Audit and Assurance Essentials: For Professional Accountancy Exams, + Website

CHAPTER 6

AUDIT REPORTING

6.1 AUDIT FINALISATION

Covering: ISA 520 Analytical Procedures, ISA 450 Evaluation of Misstatements Identified during the Audit, ISA 560 Subsequent Events, ISA 580 Written Representations.

Why do I need to read this section?

The material in this section is straightforward and much of it is relevant to general questions on audit evidence as well as to questions on audit finalisation. When prompted, it is clear that students know that written representations, final analytical procedures and similar matters are relevant towards the end of an audit but they sometimes have difficulty in pulling the issues together. Students somehow run out of steam at this stage of the audit!

What is important in this section?

Evaluating misstatements properly can make the difference between issuing an appropriate audit report and an inappropriate one. Subsequent events are important in practice and in theory and the ability to distinguish between what needs an adjustment and what needs disclosing is important. Knowing how to deal with problems arising after the issue of the financial statements, and whether a new audit report can be issued is also critical because auditors cannot simply change their minds!

Written representations are probably the most contentious issue in practice. It is important to know that some representations are mandatory, i.e. those covering the responsibility of management for the financial statements, and that others depend on the client’s circumstances ...