Chapter24-Completing-the-Audit(審計學(xué)英文版)

Chapter24CompletingtheAudit(審計學(xué)英文版)Chapter24CompletingtheAudLearningObjective1Conductareviewforcontingentliabilitiesandcommitments.LearningObjective1ConductaSummaryoftheAuditProcessPhaseIPlananddesignanauditapproach.PhaseIIPerformtestsofcontrolsandsubstantivetestsoftransactions.PhaseIIIPerformanalyticalproceduresandtestsofdetailsofbalances.PhaseIVCompletetheauditandissueanauditreport.SummaryoftheAuditProcessPhPhaseIV–CompletingtheAuditReviewforcontingentliabilities.Reviewforsubsequentevents.Accumulatefinalevidence.Evaluateresults.Issueauditreport.Communicatewithauditcommitteeandmanagement.PhaseIV–CompletingtheAudiContingentLiabilitiesAcontingentliabilityisapotentialfutureobligationtoanoutsidepartyforanunknownamountresultingfromactivitiesthathavealreadytakenplace.ContingentLiabilitiesAcontinLikelihoodofOccurrenceandFinancialStatementTreatmentReasonablypossibleFootnotedisclosureisnecessaryProbable(likelytooccur)AdjustfinancialstatementsornotedisclosureRemote(slightchance)NodisclosurenecessaryLikelihoodofoccurrenceofeventFinancialstatementtreatmentLikelihoodofOccurrenceandFAuditor’sConcernsPendinglitigationforpatentinfringement,productliability,orotheractionsIncometaxdisputesProductwarrantiesNotesreceivablediscountedGuaranteesofobligationsofothersUnusedbalancesofoutstandinglettersofcreditAuditor’sConcernsPendinglitAuditProceduresforFindingContingenciesInquireofmanagement(orallyandinwriting)aboutthepossibilityofunrecordedcontingencies.Reviewcurrentandpreviousyears’internalrevenuereportsforincometaxsettlements.Reviewtheminutesofdirectors’andstockholders’meetingsforindicationsoflawsuitsorothercontingencies.AuditProceduresforFindingCAuditProceduresforFindingContingenciesAnalyzelegalexpensesandreviewinvoicesandstatementsfromlegalcounsel.Obtainaletterfromeachmajorattorneyoftheclientastothestatusofpendinglitigation.Reviewauditdocumentationforanyinformationthatmayindicateapotentialcontingency.Examinelettersofcreditinforce.AuditProceduresforFindingCLearningObjective2Obtainandevaluatelettersfromtheclient’sattorneys.LearningObjective2ObtainandInquiryofClient’sAttorneysAlistincluding(1)pendingthreatenedlitigationand(2)assertedorunassertedclaimsorassessmentswithwhichtheattorneyhashadinvolvement.Arequestthattheattorneyfurnishinformationorcommentabouttheprogressofeachitemlisted.InquiryofClient’sAttorneysAInquiryofClient’sAttorneysArequestfortheidentificationofanyunlistedpendingorthreatenedlegalactionorastatementthattheclient’slistiscomplete.Astatementinformingtheattorneyoftheattorney’sresponsibilitytoinformmanagementoflegalmattersrequiringdisclosureinthefinancialstatementsandtoresponddirectlytotheauditor.InquiryofClient’sAttorneysASarbanes-OxleyActCongressincludedprovisionsinthisactdirectingtheSECtoissuerulesrequiringattorneysservingpubliccompaniestoreportmaterialviolationsbythecompanyoffederalsecuritieslaws.TheAmericanBarAssociationamendeditsattorney-clientconfidentialityrulestopermitattorneystobreachconfidentialityifaclientiscommittingacrimeorfraud.Sarbanes-OxleyActCongressincLearningObjective3Conductapost-balance-sheetreviewforsubsequentevents.LearningObjective3ConductaPeriodCoveredbySubsequentEventsReviewClient’sendingbalancesheetdate12-31-05Dateclientissuesfinancialstatements3-26-06Auditreportdate3-11-06PeriodtowhichreviewforsubsequenteventsappliesPeriodforprocessingthefinancialstatementsPeriodCoveredbySubsequentETypesofSubsequentEvents1Thosethathaveadirecteffectonthefinancialstatementsandrequireadjustment2ThosethathavenodirecteffectonthefinancialstatementsbutforwhichdisclosureisadvisableTypesofSubsequentEvents1ThoRequiringAdjustmentDeclarationofbankruptcybyacustomerwithanaccountsreceivablebalanceSettlementofalitigationatanamountdifferentfromtheamountrecordedonthebooksDisposalofequipmentnotbeingusedinoperationsatapricebelowthecurrentbookvalue SaleofinvestmentsatapricebelowrecordedcostRequiringAdjustmentDeclaratiAdvisabilityofDisclosureDeclineinthemarketvalueofsecuritiesheldfortemporaryinvestmentorresaleIssuanceofbondsorequitysecuritiesDeclineinthemarketvalueofinventoryasaconsequenceofgovernmentactionbarringfurthersaleofaproductUninsuredlossofinventoriesasaresultoffireAmergeroranacquisitionAdvisabilityofDisclosureDecAuditTestsTwocategories:Proceduresnormallyintegratedasapartoftheverificationofyear-endaccountbalances1Proceduresperformedspecificallyforthepurposeofdiscoveringeventsortransactionsthatmustberecognizedassubsequentevents2AuditTestsTwocategories:ProcInquireofmanagement.Correspondwithattorneys.Reviewinternalstatementspreparedsubsequenttothebalancesheetdate.Reviewrecordspreparedsubsequenttothebalancesheetdate.Examineminutesissuedsubsequenttothebalancesheetdate.Obtainaletterofrepresentation,AuditTestsInquireofmanagement.AuditTDualDatingThefirstdateisthedateforthecompletionoffieldworkexceptforaspecificexception.Theseconddate,whichisalwayslater,dealswiththeexception.DualDatingThefirstdateistLearningObjective4Designandperformthefinalstepsintheevidence-accumulationsegmentoftheaudit.LearningObjective4Designand1.Performfinalanalyticalprocedures.2.Evaluatethegoing-concernassumption.3.Obtainamanagementrepresentationletter.4.Considerinformationaccompanyingthebasicfinancialstatements.5.Readotherinformationintheannualreport.FinalEvidenceAccumulation1.PerformfinalanalyticalprManagementRepresentationLetterPurposes:Toimpressuponmanagementitsresponsibilityfortheassertionsinthefinancialstatements1Todocumenttheresponsesfrommanagementtoinquiriesaboutvariousaspectsoftheaudit2ManagementRepresentationLett1.Financialstatements2.Completenessofinformation3.Recognition,measurement,anddisclosure4.Subsequentevents5.InternalcontrolManagementRepresentationLetter1.FinancialstatementsManagem1.Management’sacknowledgmentofitsresponsibilityforestablishingandmaintainingeffectiveinternalcontroloverfinancialreporting2.Management’sconclusionabouttheeffectivenessofinternalcontroloverfinancialreportingasoftheendofthefiscalperiod3.Disclosureofalldeficiencies4.Management’sknowledgeofanyfraudManagementRepresentationLetter:InternalControl1.Management’sacknowledgmentInformationAccompanyingBasicFinancialStatementsBalancesheetIncomestatementStatementofcashflowsFootnotesDetailedcomparativestatementsStatisticaldataScheduleofinsurancecoverageBasicfinancialstatementsStandardauditor’sreportInformationaccompanyingbasicfinancialstatementsSeparateparagraph–unqualified,qualified,ordisclaimerInformationAccompanyingBasicLearningObjective5Integratetheauditevidencegathered,andevaluatetheoverallauditresults.LearningObjective5IntegrateEvaluateResultsSufficiencyofevidenceEvidencesupportsauditor’sopinionFinancialstatementdisclosuresEvaluateResultsSufficiencyofEvaluateResultsAuditdocumentationreviewIndependentreviewSummaryofevidenceevaluationEvaluateResultsAuditdocumentCompletingtheEngagementChecklist YES NO1. Examinationofprioryear’saudit documentation a. Werelastyear’sauditfilesexamined forareasofemphasisinthe current-yearaudit? b. Wasthepermanentfilereviewedfor itemsthataffectthecurrentyear?CompletingtheEngagementChecCompletingtheEngagementChecklist YES NO2. Internalcontrol a. Hasinternalcontrolbeenadequately understood? b. Isthescopeoftheauditadequatein lightoftheassessedcontrolrisk? c. Haveallmajorweaknessesbeen includedasreportableconditionsin alettertotheauditcommitteeorto seniormanagement?CompletingtheEngagementChecCompletingtheEngagementChecklist YES NO3. Generaldocuments a. Wereallcurrent-yearminutesand resolutionsreviewed,abstracted, andfollowedup? b. Hasthepermanentfilebeen updated? c. Haveallmajorcontractsand agreementsbeenreviewedand abstractedandcopiedwithall existinglegalrequirements?CompletingtheEngagementChecEvaluatingResultsandReachingConclusionsActualauditevidence(bycycle,account,andobjective)AuditproceduresSamplesizeItemstoselectTimingEvaluateresults(byaccountandcycle)Estimatedmisstatement(byaccount)Achievedauditrisk(byaccountandcycle)EvaluatingResultsandReachinEvaluatingResultsandReachingConclusionsEvaluateoverallfinancialstatementsEstimatedmisstatement(overallstatements)Achievedauditrisk(overallstatements)IssueauditreportEvaluatingResultsandReachinTheauditreportistheonlythingthatmostusersseeintheauditprocess,andtheconsequencesofissuinganinappropriatereportcanbesevere.IssuetheAuditReportTheauditreportistheonlytLearningObjective6Communicateeffectivelywiththeauditcommitteeandmanagement.LearningObjective6CommunicatCommunicatefraudandillegalactsCommunicateinternalcontroldeficienciesOthercommunicationwithauditcommitteeManagementlettersCommunicatewiththeAuditCommitteeandManagementCommunicatefraudandillegalLearningObjective7Identifytheauditor’sresponsibilitieswhenfactsaffectingtheauditreportarediscoveredafteritsissuance.LearningObjective7IdentifytPeriodCoveredbySubsequentEventsReviewDateclientissuesfinancialstatements3-26-06Client’sendingbalancesheetdate12-31-05PeriodtowhichreviewforsubsequenteventsappliesPeriodforprocessingthefinancialstatementsAuditreportdate3-11-06PeriodinwhichsubsequentdiscoveryoffactsismadePeriodCoveredbySubsequentEChapter24CompletingtheAudit(審計學(xué)英文版)Chapter24CompletingtheAudLearningObjective1Conductareviewforcontingentliabilitiesandcommitments.LearningObjective1ConductaSummaryoftheAuditProcessPhaseIPlananddesignanauditapproach.PhaseIIPerformtestsofcontrolsandsubstantivetestsoftransactions.PhaseIIIPerformanalyticalproceduresandtestsofdetailsofbalances.PhaseIVCompletetheauditandissueanauditreport.SummaryoftheAuditProcessPhPhaseIV–CompletingtheAuditReviewforcontingentliabilities.Reviewforsubsequentevents.Accumulatefinalevidence.Evaluateresults.Issueauditreport.Communicatewithauditcommitteeandmanagement.PhaseIV–CompletingtheAudiContingentLiabilitiesAcontingentliabilityisapotentialfutureobligationtoanoutsidepartyforanunknownamountresultingfromactivitiesthathavealreadytakenplace.ContingentLiabilitiesAcontinLikelihoodofOccurrenceandFinancialStatementTreatmentReasonablypossibleFootnotedisclosureisnecessaryProbable(likelytooccur)AdjustfinancialstatementsornotedisclosureRemote(slightchance)NodisclosurenecessaryLikelihoodofoccurrenceofeventFinancialstatementtreatmentLikelihoodofOccurrenceandFAuditor’sConcernsPendinglitigationforpatentinfringement,productliability,orotheractionsIncometaxdisputesProductwarrantiesNotesreceivablediscountedGuaranteesofobligationsofothersUnusedbalancesofoutstandinglettersofcreditAuditor’sConcernsPendinglitAuditProceduresforFindingContingenciesInquireofmanagement(orallyandinwriting)aboutthepossibilityofunrecordedcontingencies.Reviewcurrentandpreviousyears’internalrevenuereportsforincometaxsettlements.Reviewtheminutesofdirectors’andstockholders’meetingsforindicationsoflawsuitsorothercontingencies.AuditProceduresforFindingCAuditProceduresforFindingContingenciesAnalyzelegalexpensesandreviewinvoicesandstatementsfromlegalcounsel.Obtainaletterfromeachmajorattorneyoftheclientastothestatusofpendinglitigation.Reviewauditdocumentationforanyinformationthatmayindicateapotentialcontingency.Examinelettersofcreditinforce.AuditProceduresforFindingCLearningObjective2Obtainandevaluatelettersfromtheclient’sattorneys.LearningObjective2ObtainandInquiryofClient’sAttorneysAlistincluding(1)pendingthreatenedlitigationand(2)assertedorunassertedclaimsorassessmentswithwhichtheattorneyhashadinvolvement.Arequestthattheattorneyfurnishinformationorcommentabouttheprogressofeachitemlisted.InquiryofClient’sAttorneysAInquiryofClient’sAttorneysArequestfortheidentificationofanyunlistedpendingorthreatenedlegalactionorastatementthattheclient’slistiscomplete.Astatementinformingtheattorneyoftheattorney’sresponsibilitytoinformmanagementoflegalmattersrequiringdisclosureinthefinancialstatementsandtoresponddirectlytotheauditor.InquiryofClient’sAttorneysASarbanes-OxleyActCongressincludedprovisionsinthisactdirectingtheSECtoissuerulesrequiringattorneysservingpubliccompaniestoreportmaterialviolationsbythecompanyoffederalsecuritieslaws.TheAmericanBarAssociationamendeditsattorney-clientconfidentialityrulestopermitattorneystobreachconfidentialityifaclientiscommittingacrimeorfraud.Sarbanes-OxleyActCongressincLearningObjective3Conductapost-balance-sheetreviewforsubsequentevents.LearningObjective3ConductaPeriodCoveredbySubsequentEventsReviewClient’sendingbalancesheetdate12-31-05Dateclientissuesfinancialstatements3-26-06Auditreportdate3-11-06PeriodtowhichreviewforsubsequenteventsappliesPeriodforprocessingthefinancialstatementsPeriodCoveredbySubsequentETypesofSubsequentEvents1Thosethathaveadirecteffectonthefinancialstatementsandrequireadjustment2ThosethathavenodirecteffectonthefinancialstatementsbutforwhichdisclosureisadvisableTypesofSubsequentEvents1ThoRequiringAdjustmentDeclarationofbankruptcybyacustomerwithanaccountsreceivablebalanceSettlementofalitigationatanamountdifferentfromtheamountrecordedonthebooksDisposalofequipmentnotbeingusedinoperationsatapricebelowthecurrentbookvalue SaleofinvestmentsatapricebelowrecordedcostRequiringAdjustmentDeclaratiAdvisabilityofDisclosureDeclineinthemarketvalueofsecuritiesheldfortemporaryinvestmentorresaleIssuanceofbondsorequitysecuritiesDeclineinthemarketvalueofinventoryasaconsequenceofgovernmentactionbarringfurthersaleofaproductUninsuredlossofinventoriesasaresultoffireAmergeroranacquisitionAdvisabilityofDisclosureDecAuditTestsTwocategories:Proceduresnormallyintegratedasapartoftheverificationofyear-endaccountbalances1Proceduresperformedspecificallyforthepurposeofdiscoveringeventsortransactionsthatmustberecognizedassubsequentevents2AuditTestsTwocategories:ProcInquireofmanagement.Correspondwithattorneys.Reviewinternalstatementspreparedsubsequenttothebalancesheetdate.Reviewrecordspreparedsubsequenttothebalancesheetdate.Examineminutesissuedsubsequenttothebalancesheetdate.Obtainaletterofrepresentation,AuditTestsInquireofmanagement.AuditTDualDatingThefirstdateisthedateforthecompletionoffieldworkexceptforaspecificexception.Theseconddate,whichisalwayslater,dealswiththeexception.DualDatingThefirstdateistLearningObjective4Designandperformthefinalstepsintheevidence-accumulationsegmentoftheaudit.LearningObjective4Designand1.Performfinalanalyticalprocedures.2.Evaluatethegoing-concernassumption.3.Obtainamanagementrepresentationletter.4.Considerinformationaccompanyingthebasicfinancialstatements.5.Readotherinformationintheannualreport.FinalEvidenceAccumulation1.PerformfinalanalyticalprManagementRepresentationLetterPurposes:Toimpressuponmanagementitsresponsibilityfortheassertionsinthefinancialstatements1Todocumenttheresponsesfrommanagementtoinquiriesaboutvariousaspectsoftheaudit2ManagementRepresentationLett1.Financialstatements2.Completenessofinformation3.Recognition,measurement,anddisclosure4.Subsequentevents5.InternalcontrolManagementRepresentationLetter1.FinancialstatementsManagem1.Management’sacknowledgmentofitsresponsibilityforestablishingandmaintainingeffectiveinternalcontroloverfinancialreporting2.Management’sconclusionabouttheeffectivenessofinternalcontroloverfinancialreportingasoftheendofthefiscalperiod3.Disclosureofalldeficiencies4.Management’sknowledgeofanyfraudManagementRepresentationLetter:InternalControl1.Management’sacknowledgmentInformationAccompanyingBasicFinancialStatementsBalancesheetIncomestatementStatementofcashflowsFootnotesDetailedcomparativestatementsStatisticaldataScheduleofinsurancecoverageBasicfinancialstatementsStandardauditor’sreportInformationaccompanyingbasicfinancialstatementsSeparateparagraph–unqualified,qualified,ordisclaimerInformationAccompanyingBasicLearningObjective5Integratetheauditevidencegathered,andevaluatetheoverallauditresults.LearningObjective5IntegrateEvaluateResultsSufficiencyofevidenceEvidencesupportsauditor’sopinionFinancialstatementdisclosuresEvaluateResultsSufficiencyofEvaluateResultsAuditdocumentationreviewIndependentreviewSummaryofevidenceevaluationEvaluateResultsAuditdocumentCompletingtheEngagementChecklist YES NO1. Examinationofprioryear’saudit documentation a. Werelastyear’sauditfilesexamined forareasofemphasisinthe current-yearaudit? b. Wasthepermanentfilereviewedfor itemsthataffectthecurrentyear?CompletingtheEngagementChecCompletingtheEngagementChecklist YES NO2. Internalcontrol a. Hasinternalcontrolbeenadequately understood? b. Isthescopeoftheauditadequatein lightoftheassessedcontrolrisk? c. Haveal