1 / 30

WRAP-UP PHASE

WRAP-UP PHASE. Search for unrecorded liabilities & significant subsequent events Summarize & conclude Partner, manager & senior review. SEARCH FOR UNRECORDED LIABILITIES & SIGNIFICANT SUBSEQUENT EVENTS. What period are we talking about. . . ? -- From year-end / December 31

devi
Download Presentation

WRAP-UP PHASE

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. WRAP-UP PHASE • Search for unrecorded liabilities & significant subsequent events • Summarize & conclude • Partner, manager & senior review

  2. SEARCH FOR UNRECORDED LIABILITIES & SIGNIFICANT SUBSEQUENT EVENTS • What period are we talking about. . . ? -- From year-end / December 31 -- To last day of field work

  3. SEARCH FOR UNRECORDED LIABILITIES & SIGNIFICANT SUBSEQUENT EVENTS • What are we looking for . . . ? -- Two kinds of unrecorded liabilities -- Two kinds of significant subsequent events

  4. TWO KINDS OF UNRECORDED LIABILITIES • Known liabilities • Contingent liabilities -- Remote -- Reasonably possible -- Probable

  5. CONTINGENT LIABILITY Record, disclose &/or ignore depending upon probability

  6. FASB 5 LEVELS OF PROBABILITY • REMOTE - Don’t disclose or record • REASONABLY POSSIBLE - Disclose • PROBABLE & MEASURABLE - - Record and disclose - If range of loss possible, record lower end of range and disclose possible additional loss

  7. TWO KINDS OF SIGNIFICANT SUBSEQUENT EVENTS • Events confirming a condition existing at year-end • Events discretely related to subsequent period

  8. FIRST KIND OF SIGNIFICANT SUBSEQUENT EVENT Event that confirms an already existing situation at year-end

  9. CONFIRMS AN EXISTING SITUATION • Lawsuit settled after year-end • Customer files for bankruptcy after year-end • Record adjustment on y/e financial statements

  10. SECOND KIND OF SIGNIFICANT SUBSEQUENT EVENT Event that relates discretely to the following year

  11. RELATES DISCRETELY TO FOLLOWING YEAR • Factory burns down on Jan 18 • Airliner crashes at O’Hare on Feb 20 killing 328 people • Failure to disclose in notes to F/Ss makes F/Ss misleading

  12. SEARCH FOR UNRECORDED LIABILITIES & SIGNIFICANT SUBSEQUENT EVENTS • Search for unrecorded payables • Review interim financial statements • Review significant books of account • Obtain legal letters

  13. SEARCH FOR UNRECORDED LIABILITIES & SIGNIFICANT SUBSEQUENT EVENTS • Review minutes & obtain minute representation letter • Make inquiries of management • Obtain management representation letter

  14. SEARCH FOR UNRECORDED PAYABLES • Relates to audit of A/P • Search through end of audit • Examine subsequent C/Ds • Propose PJE for unrecorded

  15. REVIEW LATEST INTERIM FINANCIAL STATEMENTS • Internal monthly F/Ss prepared for January or February • Look for large, unusual variations from audited F/Ss • Investigate until explanation found

  16. REVIEW SIGNIFICANT BOOKS OF ACCOUNT • General ledger • General journal • Cash receipts journal • Sales journal • Purchases journal

  17. REVIEW SIGNIFICANT BOOKS OF ACCOUNT • Review through end of audit • Review for large, unusual activity • Investigate unusual items to resolution

  18. OBTAIN LEGAL LETTERS • Standard request on page 715 • Addresses asserted & unasserted claims • FASB 5 standards • Confirm understanding • Dated close to last day • Difficulties with attorneys

  19. REVIEW MINUTES • Obtain minutes thru last day • Agenda & resolutions for recent meetings • Obtaim minute representation letter from Corporate Secretary

  20. MAKE INQUIRIES OF MANAGEMENT • On last day of fieldwork • Use checklist • Discuss with CEO & CFO

  21. OBTAIN MANAGEMENT REPRESENTATION LETTER • Prepare draft for management • Dated last day of fieldwork • Signed by CEO & CFO • Formalize oral & implied reps(720) • Qualified opinion if management won’t sign

  22. MANAGEMENT REP LETTER • Management primarily responsible • Financial statements present fairly • Specific financial statement matters • Issues addressed during audit • Opinions of management • Plans/intentions of management • All records available/none withheld

  23. SUMMARIZE & CONCLUDE • Proposed journal entry schedule • Final engagement memo

  24. REVIEW PROCESS • Senior review • Manager review • Partner review

  25. REVIEW PROCESS - All procedures complete - Sufficient evidence - GAAP & GAAS correct

  26. ISSUE REPORT PHASE The Sixth Phase of the Audit Process

  27. ISSUE REPORT PHASE RIGHT . . . EXACTLY RIGHT . . . ON THE FIRST TRY! ! !

  28. PROCESSING THE REPORT • Senior drafts report • Review by client & audit team • Processing changes • Comparing (calling) & footing • Referencing by another senior • Second partner review • Signing by partner

  29. ISSUE REPORT • Unqualified report • Qualified report - Scope limitation - GAAP deviation

More Related