Audit Completion

Objectives
• competent, relevant and reasonable
audit evidence was obtained to form an
opinion on the appropriate form of audit
certificate;
• audit evidence has been adequately
documented;
• audit opinion has been correctly
expressed and the audit report conforms
the reporting standards;
 Analytical Review

•Build expectations at the

planning stage.
•Compare expectations with
actual numbers in draft
accounts and compute
variances.
•Investigate all variances
•Corroborate (or
substantiate)
•Conclude
 Review of Contingent Liabilities

A contingent liability is a
potential future obligation to an
outside party for an unknown
amount resulting from activities
that have already taken place.
 Likelihood of Occurrence and
Treatment in Financial Statements
Likelihood of Treatment in
occurrence of event Financial statements

Remote No disclosure
(slight chance) necessary

Reasonably Footnote disclosure is

possible necessary

Probable Adjust financial statements

(likely to occur) and note disclosure
 Auditor’s Concerns
 Pending litigations
 Income tax/VAT/Customs disputes
 Product warranties
 Notes receivable discounted
 Guarantees of obligations of others
 Unused balances of outstanding letters of
credit
 Audit Procedures for Finding
Contingencies
Inquire of management about the possibility
of unrecorded contingencies.

Review current and previous years’ reports

for income tax/VAT/Customs settlements.

Review the minutes of directors’ and

stockholders’ meetings for indications of
lawsuits or other contingencies.
 Audit Procedures for Finding
Contingencies-cont..
Analyze legal expenses and review invoices
and statements from legal counsel.

Obtain a letter from each major attorney/tax consultants

of the client as to the status of pending litigation.

Review audit documentation for any information

that may indicate a potential contingency.

Examine letters of credit in force.

 Review for Subsequent Events
A. Time Period of Auditor
Responsibility
B. Subsequent Events Requiring
Adjustment
C. Subsequent Events Requiring
Disclosure
D. Audit Tests for Subsequent
Events
Time Period of Auditor Responsibility

Subsequent events are events or trans-

actions having a material effect on
the financial statements that
occur after the balance sheet
date but before field
work completion.

12/31 2/14 2/28

period under audit subsequent events period

balance sheet field work report

date completion issue date
Subsequent Events Requiring Adjustment
Events that provide additional evidence
about conditions that existed at the
balance sheet date (e.g., settlement of
liabilities, realiza-
tion of assets)
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period under audit subsequent events period

balance sheet field work report

date completion issue date

Client financial statements for the period

under audit must be adjusted to reflect
this subsequent event information.
 Subsequent Events Requiring Disclosure
Events that occur after the balance
sheet date and do not relate to condi-
tions that existed at year-end
(e.g., bond/stock issue, acquisition,
fire/flood loss, major customer/vendor
bankruptcy)

12/31 2/14 2/28

period under audit subsequent events period

balance sheet field work report

date completion issue date
 Subsequent Events Requiring Disclosure
Events that occur after the balance
sheet date and do not relate to condi-
tions that existed at year-end
12/31 2/14 2/28
period under audit subsequent events period

balance sheet field work report

date disclose completion issue date

These subsequent events must be disclosed

in the notes of the period under audit.
 Audit Tests for Subsequent Events
 Inquiry of key client
management.
 Correspondence with
attorneys
 Review of internal client
statements and other
records prepared
subsequent to the balance
sheet date
 Examine minutes of board of
director meetings
 Obtain a letter of
representation from client
management
 Review of adjusting entries and
confirmation of closing balances
• Whether the required adjusting entries have
been approved by the authorized person of
the organization.
• Whether required adjusting entries have been
passed.
• Confirm the closing balances with ledgers
• Collect sufficient appropriate audit evidences.
Critical Review of Accounts Questionnaire

A final critical review of the accounts should be

performed support the conclusions drawn from
other audit work or else indicate areas in need
of further enquiry.

Critical Review of Accounts Questionnaire.doc

 File Completion Questionnaire-
Pre-Partner Review
A senior member of staff on the audit should complete the
completion questionnaires.

The first section (B3.1) should be completed before the initial

partner review. The second section (B3.2) should be completed
before the partner authorises the issue of accounts to the client
for approval.

File Completion Questionnaire-PrePartner Review.doc

B3.2.doc
Audit Standards Review Questionnaire
This should be the final form to be completed before
the initial partner completion. The purpose of the form
is to ensure compliance with the Bangladesh Standards
on Auditing (BSA). It can be a useful aid when
completing a review of the file.

Audit Standards Review Questionnaire.doc

 Accumulate Final Evidence

A. Evaluate Going-Concern Assumption

B. Obtain Management Representation
Letter
C. Read Other Information in the Annual
Report
 Evaluate Going-Concern Assumption

BSA requires the

auditor to evaluate
whether there is
substantial doubt
about a client’s
ability to continue as
a going concern for
at least one year
beyond the balance
sheet date.
 Management Representation Letter
Purposes of the letter:

1. To impress upon management its responsibility

for the assertions in the financial statements.
2. To remind management of potential misstatements
or omissions in the financial statements.

3. To document the responses from management

to inquiries about various aspects of the audit.
 Management Representation Letter-
cont.
4. Management’s acknowledgment of its responsibility
for establishing and maintaining effective internal
control over financial reporting.
5. Management’s conclusion about the effectiveness of
internal control over financial reporting as of the end
of the fiscal period.
6. Disclosure of all deficiencies
7. Management’s knowledge of any fraud
 Read Other Information in the Annual Report
 Auditor should read other
information to be included in
annual reports pertaining
directly to the financial
statements.
 Examples are the chairman’s
letter and explanations of
company activities.
 If the client refuses to modify
material inconsistencies, the
auditor should add an
explanatory paragraph to the
audit report.
 Evaluate Results
A. The Sufficiency of Audit Evidence
B. Support for the Auditor’s Opinion
C. Financial Statement Disclosures
D. Audit Documentation Review
E. Independent Review
The Sufficiency of Audit Evidence
As an aid in drawing final
conclusions about the
adequacy of the audit
evidence, auditors often use a
completing the engagement
checklist
The auditor has two choices if
sufficient evidence has not
been obtained:
Obtain additional evidence
Issue a qualified or
disclaimer of opinion
 Support for the Auditor’s Opinion
 It is necessary to combine
individually immaterial
misstatements to evaluate
whether the combined amount
is material
 The auditor has two choices if
the financial statements are
not fairly stated:
 Have statements revised to
auditor satisfaction.
 Issue a qualified or adverse
opinion.
Financial Statement Disclosures

Adequate disclosure
includes consideration
of all of the
statements, including
the related notes.
Use financial
statement disclosure
checklist.
 Audit Documentation Review
Partner
The review of audit
documentation generally
involves three increasing
levels of personnel, ending
with the partner in charge of Auditor
Manager
the audit. Three main
reasons for review include:

 Evaluation of performance Auditor

of inexperienced personnel Senior

 Ensure that audit meets

firm’s standard of Auditor
performance.
Independent Review
At the completion of
audits, it is common to
have the financial
statements and the
entire set of audit files
reviewed by a
completely independent
reviewer who has not
participated in the
engagement.
 Issue the Audit Report

The audit report is the only thing that most users

see in the audit process and the consequences of
issuing an inappropriate report can be severe.
 Communicate with the Audit
Committee and Management

Communicate reportable conditions

Other communication with audit committee
Management letters
AUDIT COMPLIANCE REVIEW
 Hot Review
Working Papers files prepared by audit team is
reviewed by a more experienced independent
staff during the course of the audit.

Objective
The purpose of a hot file review is to identify
any key areas that need to be addressed prior to
signing the report.
 Cold review
To review in detail the work performed by an audit
team and ensuring that the audit has been conducted
in accordance with the firm standard procedures.
Objectives:

• To identify the area of audit deficiencies (if any) and

recommending methods for improvement on completed audit
engagements.
• To review of financial statements to ensure compliance with
BFRS.
• A presentation of the findings at the end of the review and
getting the explanation from audit team, if required.
• A report recommending agreed courses of action for
improvements.
 checklist

whole firm ACR checklist.doc

Cold File ACR Checklist.pdf

Whole Firm ACR Checklist.pdf

 Thank You for Your Attention
Any Questions?