Steps taken by the auditor where client has departed from accounting standard.
– Consider materiality of item. Consider the item in comparison with total of all class of items it relates to
– Consider the impact of departure in financial statements
– Check wither the departure has been properly disclosed and presented by ways of a note to financial statements
– Confirm whether the directors have the intention of correcting the departure by ensuring compliance in subsequent financial statements
– Consider reasons for departure from directors
– Consider whether the reasons for departure are justified
– Consider the possibility of the directors preparing revised financial statements with the correct financial statements i.e. statements that have complied with all the standards
– If the matter is material and the directors fail to do-operate to either revise the statements or disclose by way of note, the auditor should consider qualifying the audit report.
- An auditor is required to state whether, in his opinion proper books of account have been kept and whether the financial statements give a true and fair view of the state of the financial affairs of the company being audited. What are the consequences, to the auditor, for giving an unqualified opinion, when he knows that there are material inaccuracies in financial statements
- In carrying out an audit, the auditor appraises the tests and the system of internal control in order to ascertain that it is capable of processing transactions or determining the quantities and values completely and accurately. The auditorfurther carries out substantive tests in an attempt to ensure that the transactions, assets and liabilities recorded in the accounting records upon which the figures in the financial statements are based, are completely and accurately recorded.Required;List and briefly explain the substantive tests the auditor would carry out to verify the values attributed to: Trade and debtors in a company‘s financial statements and trade creditors in a company‘s financial statements
- The information acquired by the auditor from his client in the course of his professional work should not be disclosed to any third party except where consent has been obtained from the client. Required: Explain five circumstances under which an auditor can disclose such information to an appropriate authority without client‘s permission
- What is the form of audit opinion you would give if you concluded that the client company was experiencing going concern problems and:you have established that the financial statements give sufficient disclosure of the going concern problems? And you have established that there is no disclosure of the going concern problems in the financial statements?
- It has often been said that the auditors‘ report is the formal result of all his efforts. This being the case, it is very important that the reader well understands the meaning of the Audit Report, particularly where the auditor wishes to qualify his opinion on the financial statements. Under statutory provision, what are the main contents of the auditors‘ report?