ACCA Advanced Audit & Assurance - Intensive Revision Course Sheila William FCCA

Implications for the completion of the audit

Audit fieldwork
complete
(Everything in
audit program
has been
completed)

Review Sign the

audit working files auditor’s
+ Draft FS report now?

S - PREAD Not yet!!!

More evidence needed

Adjustments to FS needed

New info has come to light

procedures
to
completion

ISA 700
FORMING AN OPINION AND REPORTING ON FINANCIAL STATEMENTS

In order to form the audit OPINION, the auditor shall conclude as to whether the auditor has obtained reasonable
assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud
or error. That conclusion shall take into account WHETHER:
Sufficient Appropriate Audit Evidence has been obtained. Limitation of scope
Presentation of FS is appropriate (including structure).
Right basis of accounting has been used.
Misstatement
Errors (misstatements) have not been corrected are material.
Accounting policies are Consistent, Appropriate & Properly Disclosed.
Disclosures required by IFRS or the law are adequate.
 ACCA Advanced Audit & Assurance - Intensive Revision Course Sheila William FCCA
Implications for the completion of the audit

S - PREAD
Sufficiency of evidence? Misstatement?

Evidence you would expect to find Matters to consider MAR-SMO

Work done SUFFICIENT? No! Misstatement ?
OCW - N Meeting with mgt AAMM
Evidence exists Refuse to adjust
Limitation of scope
Valid reason Alternative evidence
Invalid reason Management Communicate
imposed Limitation with TCWG
Auditor’s responsibilities
Planned scope, timing of audit
Significant difficulties
Significant findings
Independence of auditor
INFORM
REQUEST
WARN

SIGNIFICANT difficulties SIGNIFICANT findings

Unavailability of expected information
Significant delays in getting required information.
Extensive unexpected effort required to obtain SAAE
Management Imposed Limitations
Unnecessarily brief time to complete the audit. (tight
deadline)
SIG events & transactions
Auditor’s views on accounting policies
Areas involving SIG management judgement (high IR factors)
Material audit adjustments NOT been taken up by the client
Matters that are significant to the oversight of the financial
reporting process.
 ACCA Advanced Audit & Assurance - Intensive Revision Course Sheila William FCCA
1 Understand the RATIONALE behind this type of Q
AUDIT manager is reviewing the audit file → S-PREAD …. If … any procedures to completion?
Insufficient evidence? Get more evidence Discuss with management → A A M M

Limitation of scope? Communicate with TCWG → O M R

→ alternative evidence
Management imposed limitation?
→ TCWG

2 What are procedures to completion

It can include last minute audit procedures
New info increases audit risk Insufficient work done
(revisit audit work to date) (need last minute audit procedures)
BYERS GOODMAN, THURMAN, ARJAN
Reassess overall materiality Audit staff MERELY… OCW - N
Revisit management explanations
Revisit written representations
It can include “Further Actions”
Generally … Fraud NOCLAR Money Laundering
MYRON GOODMAN PALE YORK
INFORM C confirm U Understand S SAR (details)
REQUEST C communicate C communicate O MLRO
WARN I Implications audit I Implications audit T No tipping off
QUALITY REVIEW C continuance C continuance O Original entries
L Legal advice
I Independent
partner review

3 Pay attention to the TIMING of the scenario

The “context” of the scenario should be appreciated.
Whether it is after the completion of the audit work but before the signing of the auditor’s report?
Or whether this is after signing auditor’s report?
The NATURE of the procedures to completion will be different in each of these cases.
 ACCA Advanced Audit & Assurance - Intensive Revision Course Sheila William FCCA
4 What are “FURTHER ACTIONS”?
Design AUDIT PROCEDURES Recommend FURTHER ACTIONS
(“Further audit procedures”, Planned audit procedures”)
At the planning stage At the completion stage to finalise the audit
Audit procedures will be in audit program Procedures are NOT in audit program
Procedures designed by SENIOR AUDIT TEAM STAFF Procedures recommended by AUDIT MANAGER
Audit procedures are detailed Procedures are NOT detailed
Audit procedures are to obtain sufficient appropriate AE Procedures are NOT to obtain sufficient appropriate AE
Audit procedures are governed by assertions Procedures are NOT governed by assertions
Further actions MAY INCLUDE
PRINCIPLES of last minute audit procedures.
ASSERTIONS
designing Further actions MAY INCLUDE
audit procedures For Transactions &
revisiting audit work done
Events
Assertions COCA-CP
Reliable source of evidence For account balances
CARE-CP
Strong audit procedure

Audit procedure means the auditor is doing something …. Audit action means the auditor is doing something ….
Therefore, start with a VERB (Verb is an action) Therefore, start with a VERB (Verb is an action)

How should audit procedures be WORDED? How should “actions” be WORDED?

INFORM
Strong Reliable Source Objective of Inform management (our findings) that …
procedure of evidence the test
Inform TCWG (our findings) that …

REQUEST
Request management to put through audit adjustments.
Request management to disclose... in the notes to FS.
Request TCWG to …

WARN
Obtain mgt representations of refusal to adjust / disclose
Inform TCWG of consequences of mgt’s refusal to comply

QUALITY REVIEW MATTER

Inform Ethics Partner that…
Audit file should be subject to cold review (if audit report
has already been signed)

Every audit procedure is 1 mark Every further action is 1 mark

 ACCA Advanced Audit & Assurance - Intensive Revision Course Sheila William FCCA

What are “FURTHER ACTIONS” if audit report already signed?

1 Cold review of audit files

2 Interview audit team members (especially juniors) … to find the root cause

3 Fix the root cause

1 Inadequate RESOURCES
T
H HUMAN RESOURCES
- Incorrect allocation of work
- Absence of audit supervisor (No D,S,R)
- Inadequate involvement of audit engagement partner
I
S
2 Matters relating to the FIRM
Too many clients & too few audit staff
Deadlines too tight
Budget constraints
Unconscious bias