Upload
nur-dalila-zamri
View
33
Download
0
Tags:
Embed Size (px)
DESCRIPTION
Audit & Assurance
Citation preview
MUHAMMAD SHAHRIZUL MUIZ BIN MOHAMED NASIR 10DAT11F2078RAVIVARMA S/O MORGAN 10DAT11F2053KOGILA DEWI D/O SANTHA RASE GARAN 10DAT11F2142MEHALEI D/O KRISHNAN 10DAT11F2056
CHAPTER 4 : AUDIT ASSURANCE
SUBSEQUENT EVENTS
Define the subsequent event and after balance sheet event.
Subsequent event Events occurring between the date of the financial statements and the date of the auditor’s report, and facts that become known to the auditor after the date of the auditor’s report.
After balance sheet event Favorable and unfavorable, that occur between the reporting date and the date when the financial report is authorized for issue.
4.1.1: DEFINITION
DIFFERENCES
Subsequent event After balance sheet event
The period after the balance sheet date during which management of a reporting entity shall evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements.
Objective When an entity should adjust its financial statements for events after balance sheet and the disclosures that an entity should give about the date when the financial report was authorized for issue and about events after balance sheet.
Transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of process of preparing financial statements. Events that provide evidence that provide evidence about conditions that did not exist at the date of the balance sheet but arose subsequent to that date.
Types Those that provide evidence of conditions that existed at the reporting date ( adjusting events after the reporting date)
Those that are indicative of conditions that arose after the reporting date ( non-adjusting events after the reporting date).
4.1.2: DIFFERENCES
4.1.3,4.1.4: EXAMPLE/SITUATION OFSUBSEQUENT AND AFTER BALANCE SHEET EVENT
SUBSEQUENT
EVENTS
ADJUSTING EVENTS
NON-ADJUSTING EVENTS
ADJUSTING EVENTS
1.Settlement Of Court Case2.Declaration Of Bankruptcy By A
Customer With Outstanding Accounts Receivable Balance (Bad Debts Written Off)
3.Sale Of Inventories4.Disposal Of Dormant Equipment5.Sale Of Investments At A Price
Below Recorded Cost6.Determination Of Bonus
Payment7.Discovery Of Fraud/Errors
NON-ADJUSTING EVENTS1.Decline In The Market Value Of Investments2.Declaration Of Dividend To Equity Holders3.Major Business Combination4.Announcement To Discontinue Operation5.Major Purchases/Disposal Of Assets6.Destruction Of A Major Production Plant Due
To Natural Disaster7.Announcing/Commencing Of A Major
Restructuring8.Major Ordinary Share Transactions9.Large Changes In Asset Prices Or Forex10.Changes In Tax Rates11.Entering Into Significant Commitments Or
Contingent Liabilities12.Commencing Major Litigation13.Issuance Of Bonds/Securities14.Decline In Market Value Of Inventory
4.1.6: AUDIT PROCEDURES ON SUBSEQUENT EVENTS
1.Obtaining An Understanding Of The Procedures That Management Has Established To Ensure That The Subsequent Events Are Identified.
2.Read Minutes Of The Meetings Of The Shareholders, Board Of Directors And Audit Executive Committees Held After The Year End.
3.Inquire About Matters Discussed At Meetings For Which Minutes Are Yet To Be Available.
4.Peruse The Latest Available Interim Financial Statements, Budgets, Cash Flow Forecast And Related Management Reports.
5.Inquire From The Company’s Lawyer Concerning Litigation And Claims That Arise.
6.Inquire The Managemnent For Any Subsequent Events Occurred Which Might Affect The Financial Statements.
AUDIT FINALIZATION
a) Review the audit working paper.
b) Evaluate the audit results.
c) Ensure compliance with applicable approved accounting standards and statutory
requirements.
d) Ensure proper disclosure with Schedule 9 to the Companies Act 1965 and
applicable approved accounting standard in Malaysia.
e) Ensure consistent application of accounting policies.
f) Ensure the appropriateness of accounting treatments.
g) Ensure compliance with the applicable disclosure required by Bursa Malaysia for
public listed company.
h) Review financial statement disclosures for consistency and reasonableness.
i) Ensure the disclosure are consistent with management assertions and fair.
j) Ensure proper completion of the relevant checklist and questionnaires pertaining to
the audit.
4.2.1: FINAL STEP IN COMPLETION OF AUDIT
SUMMARY
Review for contingent liabilities
Review for subsequent events
Accumulate final evidence
Evaluate results and issue audit report
Communication with audit committee and management
a)The letter provides pending threatened litigation
and asserted or unasserted claims or assessments
by the lawyer significant involvement.
b)The letter furnish information or comment about
the progress of each item listed.
c) The letter provides unlisted pending or threatened
legal actions or a statements that the clients
involvement is complete.
d)The letter inform the lawyer’s responsibility which
is to inform the management of legal matters
requiring disclosure in the financial statements and
to respond directly to the auditor.
4.2.2: THE USE OF ATTORNEY LETTER
4.2.3: AUDITOR’S RESPONSIBILITIES UPON COMPLETING AUDIT
• Auditor is responsible for determining client has properly identified, accounted for, and disclosed material contingenciesSources of Evidence.
• Primary sources include management and client's legal counselAdditional sources include corporate minutes, contracts, correspondence from government agencies, and bank confirmations
• Obtain sufficient appropriate audit evidence about the appropriateness of management's use of the going concern assumption in the preparation and presentation of FS.
Type From To Timing Method
Engagement letter
Auditors Client Before engagement
Written
Acceptance letter
Client Auditors Before engagement
Written
Attorney letter response
Attorney Auditors Near date of auditors’ report
Written
Written representations
Client Auditors Date of auditors’ report
Written
4.2.4: SUMMARY OF AUDIT COMMUNICATIONS
Type From To Timing Method
Internal control deficiencies
Auditors Individuals charged with governance
For public entities, prior to audit report release date
Written
Communication with those charged with governance
Auditors Individuals charged with governance
After audit Oral or written
Management letter
Auditors Client After audit Oral or written