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  1. 1. CHAPTER 22 COMPLETING THE AUDIT
  2. 2. CONTINGENT LIABILITIES <ul><li>CONTINGENT LIABILITIES </li></ul><ul><ul><li>LIKELIHOOD OF OCCURRENCE </li></ul></ul><ul><ul><li>MEASUREMENT </li></ul></ul><ul><ul><li>EXAMPLES </li></ul></ul><ul><li>AUDIT PROCEDURES </li></ul><ul><ul><ul><li>INQUIRE OF MANAGEMENT </li></ul></ul></ul><ul><ul><ul><li>REVIEW TAX RETURNS </li></ul></ul></ul><ul><ul><ul><li>REVIEW MINUTES </li></ul></ul></ul><ul><ul><ul><li>ANALYZE LEGAL EXPENSE </li></ul></ul></ul><ul><ul><ul><li>LEGAL REP LETTER </li></ul></ul></ul>
  3. 3. <ul><li>INQUIRY OF ATTORNEYS </li></ul><ul><ul><li>CORROBORATION OF MANAGEMENT REPRESENTATIONS </li></ul></ul><ul><ul><ul><li>LIST OF MATERIAL PENDING LITIGATION </li></ul></ul></ul><ul><ul><ul><li>LIST OF MATERIAL UNASSERTED CLAIMS </li></ul></ul></ul><ul><ul><ul><li>REQUEST THAT ATTORNEY COMMENT ON PROGRESS OR LIKELY OUTCOME </li></ul></ul></ul><ul><ul><ul><li>REQUEST FOR UNLISTED LITIGATION </li></ul></ul></ul><ul><ul><ul><li>STATEMENT BY CLIENT RE ATTORNEY RESPONSIBILITY TO NOTIFY MANAGEMENT OF LITIGATION REQUIRING DISCLOSURE </li></ul></ul></ul><ul><ul><ul><li>LIMITATIONS IN RESPONSE </li></ul></ul></ul><ul><ul><li>LIMITED OR NONRESPONSE </li></ul></ul>
  4. 4. <ul><li>REVIEW FOR SUBSEQUENT EVENTS </li></ul><ul><ul><li>DEFINITION OF SUBSEQUENT EVENTS </li></ul></ul><ul><ul><li>TYPES OF SUBSEQUENT EVENTS </li></ul></ul><ul><ul><ul><li>TYPE 1 – DIRECT EFFECT ON FINANCIAL STATEMENTS AND REQUIRE ADJUSTMENT </li></ul></ul></ul><ul><ul><ul><ul><li>ADDITIONAL KNOWLEDGE ABOUT EVENT EXISTING AT BALANCE SHEET DATE </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>SETTLEMENT OF LAWSUIT </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>COLLECTION OF RECEIVABLES </li></ul></ul></ul></ul></ul><ul><ul><ul><li>TYPE 2 – NO DIRECT EFFECT BUT ADVISE DISCLOSURE </li></ul></ul></ul><ul><ul><ul><ul><li>EVENTS OCCURRING AFTER BALANCE SHEET DATE THAT HAVE MATERIAL EFFECT ON CLIENT </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>MERGER </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>NATURAL DISASTER </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>DEBT RESTRUCTURE </li></ul></ul></ul></ul></ul>
  5. 5. <ul><ul><li>AUDIT TESTS </li></ul></ul><ul><ul><ul><li>INQUIRE OF MANAGEMENT </li></ul></ul></ul><ul><ul><ul><li>CORRESPOND WITH ATTORNEYS </li></ul></ul></ul><ul><ul><ul><li>REVIEW SUBSEQUENT INFORMATION </li></ul></ul></ul><ul><ul><ul><ul><li>REVIEW INTERNAL STATEMENTS </li></ul></ul></ul></ul><ul><ul><ul><ul><li>REVIEW RECORDS </li></ul></ul></ul></ul><ul><ul><ul><li>REVIEW MINUTES </li></ul></ul></ul><ul><ul><ul><li>REPRESENTATION LETTER </li></ul></ul></ul><ul><ul><li>DUAL DATING AUDIT REPORT </li></ul></ul>
  6. 6. <ul><li>FINAL EVIDENCE GATHERED </li></ul><ul><ul><li>ANALYTICAL REVIEW </li></ul></ul><ul><ul><li>EVALUATE GOING CONCERN </li></ul></ul><ul><ul><li>CLIENT REPRESENTATION LETTER </li></ul></ul><ul><li>EVALUATE RESULTS </li></ul><ul><ul><li>SUFFICIENCY OF EVIDENCE </li></ul></ul><ul><ul><li>EVIDENCE SUPPORTS OPINION </li></ul></ul><ul><ul><li>WORKING PAPER REVIEW </li></ul></ul><ul><ul><li>INDEPENDENT REVIEW </li></ul></ul>
  7. 7. <ul><li>COMMUNICATIONS WITH CLIENT </li></ul><ul><ul><li>FRAUD AND ILLEGAL ACTS </li></ul></ul><ul><ul><li>REPORTABLE CONDITIONS </li></ul></ul><ul><ul><li>OTHER COMMUNICATIONS WITH AUDIT COMMITTEE </li></ul></ul><ul><ul><ul><li>AUDITOR’S RESPONSIBILITIES UNDER GAAS </li></ul></ul></ul><ul><ul><ul><li>SIGNIFICANT ACCOUNTING POLICIES </li></ul></ul></ul><ul><ul><ul><li>SIGNIFICANT ADJUSTMENTS MADE </li></ul></ul></ul><ul><ul><ul><li>DISAGREEMENTS WITH MANAGEMENT </li></ul></ul></ul><ul><ul><ul><li>DIFFICULTIES ENCOUNTERED </li></ul></ul></ul><ul><ul><li>MANAGEMENT LETTER </li></ul></ul><ul><li>SUBSEQUENT DISCOVERY OF FACTS </li></ul>

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