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Completing the Audit, Types of subsequent events
Subsequent events time…
Completing the Audit
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Review for Commitment
- Capital Commitments are commitments which the company has made pertaining to capital expenditure such as construction of a plant, a major acquisition of
machineries, major upgrading of the properties or a commitment to acquire shares in another company.
- Long term commitments are usually identified through
inquiry of management and other entity personnel during the audit of the revenue and purchasing processes.
- The amounts to be incurred are substantial and would
normally require the approval of the BOD or in certain cases, the shareholders.
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TYPES OF AUDIT REPORT
Modified audit report
- Qualified/Except for opinion - the auditor concludes that
an unqualified opinion cannot be expressed but that the effect of any disagreement with management, or
limitation on scope is not so material and pervasive as to require an adverse opinion or a disclaimer of opinion
- Disclaimer - the possible effect of a limitation on scope is
so material and pervasive that the auditor has not been able to obtain sufficient appropriate audit evidence and
accordingly is unable to express an opinion on the financial statements
- Adverse - the effect of a disagreement is so material and pervasive to the financial statements that the auditor concludes that a qualification of the report is not adequate to disclose the misleading or incomplete nature of the financial statements
Unmodified audit report
- Standard Unqualified opinion - Matters that do not affect auditor’s opinion and auditor concludes that financial statements are free of material statements
- Unqualified opinion with Emphasis of
Matter/Other Matter Paragraph
- Unqualified opinion - the auditor concludes that the financial statements give a true and fair view (or are presented fairly, in all material respects) in accordance with the applicable financial reporting framework.
Contingent Liabilites
Definition: Potential future obligation to an outside party for an unknown amount arising from activities that have already taken place.
Key Audit Matters
Determination of KAM
- Areas which were considered to be susceptible
to higher risks of material misstatement or which were deemed to be ‘significant risks’ in accordance with ISA 315 (Revised)
- Significant auditor judgments in relation to
areas of the financial statements that involved significant management judgment.
- The effect on the audit of significant events
or transactions that have taken place during the period
- Types of subsequent events
- Subsequent events time dimension