内容综合任务制part 16 others

Dec2012Q2

2.

a)

Inorderforauditorstooperateeffectivelyandtoprovideanopiniononanentity’sfinancialstatements,theyaregivencertainrights.

Required:

StateTHREErightsofanauditor,excludingthoserelatedtoresignationandremoval.

(3marks)

Auditors’rights

Rightofaccessatalltimestothecompany’sbooks,accountsandvouchers.

Righttorequirefromanofficerofthecompanysuchinformationorexplanationsastheythinknecessaryfortheperformanceoftheirdutiesasauditors.

Righttoreceiveallcommunicationsrelatingtowrittenresolutions.

Auditors’rights

Righttoreceiveallnoticesof,andothercommunicationsrelatingto,anygeneralmeetingwhichamemberofthecompanyisentitledtoreceive.

Righttoattendanygeneralmeetingofthecompany.

Righttobeheardatanygeneralmeetingwhichanauditorattendsonanypartofthebusinessofthemeetingwhichconcernsthemasauditor.

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InternationalStandardsonAuditing

Dec2010Q2

b)

ExplainthestatusofInternationalStandardsonAuditing.

(2marks)

InternationalStandardsonAuditing(ISAs)areissuedbytheInternationalAuditingandAssuranceStandardsBoard(IAASB)andprovideguidanceontheperformanceofanaudit.

ISAsonlyapplytotheauditofhistoricalfinancialinformation.Theyarewritteninthecontextofanauditoffinancialstatementsbyanindependentauditor.

Dec2010

TheISAscontainbasicprinciplesandessentialprocedurestogetherwithrelatedguidanceintheformofexplanatorymaterialandappendices.ItisnecessarytoconsiderandunderstandtheentiretextofanISAtounderstandandapplythebasicprinciplesandessentialprocedures.

ThebasicprinciplesandessentialproceduresofanISAaretobeappliedinallcases.IfinexceptionalcasestheauditordeemsitnecessarytodepartfromanISAtoachievetheoverallaimoftheaudit,thenthisdeparturemustbejustified.

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ISA210AgreeingtheTermsofAuditEngagements

Dec2013Q4

Salt&Pepper&Co(Salt&Pepper)isafirmofCharteredCertifiedAccountantswhichhasseenitsrevenuedeclinesteadilyoverthepastfewyears.Thefirmislookingtoincreaseitsrevenueandclientbaseandsohasdevelopedanewadvertisingstrategywhereithasguaranteedthatitsauditswillminimisedisruptiontocompaniesastheywillnotlastlongerthantwoweeks.Inaddition,Salt&Pepperhasofferedallnewauditclientsafreeaccountspreparationserviceforthefirstyearoftheengagement,asitisbelievedthattimespentontheauditwillbereducedifthefirmhasproducedthefinancialstatements.

Dec2013Q4

Thefirmisseekingtoreduceauditcostsandhasthereforedecidednottoupdatetheengagementlettersofexistingclients,onthebasisthattheselettersdonottendtochangemuchonayearlybasis.OneofSalt&Pepper’sexistingclientshasproposedthatthisyear’sauditfeeshouldbebasedonapercentageoftheirfinalpre-taxprofit.Thepartnersareexcitedaboutthisoptionastheybelieveitwillincreasetheoverallauditfee.

Dec2013Q4

Salt&Pepperhasrecentlyobtainedanewauditclient,CinnamonBrothersCo(Cinnamon),whoseyearendis31December.CinnamonrequirestheiraudittobecompletedbytheendofFebruary;however,thisisaverybusytimeforSalt&Pepperandsoitisintendedtousemorejuniorstaffastheyareavailable.Additionally,inordertosavetimeandcost,Salt&PepperhavenotcontactedCinnamon’spreviousauditors.

Dec2013Q4

Required:

a)

DescribethestepsthatSalt&PeppershouldtakeinrelationtoCinnamon:

I.

II.

Priortoacceptingtheaudit;and

(5marks)

Toconfirmwhetherthepreconditionsfortheauditare

inplace.

(3marks)

b)

StateFOURmattersthatshouldbeincludedwithinan

auditengagementletter.

(2marks)

(i)Stepspriortoacceptingtheaudit

ISA210AgreeingtheTermsofAuditEngagementsprovidesguidancetoSalt&Pepper&Co(Salt&Pepper)onthestepstheyshouldtakeinacceptingthenewauditclient,Cinnamon.Itsetsoutanumberofprocessesthattheauditorshouldperformpriortoacceptinganewengagement,inadditiontoconsideringwhetherpreconditionsfortheauditareinplace.

(i)Stepspriortoacceptingtheaudit

Salt&PeppershouldconsideranyissueswhichmightarisewhichcouldthreatencompliancewithACCA’sCodeofEthicsandConductoranylocallegislation,includingconflictofinterestwithexistingclients.Ifissuesarise,thentheirsignificancemustbeconsidered.

Inaddition,theyshouldconsiderwhethertheyarecompetenttoperformtheworkandwhethertheywouldhaveappropriateresourcesavailable,aswellasanyspecialistskillsorknowledgerequiredfortheauditofCinnamon.

(i)Stepspriortoacceptingtheaudit

Salt&PeppershouldconsiderwhattheyalreadyknowaboutthedirectorsofCinnamon;theyneedtoconsiderthereputationandintegrityofthedirectors.Ifnecessary,thefirmmaywanttoobtainreferencesiftheydonotformallyknowthedirectors.

Additionally,Salt&PeppershouldconsiderthelevelofriskattachedtotheauditofCinnamonandwhetherthisisacceptabletothefirm.Aspartofthis,theyshouldconsiderwhethertheexpectedauditfeeisadequateinrelationtotheriskofauditingCinnamon.

(i)Stepspriortoacceptingtheaudit

Salt&PeppershouldcommunicatewiththeoutgoingauditorofCinnamontoassessifthereareanyethicalorprofessionalreasonswhytheyshouldnotacceptappointment.TheyshouldobtainpermissionfromCinnamon’smanagementtocontacttheexistingauditor;ifthisisnotgiven,thentheengagementshouldberefused.

Ifgivenpermissiontorespond,theauditorsshouldreplytoSalt&Pepper,whoshouldcarefullyreviewtheresponseforanyissuesthatcouldaffectacceptance.

(ii)Preconditionsfortheaudit

ISA210AgreeingtheTermsofAuditEngagementsrequiresauditorstoonlyacceptanewauditengagementwhenithasbeenconfirmedthatthepreconditionsforanauditarepresent.

Toassesswhetherthepreconditionsforanauditarepresent,Salt&PeppermustdeterminewhetherthefinancialreportingframeworktobeappliedinthepreparationofCinnamon’sfinancialstatementsisacceptable.Inconsideringthis,theauditorshouldassessthenatureoftheentity,thenatureandpurposeofthefinancialstatementsandwhetherlaworregulationsprescribestheapplicablereportingframework.

(ii)Preconditionsfortheaudit

Inaddition,theymustobtaintheagreementofCinnamon’smanagementthatitacknowledgesandunderstandsitsresponsibilityforthefollowing:

Preparationofthefinancialstatementsinaccordancewiththeapplicablefinancialreportingframework,includingwhererelevanttheirfairpresentation;

Forsuchinternalcontrolasmanagementdeterminesisnecessarytoenablethepreparationoffinancialstatementswhicharefreefrommaterialmisstatement,whetherduetofraudorerror;and

ToprovideSalt&Pepperwithaccesstoallrelevantinformationforthepreparationofthefinancialstatements,anyadditionalinformationthattheauditormayrequestfrommanagementandunrestrictedaccesstopersonswithinCinnamonfromwhomtheauditordeterminesitnecessarytoobtainauditevidence.

(ii)Preconditionsfortheaudit

Ifthepreconditionsforanauditarenotpresent,Salt&PeppershalldiscussthematterwithCinnamon’smanagement.

Unlessrequiredbylaworregulationtodoso,theauditorshallnotaccepttheproposedauditengagement:

Iftheauditorhasdeterminedthatthefinancialreportingframeworktobeappliedinthepreparationofthefinancialstatementsisunacceptable;or

Ifmanagementagreementoftheirresponsibilitieshasnotbeenobtained.

(b)Engagementletters

Matterstobeincludedinanauditengagementletter:

Theobjectiveandscopeoftheaudit;

Theresponsibilitiesoftheauditor;

Theresponsibilitiesofmanagement;

Identificationofthefinancialreportingframeworkforthepreparationofthefinancialstatements;

Expectedformandcontentofanyreportstobeissued;

(b)Engagementletters

Matterstobeincludedinanauditengagementletter:

Theformofanyothercommunicationofresultsoftheauditengagement;

Thefactthatsomematerialmisstatementsmaynotbedetected;

Arrangementsregardingtheplanningandperformanceoftheaudit,includingthecompositionoftheauditteam;

Theexpectationthatmanagementwillprovidewrittenrepresentations;

Thebasisonwhichfeesarecomputedandanybillingarrangements;

Purposeofanengagementletter

Purposeofanengagementletter

Anengagementletterprovidesawrittenagreementofthetermsoftheauditengagementbetweentheauditorandmanagementorthosechargedwithgovernance.

Confirmingthatthereisacommonunderstandingbetweentheauditorandmanagement,orthosechargedwithgovernance,ofthetermsoftheauditengagementhelpstoavoidmisunderstandingswithrespecttotheaudit.

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EthicDec2013Q4c

Dec2013

c)

I.

IdentifyandexplainFIVEethicalriskswhicharisefromtheaboveactionsofSalt&Pepper&Co;and

ForeachethicalriskexplainthestepswhichSalt&Pepper&Coshouldadopttoreducetherisksarising.

II.

Note:Thetotalmarkswillbesplitequallybetweeneachpart.

(10marks)

Ethicalrisksandstepstoreducetherisks

Ethicalrisk

Stepstoreducetherisks

Salt&Pepperhasguaranteedthattheirauditwillnotlastlongerthantwoweeksandwill

minimisedisruptiontocompanies.

Everyauditengagementisdifferentandhencewillrequireadifferingamountoftime.

Complexauditscannotpossiblybecompletedwithintwoweeksastheteamwouldnotbeabletogathersufficientandappropriateauditevidenceinthistime,leadingtoanincorrectopinion.

Salt&PeppershouldceasethisadvertisingcampaignimmediatelyasitisnotincompliancewithACCA’sCodeofEthicsandConduct.

ForanypotentialclientswhohaveapproachedSalt&Pepperasaresultofthisadvert,thefirmshouldinformthemthattheauditdurationwillbebasedonthelevelofauditriskpresent,andthiscouldbeconsiderablylongerthantwoweeks.

Ethicalrisksandstepstoreducetherisks

Ethicalrisk

Stepstoreducetherisks

Salt&Pepperhasofferedallnewauditclientsafreeaccountspreparationserviceforthefirstyearoftheengagement.

WhilstSalt&Pepperisabletoprepareaccountsforunlistedclients,thisdoesincreasetheriskofself-reviewastheauditteamcouldbeauditingtheirownwork.

Additionally,ifthisserviceisofferedforfree,theninordertomakeaprofitonthetotalengagement,Salt&Peppercouldbeinclinedtosubstantiallyreducetheproceduresundertakenontheauditengagement.

ForengagementswhereSalt&Pepperistopreparetheaccounts,theymustensurethatthisworkisundertakenbyateamseparatetotheauditteam.

Inaddition,thefirmshouldensurethatallauditengagementsareconductedinaccordancewithInternationalStandardsonAuditing.

Ethicalrisksandstepstoreducetherisks

Ethicalrisk

Stepstoreducetherisks

Thefirmisnotupdatingengagementlettersforexistingclientsonthebasisthattheydonotchangemuchonayearlybasis.

ThisisnotinaccordancewithISA210AgreeingtheTermsofAuditEngagementsasevenifengagementlettersarenotchanged,theyshouldstillbereviewedtoensurethattheyarestillrelevantanduptodate.

Salt&PeppershouldcomplyfullywithISA210andannuallyreviewtheneedforrevisingtheengagementletters.

Ethicalrisksandstepstoreducetherisks

Ethicalrisk

Stepstoreducetherisks

AnexistingclientofSalt&Pepperhasproposedanauditfeebasedonapercentageoftheclient’sfinalpre-taxprofit.

Thisisacontingentfeearrangementandisprohibitedasitcreatesaself-interestthreatwhichcannotbereducedtoanadequatelevel.

Salt&PeppershouldpolitelydeclinetheproposedcontingentfeearrangementasitwouldbeabreachofACCA’sCodeofEthicsandConduct.Insteadtheyshouldinformtheclientthatthefeeswillbebasedonthelevelofworkrequiredtoobtainsufficientandappropriateauditevidence.

Ethicalrisksandstepstoreducetherisks

Ethicalrisk

Stepstoreducetherisks

Salt&PepperintendstousejuniorstafffortheauditoftheirnewclientCinnamonasthetimingoftheauditiswhenthefirmisverybusy.

Asanewengagement,Salt&Pepperhaslittleknowledgeoftherisksassociatedwiththisaudit.Iftheyusetoojuniorstaff,theywillnotbecompetentenoughtoassesswhethertheyhaveperformedadequatework,andtheriskofgivinganincorrectauditopinionisincreased.

Salt&PeppershouldreviewthestaffingofCinnamonandmakechangestoincreasetheamountofexperiencedteammembers.

Ifthisisnotpossible,theyshoulddiscusswiththedirectorsofCinnamontoseewhetherthetimingoftheauditcouldbemovedtoapointwherethefirmhasadequatestaffresources.

Ethicalrisksandstepstoreducetherisks

Ethicalrisk

Stepstoreducetherisks

Salt&PepperhasnotcontactedCinnamon’spreviousauditors.

ContactingthepreviousauditorsisimportantasthefirmneedstounderstandwhyCinnamonhaschangedtheirauditors.Theymayhavebeenactingunethicallyandtheirpreviousauditorsthereforerefusedtocontinue.

Inaddition,itisprofessionalcourtesytocontactthepreviousauditors.

Salt&PeppershouldcontactthepreviousauditorstoidentifyifthereareanyethicalissueswhichwouldpreventthemfromactingasauditorsofCinnamon.

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Fraud-control

June2011Q1

Required:

c)

IdentifyandexplaincontrolsTinkerbellshouldimplementtoreducetheriskoffraudoccurringagainand,foreachcontrol,describehowitwouldmitigatetherisk.

(6marks)

Fraud

Duringtheyearamaterialfraudwasuncovered.Itinvolvedcash/chequereceiptsfromcustomersbeingdivertedintoemployees’personalaccounts.Inordertocoverupthefraud,receiptsfromsubsequentunrelatedcustomerswouldthenberecordedagainsttheearlieroutstandingreceivablebalancesandthiscycleoffraudwouldcontinue.

June2011Q1

Thefraudoccurredbecausetwomembersofstaff‘whowererelated’colluded.Oneprocessedcashreceiptsandpreparedtheweeklybankreconciliation;theotheremployee

recordedcustomerreceiptsinthesalesledger.Anunrelatedsalesledgerclerkwassupposedtosendoutmonthlycustomerstatementsbutthiswasnotperformed.Thebankreconciliationseachhadasmallunreconciledamountbutno-onereviewedthereconciliationsaftertheywereprepared.

Thefraudwasonlyuncoveredwhenthetwoemployeeswentonholidayatthesametimeanditwasdiscoveredthatcashreceiptsfromdifferentcustomerswerebeingappliedtoolderreceivablebalancestohidetheearliersumsstolen.

Fraud-Q

Control

Mitigaterisk

Monthlycustomerstatementsshouldbesentoutpromptlytoallcustomers.Thesalesledgersupervisorshouldreviewtoensurethatallcustomershavebeensentstatements.

IfcustomersreceiveregularstatementsthentheywouldbeinapositiontoflagtoTinkerbellthattherewasadelayintheirpaymentsbeingcreditedtotheiraccounts.

Thisshouldthenflagapossible‘teemingandlading’fraud.

Fraud-Q

Control

Mitigaterisk

Bankreconciliationsshouldbereviewedbyaresponsibleofficial(differenttothepreparerofthereconciliation)onaregularbasis.Anyunreconciledamountsshouldbepromptlyinvestigatedandresolved.

Asmallunreconciledamountcanactuallyrepresenttwolargebalanceswhichalmostcanceleachotheroutandhencecouldindicatesignificantproblemswithcashandbank.

Wherefraudarisesitcanoftenbequicklyspottedbyperformingandreviewingabankreconciliation.

Fraud

Control

Mitigaterisk

Membersofstaffwhoarerelatedshouldnotbepermittedtoworkinthesamedepartmentwherebytheycanbreachsegregationofdutycontrols.

Thisshouldreducetheriskofstaffcolludingandbeingabletocommitafraudwithouteasilybeingdiscovered.

Fraud

Control

Mitigaterisk

Onaregularbasisstaffwithinthefinancedepartmentshouldrotateduties.

Ifstaffmembersknowthattheywillneedtorotatetheirrolesthentheywillbelessinclinedtocommitfraudulentactivities,asthechancesofthembeingcaughtincreasesignificantly.

Fraud

Control

Mitigaterisk

Managementshouldconsiderestablishinganinternalauditdepartmentwhichcouldassesstheeffectivenessofcontrolsandidentifyareasofweaknesses,aswellasperformspecificfraudinvestigations.

Astherehasbeenasignificantbreakdownintheinternalcontrolsthenthemerepresenceofaninternalauditdepartmentwouldhelptodeteremployeescommittingfraud.Inaddition,fraudulentactivitieswouldbemorelikelytobeidentifiedquickerasinternalcontrolswouldbetested.

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Fraud-IA'sresponsibility

June2013Q4

b)

ExplainhowthenewinternalauditdepartmentofBush-BabyHotelsCocouldassistthedirectorsinpreventinganddetectingfraudanderror.

(3marks)

Fraud-IAresponsibility

ThedirectorsofBush-BabyHotelsCo(Bush-Baby)areresponsibleforthepreventionanddetectionoffraudanderror.However,thenewinternalauditdepartmentcanhelpthedirectorsbyassessingthemainareasoffraudrisk,assessingtheadequacyandeffectivenessofcontrolsystemsandhelpingtodevelopcontrolstomitigatekeyrisks.

Havingdevelopedthecontrols,theycanundertakeregularreviewsofcompliancebyeachhotelofthesecontrols.Wherenon-complianceisidentified,theycaninstigatefurthertrainingifnecessaryorreportsuspectedfraudstoseniormanagement.

Fraud-IAresponsibility

Wherefraudissuspected,theinternalauditdepartmentcanundertakeadetailedfraudinvestigationtoidentifywhoisinvolved,likelysumsstolenandgatherevidenceforanysubsequentpoliceinvestigation.

Inaddition,thepresenceofaninternalauditdepartmentcanitselfactasafrauddeterrent,astheriskofbeingdiscoveredmeansindividualsarelesslikelytoundertakefraudulentactivities.

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Fraud-

EA'sresponsibility

June2012Q3

a)

Explaintheexternalauditors’responsibilitiesinrelationtothepreventionanddetectionoffraudanderror.

(4marks)

EA'sresponsibility

AnauditorconductinganauditinaccordancewithISA240TheAuditor’sResponsibilitiesRelatingtoFraudinanAuditofFinancialStatementsisresponsibleforobtainingreasonableassurancethatthefinancialstatementstakenasawholearefreefrommaterialmisstatement,whethercausedbyfraudorerror.

Inordertofulfilthisresponsibilityauditorsarerequiredtoidentifyandassesstherisksofmaterialmisstatementofthefinancialstatementsduetofraud.

EA'sresponsibility

Theauditorwillneedtoobtainsufficientappropriateauditevidenceregardingtheassessedrisksofmaterialmisstatementduetofraud,throughdesigningandimplementingappropriateresponses.

Inaddition,theauditormustrespondappropriatelytofraudorsuspectedfraudidentifiedduringtheaudit.

EA'sresponsibility

Whenobtainingreasonableassurance,theauditorisresponsibleformaintainingprofessionalscepticismthroughouttheaudit,consideringthepotentialformanagementoverrideofcontrolsandrecognisingthefactthatauditproceduresthatareeffectiveindetectingerrormaynotbeeffectiveindetectingfraud.

Toensurethatthewholeengagementteamisawareoftherisksandresponsibilitiesforfraudanderror,ISAsrequirethatadiscussionisheldwithintheteam.Formembersnotpresentatthemeetingtheengagementpartnershoulddeterminewhichmattersaretobecommunicatedtothem.

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Relianceontheworkofanindependentvaluer

Dec2014Q6

Landandbuildings

Jackdawhaveapolicyofrevaluinglandandbuildings,thisisundertakenonarollingbasisoverafive-yearperiod.DuringtheyearJackdawrequestedanexternalvaluertorevalueanumberofproperties,includingawarehousepurchasedinMay2014.

Required:

a)

ExplainthefactorsPuffin&Coshouldconsiderwhenplacingrelianceontheworkoftheindependentvaluer.

(5marks)

Relianceontheworkofanindependentvaluer

ISA500AuditEvidencerequiresauditorstoevaluatethecompetence,capabilitiesincludingexpertiseandobjectivityofamanagementexpert.

Thiswouldincludeconsiderationofthequalificationsofthevaluerandassessmentofwhethertheyweremembersofanyprofessionalbodyorindustryassociation.

Theexpert’sindependenceshouldbeascertained,withpotentialthreatssuchasunduerelianceonJackdaworaself-interestthreatsuchasshareownershipconsidered.

Relianceontheworkofanindependentvaluer

Inaddition,Puffin&Coshouldmeetwiththeexpertanddiscusswiththemtheirrelevantexpertise,inparticularwhethertheyhavevaluedsimilarlandandbuildingstothoseofJackdawMotorCarsCo(Jackdaw)inthepast.Puffin&CoshouldalsoconsiderwhetherthevaluerunderstandstheaccountingrequirementsofIAS16Property,PlantandEquipmentinrelationtovaluations.

Thevaluationshouldthenbeevaluated.TheassumptionsusedshouldbecarefullyreviewedandcomparedtopreviousrevaluationsatJackdaw.Theseassumptionsshouldbediscussedwithbothmanagementandthevaluertounderstandthebasisofanyvaluations.

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Relianceoninternalaudit

Dec2011Q1

e)

ChuckIndustriesisconsideringestablishinganinternalaudit(IA)departmentnextyear.ThefinancedirectorhasaskedwhethertheworkperformedbytheIAdepartmentcanberelieduponbyBlair&Co.

Required:

Explainthefactorsthatshouldbeconsideredbyanexternalauditorbeforereliancecanbeplacedontheworkperformedbyacompany’sinternalauditdepartment.

(4marks)

Relianceoninternalaudit

ISA610UsingtheWorkofInternalAuditorsdetailsthefactorstheexternalauditorsshouldconsiderinordertoplacerelianceontheworkoftheinternalaudit(IA)departmentasfollows:

Objectivity

TheyshouldconsiderthestatusofIAwithinthecompanyandiftheyareindependentofotherdepartments,inparticularthefinancedepartment.Inaddition,considerationshouldbegivenastowhoIAreportsto,whetherthisisdirectlytothosechargedwithgovernanceortoafinancedirector.

Relianceoninternalaudit

Technicalcompetence

ThetechnicalcompetenceofIAstaffshouldbeconsidered.Considerationshouldbegiventowhethertheyaremembersofaprofessionalbodyandhaverelevantqualificationsandexperience.

Relianceoninternalaudit

Dueprofessionalcare

TheexternalauditorsshouldconsideriftheIAdepartmenthaveexerciseddueprofessionalcare,theworkwouldneedtohavebeenproperlyplannedincludingdetailedworkprogrammes,supervised,documentedandreviewed.

Relianceoninternalaudit

Communication

Inordertoplacereliancethereneedstobeeffectivecommunicationbetweentheinternalauditorsandtheexternalauditor.ThisismostlikelytooccurwhentheIAdepartmentisfreetocommunicateopenlyandregularmeetingsareheldthroughouttheyear.

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interimandafinalaudit

June2014Q1

b)

Explainthedifferencebetweenaninterimandafinalaudit.

(5marks)

Interimaudit

Theinterimauditisthatpartoftheauditwhichtakesplacebeforetheyearend.Theauditorusestheinterimaudittocarryoutprocedureswhichwouldbedifficulttoperformattheyearendbecauseoftimepressure.Thereisnorequirementtoundertakeaninterimaudit;factorstoconsiderwhendecidinguponwhethertohaveoneincludethesizeandcomplexityofthecompanyalongwiththeeffectivenessofinternalcontrols.

Typicalproceduresundertakenduringtheinterimauditincludedocumentingandtestingofinternalcontrols,testingofprofitandlosstransactionsfortheyeartodateandidentificationofpotentialproblemswhichmayaffectthefinalauditwork.

Finalaudit

Thefinalauditwilltakeplaceaftertheyearendandconcludeswiththeauditorformingandexpressinganopiniononthefinancialstatementsforthewholeyearsubjecttoaudit.Itisimportanttonotethatthefinalopiniontakesaccountofconclusionsformedatboththeinterimandfinalaudit.

Typicalworkcarriedoutatthefinalauditincludesfollowupofitemsnotedattheinventorycount,obtainingconfirmationsfromthirdparties,analyticalreviewsoffiguresinthefinancialstatements,substantiveproceduresofaccountbalancesandtransactions,reviewofeventsafterthereportingperiodandgoingconcernreview.

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ISA230AuditDocumentation

June2012Q4

c)

ListandexplainthepurposeofFOURitemsthatshouldbeincludedoneveryworkingpaperpreparedbytheauditteam.

(4marks)

Workingpapers

Nameofclient–identifiestheclientbeingaudited.

Year-enddate–identifiestheyearendtowhichtheauditworkingpapersrelate.

Subject–identifiestheareaofthefinancialstatementsthatisbeingaudited,thetopicareaoftheworkingpaper,suchasreceivablescircularisation.

Workingpaperreference–providesaclearreferencetoidentifythenumberoftheworkingpaper,forexample,R12beingthe12thworkingpaperintheauditofreceivables.

Workingpapers

Preparer–identifiesthenameoftheauditteammemberwhopreparedtheworkingpaper,soanyqueriescanbedirectedtotherelevantperson.

Dateprepared–thedatethattheauditworkwasperformedbytheteammember;thishelpstoidentifywhatwasknownatthetimeandwhatissuesmayhaveoccurredsubsequently.

Workingpapers

Reviewer–thenameoftheauditteammemberwhoreviewedtheworkingpaper;thisprovidesevidencethattheauditworkwasreviewedbyanappropriatememberoftheteam.

Dateofreview–thedatetheauditworkwasreviewedbytheseniormemberoftheteam;thisshouldbepriortothedatethattheauditreportwassigned.

Workingpapers

Objectiveofwork/test–theaimoftheworkbeingperformed,couldbetherelatedfinancialstatementassertion;thisprovides