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The partner in your firm has requested you to train the newly recruited junior audit staff on ISA 260: Communication with those charged with governance.
Required:
Draft a training material for the new junior recruits on the provisions set out in ISA 260 in relation to:
i) The purpose of issuing a Management Letter to a client after an audit.
(5 marks)
ii) The contents of a Management Letter.
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In January 2015, the IAASB issued ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report. This standard is required to be applied to the audit of all listed entities.
Required:
a) Explain the term Key Audit Matters as defined in ISA 701. (2 marks)
b) State TWO objectives of ISA 701. (2 marks)
c) What are the THREE matters that ISA 701 requires the auditor to take into account when making a determination of Key Audit Matters? (6 marks)
d) How should the auditor communicate Key Audit Matters? (5 marks)
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b) The Auditor of Pegasus Technologies, a fintech company, issued an adverse opinion on the financial statements for the year ended 31 December 2020. This was due to the fact that management could not make available the sales ledger, cash book, and other ledgers to the auditors due to a massive hack suffered by the company. Hackers used SIM cards to gain access to the company’s mobile money platform, stole funds, and destroyed company records. The hackers have been caught, and the IT unit has fixed the loophole that led to the hacking.
Required:
Comment on the Auditor’s issue of an adverse opinion and suggest whether another opinion would be more appropriate under ISA 705 (revised): Modifications to the Opinion in the Independent Auditor’s Report. (10 marks)
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
ISSAI 1706 (Revised) provides the requirements for an auditor who, having formed an opinion on the financial statements, has determined that it is necessary to draw users’ attention, by way of clear additional communication in the auditor’s report, to:
(a) A matter, although appropriately presented or disclosed in the financial statements, that is of such importance that it is fundamental to users’ understanding of the financial statements; or (b) As appropriate, any other matter relevant to users’ understanding of the audit, the auditor’s responsibilities, or the auditor’s report.
Required:
What additional guidance for public sector auditors relates to “Emphasis of Matter Paragraphs” in the Auditor’s Report? (10 marks)
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ISA 701: Communicating Key Audit Matters (KAM) in the Independent Auditor’s Report is a new ISA introduced as part of the International Audit and Assurance Standards Board’s (IAASB) extensive revisions to International Standards on Auditing (ISAs) relating to audit reporting. The objective of the IAASB’s revisions was to make the auditor’s report more detailed and useful for the intended users. ISA 701 applies to audits of complete sets of general purpose financial statements of listed entities.
Subsequently, the Institute of Chartered Accountants, Ghana (ICAG) as the regulator of accountancy profession and practice in Ghana, issued a notice to practitioners and the public which directed that auditor’s report issued on financial statements for periods ending on or after 31 December, 2017 for Public Interest Entities (PIEs) to include a communication on Key Audit Matters as required by ISA 701.
You are the Partner in charge of training with Preko and Associates. An audit team member informed you that one of the clients being audited has an issue which is being contemplated as to whether to report the issue as key audit matter, emphasis of matter paragraph, other matter paragraph, or to modify the audit opinion.
Required: Prepare briefing notes for the staff of your firm regarding the following:
a) KAMs and state TWO (2) categories of entities in Ghana which ISA 701 is applicable as adopted by ICAG. (5 marks)
b) Factors to be considered in determining KAMs.
(3 marks)
c) Interaction between: i) KAMs and ISA 705 (revised): Modifications to the Opinion in the Independent Auditor’s Report
ii) KAMs and ISA 570 (revised): Going Concern
iii) KAMs and Emphasis of Matter
iv) KAMs and Other Matters (12 marks)
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a) You are the partner responsible for the audit of ABC Co, for the year ended 30th April 2014. The final audit has been completed and you have asked the audit manager to draft the audit report. The manager is aware that there is guidance for auditors relating to audit report in ISA 706 Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report. The manager has asked for your assistance in this matter.
Required:
i) Define an ‘Emphasis of Matter paragraph’ and explain, providing examples, the use of such a paragraph. (6 marks)
ii) Define an ‘Other Matter paragraph’ and explain, providing examples, the use of such a paragraph. (4 marks)
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
The partner in your firm has requested you to train the newly recruited junior audit staff on ISA 260: Communication with those charged with governance.
Required:
Draft a training material for the new junior recruits on the provisions set out in ISA 260 in relation to:
i) The purpose of issuing a Management Letter to a client after an audit.
(5 marks)
ii) The contents of a Management Letter.
Find Related Questions by Tags, levels, etc.
In January 2015, the IAASB issued ISA 701, Communicating Key Audit Matters in the Independent Auditor’s Report. This standard is required to be applied to the audit of all listed entities.
Required:
a) Explain the term Key Audit Matters as defined in ISA 701. (2 marks)
b) State TWO objectives of ISA 701. (2 marks)
c) What are the THREE matters that ISA 701 requires the auditor to take into account when making a determination of Key Audit Matters? (6 marks)
d) How should the auditor communicate Key Audit Matters? (5 marks)
Find Related Questions by Tags, levels, etc.
b) The Auditor of Pegasus Technologies, a fintech company, issued an adverse opinion on the financial statements for the year ended 31 December 2020. This was due to the fact that management could not make available the sales ledger, cash book, and other ledgers to the auditors due to a massive hack suffered by the company. Hackers used SIM cards to gain access to the company’s mobile money platform, stole funds, and destroyed company records. The hackers have been caught, and the IT unit has fixed the loophole that led to the hacking.
Required:
Comment on the Auditor’s issue of an adverse opinion and suggest whether another opinion would be more appropriate under ISA 705 (revised): Modifications to the Opinion in the Independent Auditor’s Report. (10 marks)
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
ISSAI 1706 (Revised) provides the requirements for an auditor who, having formed an opinion on the financial statements, has determined that it is necessary to draw users’ attention, by way of clear additional communication in the auditor’s report, to:
(a) A matter, although appropriately presented or disclosed in the financial statements, that is of such importance that it is fundamental to users’ understanding of the financial statements; or (b) As appropriate, any other matter relevant to users’ understanding of the audit, the auditor’s responsibilities, or the auditor’s report.
Required:
What additional guidance for public sector auditors relates to “Emphasis of Matter Paragraphs” in the Auditor’s Report? (10 marks)
Find Related Questions by Tags, levels, etc.
ISA 701: Communicating Key Audit Matters (KAM) in the Independent Auditor’s Report is a new ISA introduced as part of the International Audit and Assurance Standards Board’s (IAASB) extensive revisions to International Standards on Auditing (ISAs) relating to audit reporting. The objective of the IAASB’s revisions was to make the auditor’s report more detailed and useful for the intended users. ISA 701 applies to audits of complete sets of general purpose financial statements of listed entities.
Subsequently, the Institute of Chartered Accountants, Ghana (ICAG) as the regulator of accountancy profession and practice in Ghana, issued a notice to practitioners and the public which directed that auditor’s report issued on financial statements for periods ending on or after 31 December, 2017 for Public Interest Entities (PIEs) to include a communication on Key Audit Matters as required by ISA 701.
You are the Partner in charge of training with Preko and Associates. An audit team member informed you that one of the clients being audited has an issue which is being contemplated as to whether to report the issue as key audit matter, emphasis of matter paragraph, other matter paragraph, or to modify the audit opinion.
Required: Prepare briefing notes for the staff of your firm regarding the following:
a) KAMs and state TWO (2) categories of entities in Ghana which ISA 701 is applicable as adopted by ICAG. (5 marks)
b) Factors to be considered in determining KAMs.
(3 marks)
c) Interaction between: i) KAMs and ISA 705 (revised): Modifications to the Opinion in the Independent Auditor’s Report
ii) KAMs and ISA 570 (revised): Going Concern
iii) KAMs and Emphasis of Matter
iv) KAMs and Other Matters (12 marks)
Find Related Questions by Tags, levels, etc.
a) You are the partner responsible for the audit of ABC Co, for the year ended 30th April 2014. The final audit has been completed and you have asked the audit manager to draft the audit report. The manager is aware that there is guidance for auditors relating to audit report in ISA 706 Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report. The manager has asked for your assistance in this matter.
Required:
i) Define an ‘Emphasis of Matter paragraph’ and explain, providing examples, the use of such a paragraph. (6 marks)
ii) Define an ‘Other Matter paragraph’ and explain, providing examples, the use of such a paragraph. (4 marks)
Find Related Questions by Tags, levels, etc.
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