forecasts 188 bulletins 52-3 business risk approach 184-98

advantages 191 audit procedures 193-4 audit risk 192 business risk 192 client approach to risk 188-90

disadvantages 191-2 external risks 184-6 implications for audit 193-4

internal risks 187-8 ISA315184 planning 193 risk mitigation 190 top-down approach 192-3

understanding 192-3 use in auditing 191-2

Cadbury Report (1992) 11-12

Candler v Crane Christmas & Co. (1951)

386 Caparo Industries v Dickman and

Touche Ross & Co (1990) 386-7

Caparo judgment 347 cash 222-3 cash and cheques received by post 98

control objectives 98 control procedures 98

cash sales 175 special procedures 175

cash sales and collections 97 control activities 97 control objectives 97

categories of stock 206 CAVEBOP 200, 206 Chantrey Martin & Co v Martin (1953) 256

China 441 civil liability under common law 383

duty of care 383 negligence 383

client approach to risk 188-90

budgets and forecasts 188 risk assessment 189 strategic planning 188 tactical planning 188

client screening 78-9 Coloroll11 Combined Code on Corporate

Governance 2003 13-14

directors' duties 13-14 non-compliance 280-1

commissions and fees 61-2

Companies Act 20063-4,12,22-3

auditing issues 438 auditing objectives 4 director duties 12 offences 381-2

Index 451

company accounts 42-3

comparative testing 244

competence 7, 58, 140 compilation assignments 395-6

Letter of Engagement 395

Letter of Representation 395 completeness 215

bank balances 219 completion checklists 73 compliance audit 431 compliance risk 185

compliance tests 145-6, 216 bank balances 220 trade debtors 216

computation 137 computer information systems (CIS)

240 computer-assisted audit techniques

(CAATs) 241, 243

computerised systems 242-4

auditing around computer 242-3

comparative testing 244

exception reporting 244

understanding and interrogating CIS

243-4 computers see auditing and computers

confidence level 126, 151

confidentiality, payroll 177

confifinatinns 137 conflicts of interest 62

consequences, going concern 313-14

consistency 43 consolidated accounts 365-6

accounting policies 365

acquisitions and disposals 366

co-terminous accounting periods 365

consolidation adjustments 365-6

dividends 366 loss-making subsidiaries 366

subsequent events 366

consultation 73 content of working papers 250

contentious matters 73

contingent liabilities 233-5

audit evidence 233 legal matters 233-5

continuous inventory 210

control activities 89, 92-8 cash and cheques received by post

98 cash sales and collections 97

internal control 92 payments 94 payments into bank 97-8

purchases and creditors system

92-3 sales and debtors 95-7

wages and salaries 94-5

control of the entity 291

452 Index

control environment 87-8 computerised environment 241-2

control objectives, tangible assets 202 control policies and procedures 72 control procedures 86-92

arithmetical procedures 91 authorisation and approval 90 management 91-2

,.organisational controls 90 \personnel 91 physical controls 91 segregation of duties 86-90 SOAPSPAM89 supervision 91

control risk (CR) 125-6,413 controls necessity 86 convergence 438 corporate governance 11-21

audit committees 18-19 auditors' duties 16-17 auditors' responsibilities 16 Cadbury and after 11-12 Cadbury Report (1992) 11 Combined Code on Corporate

Governance 200313-14 Companies Act 2006 12 directors' remuneration dis~losure

18 directors' report on internal controls

17-18 directors' responsibilities for

financial statements 15-16 Sarbanes Oxley Act 2002 12-13 substance over form 14-15

corporate social responsibility 433-6 advantages and disadvantages 434-5 audit methodology 435 social audits 434

corporation tax and deferred taxation 228

cost and net realisable value 206-7 courtesy and consideration 58 Credit Alliance v Arthur Andersen & Co

(1985) 388 creditors 228 Criminal Justice Act 199364-5

money laundering 64-5 criminal law 381-3

Companies Act offences 381-2 false information/market 383 fraud 382 insider trading 382 money laundering 383 theft 382

current assets 205-6 CAVEBOP206

Current File 252-3 retention period 257

customers 138

cut-off 213-15 Allied Crude Vegetable Oil Refining

Corporation of New Jersey (1963) 214-15

independent stocktakers 214 .McKesson and Robbins lnc., USA.

(1939) 214 Re, the Kingston Cotton Mill Co. Ltd

(1896) 214 Re, Thomas Gerrard & Son Ltd

(1967) 213

debenture loans 228 debtors 215-19

analytical review 217 bad and doubtful debts 216-17 completeness 215 debtors circularisation 217-19 existence 215 prepayments 219-21 rights and obligations 215 trade debtors 215-16 valuation and allocation 215

debtors circularisation 217-19 letter 218-19

Delorean 11 departure

from accounting principles 43 from basic principles 250

detection risk (DR) 126,413 differences between internal and

external audit 263 direct reporting engagements 398-9

Letter of Engagement 399 directional testing 165-7

case study 166 directors' duties 13-14

accountability and audit 14 directors 13-14 directors' remuneration 14 going concern 314

directors' remuneration disclosure 18 Stock Exchange Listing Agreement

18 Directors' Remuneration Report 42,

344 Directors' Report 42, 44 Directors' Report on Internal Controls

17-18 ISA 72018

directors' responsibilities for financial statements 6,15-16

disciplinary rules 26 Accountancy & Actuarial Discipline

Board (AADB) 26 Professional Oversight Board (POB)

26 disclaimer of opinion 338

limitation of scope 338

.i~i$claimers of conclusion 418 disclosure 43-4, 279-80, 288-9, 408

by law to proper authorities 279 in public interest 279 to protect auditor interests 279

discovery of unlawful acts 279 documentation 74, 137 dormant companies 46 due diligence 399-400

audit 432 International Standard on

Assurance Engagements 400 duty of care 383

economic risk 185 economy, efficiency, effectiveness 424-6

approach 425-6 areas for review 424-5

emphasis of matter 345-6 Engagement Letter 274, 389

example 445-6 engagements to review financial

statements 400 International Standard on

Assurance Engagements 400 International Standard on Review

Engagements 400 en'qUiry 13 7 Enron 12, 289, 362, 439-40

limited liability partnerships (LLPs) 390

environmental reporting 427-8 asset values 428-9 environmental issues and financial

accounts 427-8 environmental management systems

(EMS) 430 Environmental Protection Act 1990

429 Environmental Protection (Duty of

Care) Regulations 1991 429 ISA315428 laws and regulations 428 Management Licensing Regulations

1994429 operational issues 428 third parties 429

environmental reporting assignment 429-33

acquisition audit 431-2 audit tools 432 compliance audit 431 due diligence audit 432 environmental audit types 430-3 environmental management system

(EMS) audit 431 environmental review 430 reporting 432-3 waste audit 430-1

waste disposal site audits 431 water audit 431

error definition 149 errors, fraud and unlawful acts 270-8

audit approach 274-5 audit issues and non-compliance

280-3 audit tests and fraud 275-7 err~rs 270-1 Fra\d Act 2006 271 fraud and irregularities 271-4 ISA 240 270, 274, 277-8 ISA250 278 ISA 315 270 ISA330 270 Letter of Weakness 271 management responsibility 273-4 perception gaps 270 professional scepticism 274 risk assessment 274-5 unintentional mistakes 270 unlawful acts of clients and staff

278-80 estimation sampling for variables 154 ethics 58-9, 373-4, 440-1 evaluating audit risk .126-7

confidence level 126 evaluation and review 301-11

adjusting and non-adjusting events 304-6

auditors' interest 302-3 ISA 510301-2 ISA 710 301-2 opening balances and comparatives

301-11 subsequent events 303-4

evaluation of specialist evidence 141 !

events identified, going concern 315-16 evidence collection 137-9

computation 137 confirmations 137 enquiry 137 inspection of documents 137 observation 137 re-performance 137 sample testing 137 sources of audit evidence 137-9

evidence of work carried out 248 except for conclusion 418 except for qualifications 340-4

adverse opinion 342 disagreement 340 disclaimer of opinion 343-4 limitation of scope 341

exception reporting 244 existence 215

bank balances 219 expected error 151 experience of specialist 140

expert see using work of expert external auditors and internal audit

264-5 ISA610 264

external risks 184-6 compliance risk 185 economic risk 185 financial risk 186 legislative risk 185 market risk 186 physical risk 185 political risk 184-5 technological risk 186

false infdrmation/market 383 filing accounts 45

private companies 45 public companies 45

final accounts 327-8 final audit 123-4 final review stage 327-31

accounting poliCies 328 audit evidence 328-9 final accounts 327-8 presentation and disclosure 329 procedures 328-9 results for period 328

finalisation 256 financial problems, going concern 312-13 Financial Reporting Council (FRC) 50, 53 Financial Reporting Exposure Draft

(FRED) 53 Financial Reporting Review Panel

(FRRP) 53 Financial Reporting Standard for

Smaller Entities (FRSSE) 54 Financial Reporting Standards (FRSs) 4 financial risk 186 Financial Services & Markets Act 2000

3,45,383 Financial Services Authority (FSA) 3 Financial Services and Markets Act,

fraud 277 financial statements 2-3, 42, 44-5

balance sheet 42 directors' remuneration report 42 directors' report 42 group accounts 42 notes to accounts 42 parties 2-3 profit and loss account 42

financial statements and assertions 135-6 assertions about account balances at

period end 135 assertions about classes of

transactions 135 assertions about presentations and

disclosure 135 ISA500 135

flow charts 111-15 advantages 111 case study 112-13 disadvantages 111

Index 453

flow chart for audit purposes 114-15

forecast 405 foreign subsidiaries 366-7 fraud 382

ISA240 385 Fraud Act 2006 271 fraud and irregularities 271-4

Engagement Letter 274 Fraud Act 2006 271 fraud characteristics 272-3 fraudsters 273 ISA240 274 management override 273 materiality of fraud and error 273 misappropriation of assets 272 misstatements 272 responsibilities for fraud prevention

273-4 free of material misstatement 104 fundamental principles 57-8

competency 58 courtesy and consideration 58 independence 58 integrity 57-8 objectivity 58

furniture and fittings 201

Generally Accepted Accounting Principles (GAAP) 42

Global Crossing 12 going concern 43,312-19

auditors' procedures 314-15 consequences 313-14 directors' duties 314 effect on audit reports 316 events identified 315-16 indicators of problems 312-13

goodwill 204 governance 351

ISA260 351 Greenbury Report (1995) .12 group accounts 42, 44, 362-71

audit considerations 363-4 consolidated accounts 365-6 foreign subsidiaries 366-7 investments in subsidiaries 365 joint audits 367-8 modified reports 366 subsidiary auditors 364-5 support letter to subsidiaries 368

Haigv Bamford (1976) 388 Hampel Report (1998) 12

454 Index

Hedley Byrne v Heller and Partners (1964) 386

Higgs Report (2003) 12

inclusion of all liabilities 232-3 independence 6-7, 24, 58-61, 440

acceptance of goods/services 60 actual or threatened litigation 60 Deneficial interests 60 hmily/other personal relationships

60 influences outside practice 60 loans to/from clients 60 provision of other services 61 undue dependence on audit client 60

independent and third-party evidence 136

India 441 indicators of problems

financial problems 312-13 going concern 312-13 operating indicators 313

individual audits 73-4 audit completion checklists 73 contentious matters 73 documentation 74 reviews 74 sign 74 staff allocation 73 staff briefing 73 supervision 74

ineligible persons 24 influences on audit 104-5 information system 88-9 inherent risk (IR) 125,413 insider dealing 64, 382 inspection of documents 137 Institute of Chartered Accountants in

England & Wales (ICAEW) professional competence 384 Royal Bank of Scotland v Bannerman

lohnstone Maclay 347 Institute of Chartered Accountants in

Ireland (ICAl) 25 Institute of Chartered Accountants in

Scotland (ICAS) 25 Institute of Chartered Accounts in

England & Wales (ICAEW) 1, 25

intangible assets 203-4 goodwill 204 research and development 203-4 trademarks, patents 204

integrity 7, 57-8 interim audit 123 interim financial information 403-5

example 403-4 internal audit 262-9

definition 262

differences between internal and external audit 263

external auditors and internal audit 264-5

outsourcing internal audit 265-6 public sector 264 role 262-3

internal control evaluation questionnaires (ICEQs) 115-16

internal control questionnaires (ICQs) 109-11

internal control system review 109-16 flow charts 111-15 internal control evaluation

questionnaires (ICEQs) 115-16 internal control questionnaires

(ICQs) 109-11 walk-through tests 116

internal controls 86-9, 92 auditor ahd internal control 86-9 control objectives 92 control procedures 92 ISA86,315 limitations 98

internal risks 187-8 financial risks 188 governance risk 187-8 operational risk 187 strategic risk 187

International Accounting Standards Board (IASB), Framework for Preparation and Presentation of Financial Statements 54 .

International Accounting Standards (IAS) 42

International Auditing & Assurance Standards Board (IAASB) 50, 394

International Auditing Practice Statements 52-3

international decisions 388-9 International Federation of

Accountants (IFAC) 50 International Financial Reporting

Standards (IFRS) 42 International Standard on Assurance

Engagements 400, 412 International Standards on Auditing

(ISAs) 50-1 basic principles and essential

procedures 50 explanatory material 50

International Standards on Review Engagements (ISREs) 394, 400

investments 204-5 ISA510 205 in subsidiaries 365

lEB Fasteners v Marks Bloom (1980) 386 joint audits 367-8

, Is.~yperformance indicators (KPIs) , 427-8

knowledge of business 406

land and buildings completeness and accuracy 202 completeness, valuation, allocation

202 existence 202 impairment 203 occurrence, rights, obligations 202 ownership, rights, obligations 202 tangible assets 201 valuation 202

legal matters, contingent liabilities 233-5 legal position 278 legislative risk 185 lenders 138 Letter of Engagement 80-2, 351, 384

compilation assignments 395 direct reporting engagements 399 ISA210 80 principal contents 81-2 prospective financial information

406 purposes 80-1 when to send 81

Letter of-Representation 320-3 example 321-3 reliance on 321

Letter of Weakness 271, 351 liabilities

bank loans and overdrafts 228 corporation tax and deferred

taxation 228 creditors 228 debenture loans 228 share capital and reserves 228

liability for audit reports 346, 380-93 civil liability under common law 383 Companies Act 2006 346 criminal law 381-3 future 391 international decisions 388 Liability Limitation Agreement

(LLA) 390 liability in tort 385-9 liability under contract law 384-5 limited liability partnerships (LLPs)

389-90 limiting auditors' liability 390-1 risk minimisation for audit firms 389

Liability Limitation Agreement (LLA) 390-1

liability in tort 385-9 ADT Ltd v BDO Binder Hamlyn

(1995) 388 Candler v Crane Christmas & Co­

(1951) 386

Caparo Industries v Dickman and Touche Ross & Co (1990) 386-7

Credit Alliance v Arther Andersen &

Co (1985) 388 Haig v Bamford (1976) 388

Hedley Byrne v Helier and Partners

(1964) 386 international decisions 388-9

l~B Fasteners v Marks Bloom (1980)

\386 Mutual Life v Citizens Assurance Co

Ltd v Evatt (1971) 388

Peach Publishing Co v Slater & Co

(1997) 388 Royal Bank of Scotland v Bannerrnan

lohnstone Maclay (Scottish Court

of Session )(2002) 387-8 mtramares v Touche (1931) 388

liability under contract law 384--5

ISA240 385 Re Kingston Cotton Mill (1896)

384-5 Re London & General Bank (No 2)

(1895) 384 Re Thomas Gerrard & Son (1968)

385 limitation of scope, disclaimer of

opinion 338 limited assurance 417-18

example 417-18 negative opinion 417

limited liability partnerships (LLPs)

389--90 limiting auditors' liability 390-1

listed companies 344-5 Directors' Remuneration Report

344 loans 221-2

audit procedures 222

long-term liabilities 231

lowballing 63

McKesson and Robbins Inc., USA (1939)

214 management 91-2

override 273 and staff 137

Management Letter 351-5

contents 354-5 example 356-8 format 355 procedures 354 purposes 353 response by management 355

timing 353 Management Licensing Regulations

1994429 management representations 320-6

ISA580 320

Letter of Representation 320-3

refusal to co-operate 323

manuals 255 market risk 186 materiality 127-8, 138, 151

and audit procedures 128 .

fraud and error 273 ISA320 127 qualitative estimates 127-8

quantitative estimates 127

Maxwell Communications 11

misappropriation of assets 272

modified reports 337-9, 366

adverse opinion 338--9

disclaimer of opinion 338

ISA 700339 material but not pervasive 338-9

pervasive 337-9 qualified 'except for' opinion 338

wording 339 Monetary Unit Sampling (MUS) 153-4

money laundering 64--5,383

Criminal Justice Act 1993 64--5

Money Laundering Reporting

Officer (MLRO) 65

Serious and Organised Crime

Agency (SOCA) 65 serious transaction report 65

tipping off 65 Money Laundering Regulations 2003

65,279 monitoring controls 89

analysis of results 89 internal audit 89 senior management review 89

motor vehicles 201 multi-stage sampling 153

Mutual Life v Citizens Assurance Co Ltd

v Evatt (1971) 388

nature and content of working papers

249 negative assurance 400-5

example 402 interim financial information 403-5

report qualification 402-3

negligence 383 non-audit assurance services 394--422

assurance engagements 411-16

assurance lev,els 416-18 negative assurance 400-5

prospective financial information

405-10 review engagements 394--400

non-compliance 280-3 auditor resignation 282-3

auditor role 281-2 directors' responsibilities 280-1

effects 280

ISA240 282 penalties 280

. procedures 281-2

non-current assets 201-5

intangible assets 203-4 investments 204--5 tangible assets 201-3

notes to accounts 42

objective of test 148 objectives 102-3

Index 455

in all material respects 102-3

ISA 200102 opinion 102 true and fair 103

objectivity 58 observation 137 on-the-job training 73

opening balances and comparatives

301-11,346 Companies Act requirements 301

operating indicators 313

operational performance 426

organisation of aUditing profession 6-7

independence 6 organisational controls 90

outsourcing advantages 294-5 audifplanning issues 295-7

disadvantages 295

outsourcing internal audit 265-6

advantages 265-6 disadvantages 266

ownership of books and papers 256-7

Chantrey Martin & Co v Martin (1953) 256

payments 94 . control activities 94

control objective 94 payments into bank 97-8

control objectives 97 control procedures 97-8

payroll system 176-80 audit objectives 176-7 audit testing 176, 179

confidentiality 177 system controls 177-8

Peach Publishing Co v Slater & Co (1997) 388

perception gaps 270, 441 performance evaluation 426-7

assessing operational performance

427-8 key performance indicators (KPls)

427-8 operational performance 426

period covered, prospective financial

information 406-7

456 Index

Permanent File 251-2 retention period 257

personnel 91 physical risk 185 planning audit 105-8

case study 107-8 ISA315106 know your client 106-7

planping audit work 116-20 J\Idit Planning Memorandum 117 case study 118-20 ISA300 117 ISA315117 planning process 117-20

plant and equipment 201 political risk 184-5 Polly Peck 11 population 150-1 post balance sheet events 304 powers of auditor 36 practice notes 51-2 precision 151 prepayments 219-21 presentation and disclosure, final review

stage 329 Proceeds of Crime Act 2002, money

laundering 65 production overheads 207 professional advisers 138 professional body rules 25-6

Professional Indemnity Insurance (PU) 26

professional conduct see rules of professional conduct

professional ethics 72 Professional Indemnity Insurance (PU)

26,389 Professional Oversight Board (POB) 26,

438 professional scepticism 274 profit and loss account 42, 44 projecting error into population

154-5 projection 405 prospective financial information 405-

10 audit approach 407-8 disclosure 408 example 409 forecast 405 knowledge of business 406 Letter of Engagement 406 period covered 406-7 projection 405 reporting 408-10

provisions 230 prudence 43 Public Interest Disclosure Act 1988,

whistleblowing 66-7

public sector 264 accountability 264 regularity 264

publication of accounts 46 purchases and creditors system 92-3

control objectives 92-3 control procedures 93

purchases and expenses system 167-71 audit objectives 167 audit testing 170-1 system controls 168-70 system objectives 167-8

purpose audit tests 167 working papers 248

I

qualifications 25 qualified conclusions 418

adverse conclusion 418 disclaimers 'of conclusion 418 except for conclusion 418 qualified conclusion 418

qualified 'except for' opinion 338 qualified reports 291, 336-7

effect 337 qualifying bodies 25 quality control 71-7, 440-1

audit firm organisation 71-3 individual audits 73-4 ISA220 71 ISAs 71 reviews 74-5

random sampling 152 Re Kingston Cotton Mill (1896) 384-5 Re, the Kingston Cotton Mill Co. Ltd

(1896) 214, 275 Re London & General Bank (No 2)

(1895) 384 Re Thomas Gerrard & Son (1968) 385 Re, Thomas Gerrard & Son Ltd (1967) 213 re-performance 137 reasonable assurance 104, 416-17

example 417 positive opinion 416-17

receivership and liquidation 62 Recognised Supervisory Bodies (RSBs)

24-5 rules 24

recruitment 72 refusal to co-operate 323 regularity, public sector 264 related parties 288-93

audit procedures 290-1 auditors' duties 289-90 control of the entity 291 disclosure 288-9 ISA550 288 qualified audit reports 291

relevance 138 \;iiability 138 removal of auditors 28-9 remuneration 28, 63-4 report contents 333-6 reporting, prospective financial

information 408-10 reporting errors and irregularities

277 management 277 members (shareholders) 277 third parties 277 top management 277

representations by directors 136-7 required procedures 103-4

free of material misstatement 104 ISA200 103 reasonable assurance 104 sufficient, appropriate audit

evidence 103-4 requirement to have auditors 23 research and development 203-4 residual risks 190 resignation of auditors 30-1

ethical reasons 30 operational reasons 30 procedures 30 rights. and duties of resigning auditor

30-1 statement of circumstances 30

responsibilities for fraud prevention 273-4

results for period 328 retention of working papers 257

retention periods 257 review checklists 255 review engagements 394-400

agreed-upon procedures engagements 396-8

attest functions 394-5 compilation assignments 395-6 direct reporting engagements

398-9 due diligence 399-400 engagements to review financial

statements 400 International Standards on Review

Engagements (ISREs) 394 reviews 74-5

hot 74 monitoring 74

rights and obligations 215 bank balances 219

risk assessment 189 process 88 risk evaluation 189 risk identification 189

risk minimisation for audit firms 389 Engagement Letter 389

I! , ,

IAS 315 389 professional indemnity insurance

(PH) 389 risk mitigation 190

residual risks 190 risk-based auditing 120-1, 304

role of internal audit 262-3

Royal Bank of Scotland v Bannennan

" lohnstone Mac/ay 347

Roy/14 Bank of Scotland v Bannennan

lohnstone Mac/ay (Scottish Court

of Session) (2002) 387-8

rules of professional conduct 57-70

advertising and publicity 63

commissions and fees 61-2

conflicts of interest 62 ethics 58-9 fundamental principles 57-8

independence 59-61 insider dealing 64 money laundering 64-5 remuneration 63-4 suspicious transactions 65-6

threats 59 whistleblowing 66-7

sales and debtors 95-7 control objectives 95 control procedures 95-7

sales system 171-5 audit objectives 171 audit testing 171, 174-5

system controls 172-4 system objectives 171-2

sample inappropriate 148 population 149-51 testing 137 unit 149

sample design 150-1 expected error 151 level of confidence 151 materiality 151 population 150-1 precision 151 tolerable error 151

sampling bases 147-50 -statistical sampling 150

ISA530 148 non-statistical sampling 149-50

sampling methods 151-4 attribute sampling 154 block 153 estimation sampling for variables

154 multi-stage 153 protective 152 random 151-2 representative 151

simple random 152 stratified 152 systematic selection 152

unpredictable 152 value weighted selection 153-4

sampling risk 149 sampling working papers 155

Sarbanes Oxley Act 200212-13, 439-40

Sarbox see Sarbanes Oxley Act 2002

Securities and Exchange Commission,

Enron439 segregation of duties 86-90

Serious and Organised Crime Agency

"(SOCA) 65

serious transaction report 65

servic~ organisations 294-300

accounting records 297

audit evidence 297 audit plijl1ning issues 295-7

auditor reports 298 contractual terms and obligations

296 control risk 296-7 functions outsourced 294

inherent risk 296 ISA 315 295 ISA 402 294-5 outsourcing 294-5

share capital and reserves 228, 231-2

sign 74 simple random sampling 152

skills and competence 72

small company audits 372-9

advantages 373 audit considerations 376-7

audit exemption 372-3

corporate/private activities 375

disadvantages 373 ethical standards 373-4

going concern and uncertainty 375-6

independence issues 374-5

internal control 375

small businesses 374-6

SOAPSPAM89 social audits 434 sources of audit evidence 137-9

accounting records 137 accounting systems 137 appropriateness 138

customers 138 documents 137 lenders 138 management and staff 137

materiality 138 professional advisers 138

relevance 138 reliability 138 sufficiency 138-9 suppliers 138

Index 457

Sources of evidence 136-7

auditor-derived evidence 136

independent and third-party evidence 136

representations by directors 136-7 special circumstances 346

assurance or non-audit assignments 346,394-422

groups of companies 346, 362-71

opening balances and comparatives 346

special procedures, cash sales 175

staff allocation 73 staff briefing 73 stages in audit 105

operational phase 105

planning phase 105 reporting phase 105

standardisation of working papers 256

advantages 256 standards and guidelines 50-6

accounting standards 53-4

bulletins 52-3 international standards on auditing

(ISA) 50-1 practice notes 51-2

Statements of Recommended Practice

(SORPs) 53 statistical sampling 150 statutory auditors 23-4

statutory books 40-1 auditor's interest 40-1 minute books 40 register of charges 40

register of directors 40 register of information received 40

register of members 40

statutory framework 22-37

appointment of auditors 27-8

auditor rights and duties 27

auditor status 23-6 auditors' duties 31-2 auditors' powers 36

auditors' report 33-6 auditors' rights 32-3 auditors' rights to attend meetings

36 Companies Act 2006 22-3

removal of auditors 28-9 remuneration of auditors 28

requirement to have auditors 23

reSignation of auditors 30-1

Stock Exchange Listing Agreement 18

stock and work in progress 206-12

analytical review 212 categories of stock 206 cost and net realisable value 206-7

ISA501206 production overheads 207

458 Index

stocktaking: auditor's duties 208-10

stocktaking procedures 207-8 valuation 207, 212 work in progress 211-12

stocktaking: auditor's duties 208-10 after stocktake 209-10 before stocktake 208-9 continuous inventory 210

" it during stocktake 209 ISA510 208 stocktakes other than at year end

210 stocktaking procedures 207-8 strategic planning 188 stratified sampling 152 subsequent events 303-6

ISA560 303 post balance sheet events 304 risk-based auditing 304 systems-based auditing 303

subsidiary auditors 364-5 ISA 600 364

substance over form 14-15 substantive approach 120 substantive testing 146-7, 229

ISA500 147 trade debtors 216 verification procedures 229

substantive tests, bank balances 219 sufficiency 134, 138-9 sufficient, appropriate audit evidence

103-4 summary accounts 46 supervision 74,91 suppliers 138 support letter to subsidiaries 368/ suspicious transactions 65-6 system components testing 165-7

directional testing 165-7 purpose of audit tests 167

system controls: payroll 177-8 basis of payroll calculation 178 calculation and wages payment 178

system controls: purchases and expenses system 168-70

accounting 169-70 delivery of goods and invoicing 169 ordering 169

system controls: sales system 172-4 accounting 173-4 despatches and invoicing 173 ordering and granting credit 172-3

system objectives: purchases and expenses system 167-8

accounting 168 ordering 168 receipt of goods and invoicing 168

system objectives: sales system 171-2 accounting 172 despatch and invoicing 171-2 ordering and granting credit 171

systematic selection 152 systems-based auditing 120, 164-83, 303

cash sales 175 payroll system 176-80 purchases and expenses system 167-

71 sales system 171-5 testing system components 165-7

tactical planning 188 tangible assets 201-3

audit procedures 202 control objectives 202 finance leases 201 furnitur~ and fittings 201 impairment 201 ISA 16 201 land and buildings 201-2 motor vehicles 201 plant and equipment 201

technical training and updating 72-3 technological risk 186 Terrorism Act 2000, money laundering

65 theft 382 third parties 356

Caparo judgment 347 disclaimers of liability 347 Royal Bank of Scotland v Bannerman

lohnstone Maclay 347 threats 59

advocacy 59 familiarity 59 intimidation 59 safeguards 59 self-interest 59 self-review 59

time sheets 255 timing, analytical procedures 156-7 timing of audit work 122-4

Audit Planning Memorandum 124 audit visits 122 final audit 123-4 interim audit 123 year-end work 123

tipping off 65, 279 tolerable error 151 top-down approach 192-3 trade creditors, compliance testing of

internal control procedures 229 trade debtors 215-16

compliance tests 216 substantive testing 216

trademarks and patents 204

~:; true and fair override 4-5, 44 Turnbull Report (1999) 12

- Tyco International 12

UK Generally Accepted Accounting Principles (UK GAAP) 4

Ultramares v Touche (1931) 388 understanding and interrogating CIS

243-4 unintentional mistakes 270 unlawful acts of clients and staff

278-80 auditor's actions 278 auditor's legal position 278 disclosure rules 279-80 discovery of unlawful acts 279 guidance 278 ISA250 278

unqualified reports 336 Urgent Issues Task Force (UITF) 53,

438 UITF Abstracts 53

using work of expert 139-41 competence of specialist 140 evaluation of specialist evidence 141 experience of specialist 140 expert 139 independence of specialist 140

-ISA 620139 points to consider 140 process 140-1

valuation 207 average cost basis 207 first in first out (FIFO) 207

valuation and allocation 215 bank balances 219

valuation of stock and work in progress 212

value for money (VFM) 423-4 value weighted selection 153-4

Monetary Unit Sampling (MUS) 153-4

verification procedures 228-9 current liabilities 228-9 substantive testing 229 trade creditors 229·

wages and salaries 94-5 control procedures 94-5 objectives 94

walk-through tests 116 waste audit 430-1 waste disposal site audits 431 water audit 431 whistleblowing 66-7 Woodworth v Conroy (1976) 257 work in progress 211-12

working papers 247-61 accountant's lien 257 audit programme 253-5 content 250 Current File 252-3 departure from basic principles 250 evidence of work carried out 248 finalisation 256

" \

ISA230 247 manuals 255 nature and content 249 ownership of books and papers

256-7 Permanent File 251-2 purposes 248 retention 257

Index 459

review checklists 255 sample working papers 250-5 standardisation 256 time sheets 255

WorldCom 12, 440

year-end work 123 ISA501123