Chapter 18: Completing the audit process:
Effects of post Statement of Financial Position Events


After complete the audit, some review activities will done to ensure the client's financial statements are correct and high-quality audit

Reviewing Subsequent Events
回顾后续的事件

Reviewing the client significant Accounting Estimates
审查客户重大会计估计.

Review Adequacy and Disclosures
审查充分性和披露

Complete Engagement Quality Review
完整的互动质量审查

Conducting a final analytical review of financial statement
对财务报表进行最终分析审查

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Reviewing the Client Accounting - Disclosure / Loss Contingencies
审查客户会计 - 披露/损失或有事项

Impact of Events on Audit Report

Types of Subsequent Events

Occur between the date of the statement of financial position and the date of financial statement are authorised for issue

  • Provides evidence about conditions that arose after the date of the financial statement. 财务报表日期之后出现的情况
  • Financial Statement Number - Not be adjusted and the considered for disclosure.
  • Examples:
    (a) Uninsured casualty loss that occurs after the statement of financial position date. 财务状况表日期之后发生的未投保伤亡损失
    (b) Due to natural disaster occurring after the statement of financial position date 由于财务状况表日期后发生自然灾害
  • Provides evidence about conditions that existed at the date of the financial statement.财务报表日期存在的情况


  • Financial Statement number: Adjusted to reflect this information and Footnote disclosure be necessary


  • Examples:


    (a) Customer - Bankruptcy - Deteriorating financial condition existed prior to the balance sheet date


    在资产负债表日期之前存在恶化的财务状况


    (b) Lawsuit(Saman) settled for different amount than accrual.


    诉讼以与应计金额不同的金额解决


    (c) Stock dividend or split. 股票股息或拆分


Accounting Treatment - Contingent Losses


Probable, Reasonable estimated and remote should be accrued and disclosed because common practice should be disclosed in the notes to the financial statements.
应应计并披露可能的、合理的估计和远程的数据,因为通常的做法应在财务报表附注中披露

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Exists at the date of the statement of financial position where the outcome will only be confirmed by the occurrence (or non-occurrence) of some future event which is outside the control of the business.
存在于财务状况表之日,其结果只能通过企业无法控制的未来事件的发生(或不发生)来确认.

Source of Evidence

Responsibilities

Examples of Contingencies

Guaratees of debts of other

Obligations of banks under standby letters of Credit

Litigation, claims and assessment

Agreement to repurchase receivables that has been sold.

Threat of expropriation of assets in a foreign country

Purchase and Sale COCmmitments

Objective

  • Management has information system to develop estimates material to the financial statement
  • Estimates are reasonable
  • Estimates are presented per GAAP

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Provides opportunities for the entity to "manage" or even manipulate earning

  • Company may underestimate liabilities / impairment of asset values to achieve reporter earning goal.

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Provides an objective evaluation on or before the date of auditor's report of the significant judgements the engagement team made and the conclusion reached in formulating the auditor's report

Auditor shall design and perform analytical procedures near the end of the audit that assist informing an overall conclusion as to whether the financial statements are consistent with the auditor’s understanding of the entity

Single Date
The date of events = The date of the audit report

Dual Date
The dates of the original audit report and events to disclose the work done only on the event after the original audit report date

Management

Auditor

Identifying, evaluating and accounting

Determining the client has properly identifies, accounted and disclosed all material contingency.