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COMPLETING THE AUDIT - Coggle Diagram
COMPLETING THE AUDIT
What include in accounting estimates
depreciation or amorisation
accrued revenue
allowance to reduce inventory and receivable to their estimate realizable value
deferred tax
provision for loss from lawsuit
provision to meet warranty claim
Audit Procedures in Related Party Transactions
review minutes and corporate structure and discuss with management
confirm with related party the terms and amount of transactions
review last year working paper to identify related party and transactions
inspect documentary evidence in possession of related party
obtain written representation letter from management
completeness of information provided in FS
adequacy of related party disclosures in FS
Related Party Transactions
business deal or arrangement between 2 parties who are joined by special relationship prior to the deal
example of related party transactions
parent entity and its subsidiaries
subsidiaries of a common parent
an entity and trusts for benefit of employees
Transaction of related party
purchase or sales of property and other capital assets
leasing and rental agreements
purchase of sales of goods
transfer under license agreements
Important Purpose of Management Representation Letter
representation by management as audit evidence
to confirm the oral representation
acknowledgement by management of its responsibility for the financial statements
Audit procedures for accounting estimates
Review subsequent event
provide audit evidence regarding accounting estimate made by management
Review and testing the process used by management
test the calculation
evaluate data and consider assumptions used
compare and estimate current period to last period
Responsibilities in Related Party Transaction
Auditors
Obtain information from client at the completion of audit stage and ensure appropriate disclosure in FS
responsible to perform audit procedures to obtain reasonable assurance
perform audit procedures to obtain audit evidence and effect on the FS under ISA 550
Management
responsible to implement adequate accounting and internal control systems
ISA 540 (Accounting Estimates)
auditor should obtain audit evidence regarding accounting estimates