Topic: Completion Procedures and Reporting

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AA – July 2023 – L2 – Q5c – Completion Procedures and Reporting

Identification of circumstances leading to modified audit opinions and types of opinions issued in each case.

Question

c) According to ISA 705: Modification of the auditor’s report, the auditor’s opinion on financial statements other than unmodified opinion depends on his/her judgement on two major circumstances.

Required:
i) State the TWO (2) circumstances that may result in an audit opinion being modified. (2 marks)
ii) Discuss the types of opinion that may be issued under each of the two circumstances. (8 marks)

Answer

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Tags: Audit evidence, Audit opinion, Financial Misstatements, ISA 705
Level: Level 2

Topic: Completion Procedures and Reporting
Series: JULY 2023

AA – Nov 2023 – L2 – Q5c – Completion Procedures and Reporting

This question requires brief notes on the terms: Qualified opinion, Disclaimer of opinion, Emphasis of Matter paragraph, and Other Matter paragraph.

Question

ISA 705: Modifications to the opinion in the independent auditor’s report and ISA 706: Emphasis of Matter paragraphs and Other Matter paragraphs in the independent auditor’s report provide modifying phrases for use when issuing modified reports.

Required:
Write brief notes on the following terms:

i) Qualified opinion
ii) Disclaimer of opinion
iii) Emphasis of Matter paragraph
iv) Other Matter paragraph
(10 marks)

Answer

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Tags: Disclaimer of Opinion, Emphasis of Matter, ISA 705, ISA 706, Other Matter Paragraph, Qualified Opinion
Level: Level 2

Topic: Completion Procedures and Reporting
Series: NOV 2023

AA – Nov 2023 – L2 – Q4b – Completion Procedures and Reporting

This question explains circumstances where the audit opinion should refer to comparative figures.

Question

ISA 710: Comparative information—corresponding figures and comparative financial statements deals with audit work on corresponding amounts and other comparative information for the preceding financial reporting period.

Required:
Explain THREE (3) circumstances under which the audit opinion should refer to the comparatives figures.
(3 marks)

Answer

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Tags: Audit opinion, Comparative figures, Financial reporting period, ISA 710
Level: Level 2

Topic: Completion Procedures and Reporting
Series: NOV 2023

AA – Nov 2019 – L2 – Q4a – Completion Procedures and Reporting

Classifies subsequent events and indicates the required treatment in financial statements.

Question

During the audit of Die Hard Company Limited, the following items were listed on the file divider under subsequent events:
i) Kodjo Armah, a major debtor for GH¢400,000 has been found to be insolvent.
ii) Large quantities of stocks were destroyed by fire in the first month after the reporting date.
iii) Judgment in respect of litigation that was ongoing before the year-end has been given against the company shortly after the end of the financial year. The judgment debt was GH¢5 million.
iv) Two customers had put in a claim in respect of goods sold to them under warranty before the year-end of GH¢300,000 and GH¢450,000 respectively. No provision was made for warranty claims in the financial statements.
v) The company issued fresh equity shares after the year-end. The number of shares was 2.5 million which generated GH¢5 million.

Required:
Classify the above items and indicate the treatment required in the financial statements.
(10 marks)

Answer

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Tags: Adjusting Events, Financial Reporting, Non-adjusting Events, Subsequent Events
Level: Level 2

Topic: Completion Procedures and Reporting
Series: NOV 2019

AA – Nov 2020 – L2 – Q5c – Completion Procedures and Reporting

Discuss key matters to include in the communication with those charged with governance.

Question

You have completed the audit engagement for ABC Company Ltd, and the engagement partner has asked the audit manager to bring the draft communication with those charged with governance for discussion. You were among the audit field staff who performed the audit and prepared the working papers and documented issues for management’s considerations.

Required:
Discuss the main matters that should be included in the communication with those charged with governance.
(10 marks)

Answer

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Tags: Audit findings, Auditor’s Independence, Communication, Governance, ISA 260, Reporting
Level: Level 2

Topic: Completion Procedures and Reporting
Series: NOV 2020

AA – Nov 2020 – L2 – Q4a – Completion Procedures and Reporting

Outline reasons for obtaining a letter of representation before signing the audit report.

Question

The audit engagement team of which you are a member, for the audit of Survival Ltd, has almost completed the audit of the financial statements for the year ended 31 October 2019. You have been told that your firm will need to obtain a letter of representation from management as part of the audit evidence needed to form an opinion on the financial statements.

Required:
i) Outline FOUR (4) reasons why your audit firm needs to obtain a letter of representation before the audit report is signed.
(6 marks)

ii) Outline TWO (2) factors you will consider determining the adequacy of management representation as audit evidence.
(4 marks)

Answer

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Tags: Audit evidence, Audit report, ISA 580, Letter of Representation, Management Responsibility
Level: Level 2

Topic: Completion Procedures and Reporting
Series: NOV 2020

AA – May 2016 – L2 – Q4b – Completion Procedures and Reporting

This question explains the possible audit reports that can be issued when the going concern status of a company is questioned.

Question

(b) Describe the possible audit reports that can be issued where the going concern status of a company is called into question; your answer should describe the circumstances in which they can be issued. (5 marks)

Answer

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Tags: Audit opinion, Audit Reports, Going Concern, Material Uncertainty, Modifications
Level: Level 2

Topic: Completion Procedures and Reporting
Series: MAY 2016

AA – May 2016 – L2 – Q4a – Completion Procedures and Reporting

This question outlines the external auditor's responsibilities and the work required regarding the going concern status of a company.

Question

(a) Describe external auditor’s responsibilities and the work that the auditors must perform in relation to the going concern status of companies. (5 marks)

Answer

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Tags: Audit Procedures, Audit Responsibilities, External Auditor, Going Concern, ISA 570
Level: Level 2

Topic: Completion Procedures and Reporting
Series: MAY 2016

AA – Nov 2015 – L2 – Q2c – Audit and Assurance Risk Environment, Completion Procedures and Reporting

This question covers auditors’ responsibilities for subsequent events and going concern assessments, as well as internal control reporting.

Question

c) Technolab has an internal audit department. The partner in charge of the audit is seeking clarification regarding how any deficiencies in internal control should be identified and communicated to management. The partner feels the report produced by the external auditors may duplicate the report produced by the internal audit function.

Required:
Explain how the purpose and content of an internal auditor’s report on internal control deficiencies differ from one prepared by the external auditor.
(7 marks)

Answer

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Tags: Audit Responsibilities, Going Concern, ISA 560, ISA 570, Subsequent Events
Level: Level 2

Topic: Audit and Assurance Risk Environment, Completion Procedures and Reporting
Series: NOV 2017

AA – May 2017 – L2 – Q3c – Completion Procedures and Reporting

Audit procedures for determining if PharmaCo can continue as a going concern.

Question

PharmaCo provides scientific services to a wide range of clients. Typical assignments range from testing food for illegal additives to providing forensic analysis on items used to commit crimes to assist law enforcement officers.

The annual audit is nearly complete. As audit senior, you have reported to the engagement partner that PharmaCo is having some financial difficulties. Income has fallen due to the adverse effect of two high-profile court cases by customers who bought drugs from the company.

Required:
Explain the audit procedures that may be carried out to determine whether or not PharmaCo has the ability to continue as a going concern entity.

Answer

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Tags: Audit Procedures, Cash Flow Forecasts, Going Concern, ISA 570
Level: Level 2

Topic: Completion Procedures and Reporting
Series: MAY 2017

AA – July 2023 – L2 – Q5c – Completion Procedures and Reporting

Identification of circumstances leading to modified audit opinions and types of opinions issued in each case.

Question

c) According to ISA 705: Modification of the auditor’s report, the auditor’s opinion on financial statements other than unmodified opinion depends on his/her judgement on two major circumstances.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit evidence, Audit opinion, Financial Misstatements, ISA 705
Level: Level 2

Topic: Completion Procedures and Reporting
Series: JULY 2023

AA – Nov 2023 – L2 – Q5c – Completion Procedures and Reporting

This question requires brief notes on the terms: Qualified opinion, Disclaimer of opinion, Emphasis of Matter paragraph, and Other Matter paragraph.

Question

Required:
Write brief notes on the following terms:

i) Qualified opinion
ii) Disclaimer of opinion
iii) Emphasis of Matter paragraph
iv) Other Matter paragraph
(10 marks)

Answer

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Tags: Disclaimer of Opinion, Emphasis of Matter, ISA 705, ISA 706, Other Matter Paragraph, Qualified Opinion
Level: Level 2

Topic: Completion Procedures and Reporting
Series: NOV 2023

AA – Nov 2023 – L2 – Q4b – Completion Procedures and Reporting

This question explains circumstances where the audit opinion should refer to comparative figures.

Question

Required:
Explain THREE (3) circumstances under which the audit opinion should refer to the comparatives figures.
(3 marks)

Answer

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Tags: Audit opinion, Comparative figures, Financial reporting period, ISA 710
Level: Level 2

Topic: Completion Procedures and Reporting
Series: NOV 2023

AA – Nov 2019 – L2 – Q4a – Completion Procedures and Reporting

Classifies subsequent events and indicates the required treatment in financial statements.

Question

Required:
Classify the above items and indicate the treatment required in the financial statements.
(10 marks)

Answer

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Tags: Adjusting Events, Financial Reporting, Non-adjusting Events, Subsequent Events
Level: Level 2

Topic: Completion Procedures and Reporting
Series: NOV 2019

AA – Nov 2020 – L2 – Q5c – Completion Procedures and Reporting

Discuss key matters to include in the communication with those charged with governance.

Question

Required:
Discuss the main matters that should be included in the communication with those charged with governance.
(10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit findings, Auditor’s Independence, Communication, Governance, ISA 260, Reporting
Level: Level 2

Topic: Completion Procedures and Reporting
Series: NOV 2020

AA – Nov 2020 – L2 – Q4a – Completion Procedures and Reporting

Outline reasons for obtaining a letter of representation before signing the audit report.

Question

Required:
i) Outline FOUR (4) reasons why your audit firm needs to obtain a letter of representation before the audit report is signed.
(6 marks)

ii) Outline TWO (2) factors you will consider determining the adequacy of management representation as audit evidence.
(4 marks)

Answer

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Tags: Audit evidence, Audit report, ISA 580, Letter of Representation, Management Responsibility
Level: Level 2

Topic: Completion Procedures and Reporting
Series: NOV 2020

AA – May 2016 – L2 – Q4b – Completion Procedures and Reporting

This question explains the possible audit reports that can be issued when the going concern status of a company is questioned.

Question

Answer

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Tags: Audit opinion, Audit Reports, Going Concern, Material Uncertainty, Modifications
Level: Level 2

Topic: Completion Procedures and Reporting
Series: MAY 2016

AA – May 2016 – L2 – Q4a – Completion Procedures and Reporting

This question outlines the external auditor's responsibilities and the work required regarding the going concern status of a company.

Question

(a) Describe external auditor’s responsibilities and the work that the auditors must perform in relation to the going concern status of companies. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Procedures, Audit Responsibilities, External Auditor, Going Concern, ISA 570
Level: Level 2

Topic: Completion Procedures and Reporting
Series: MAY 2016

AA – Nov 2015 – L2 – Q2c – Audit and Assurance Risk Environment, Completion Procedures and Reporting

This question covers auditors’ responsibilities for subsequent events and going concern assessments, as well as internal control reporting.

Question

Required:
Explain how the purpose and content of an internal auditor’s report on internal control deficiencies differ from one prepared by the external auditor.
(7 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Responsibilities, Going Concern, ISA 560, ISA 570, Subsequent Events
Level: Level 2

Topic: Audit and Assurance Risk Environment, Completion Procedures and Reporting
Series: NOV 2017

AA – May 2017 – L2 – Q3c – Completion Procedures and Reporting

Audit procedures for determining if PharmaCo can continue as a going concern.

Question

Required:
Explain the audit procedures that may be carried out to determine whether or not PharmaCo has the ability to continue as a going concern entity.

Answer

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Tags: Audit Procedures, Cash Flow Forecasts, Going Concern, ISA 570
Level: Level 2