Module 12 Outline PDF
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This document outlines a seminar on auditing, specifically focusing on wrapping up the audit and evaluating results based on PCAOB standards (AS 2810). It covers topics such as analytical procedures, accumulated misstatements, and qualitative aspects of accounting practices.
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**ACCY 610: Auditing Seminar** **Wrapping up the Audit and Evaluating the Results** **Evaluating Audit Results (PCAOB Auditing Standard AS 2810)** **At the conclusion of the audit, the auditor must form an opinion (if possible).** **This evaluation should take the following into consideration:**...
**ACCY 610: Auditing Seminar** **Wrapping up the Audit and Evaluating the Results** **Evaluating Audit Results (PCAOB Auditing Standard AS 2810)** **At the conclusion of the audit, the auditor must form an opinion (if possible).** **This evaluation should take the following into consideration:** - - - - - - **Results of analytical procedures** **The auditor should read the FS and perform analytical procedures, perhaps similar to those performed for risk assessments** - **Reading the FS & the footnotes that go with those FS** - **Then perform analytical procedures** - - - - - - - - **Evaluate accumulated misstatements** **During planning, auditor established a materiality threshold for accumulating misstatements** - - - - - - - - **Evaluate accumulated misstatements** **As the audit progresses** - - - - - - **Evaluate uncorrected misstatements** - - - - - - - - **Evaluate qualitative aspects of accounting practices** **Do the accounting practices indicate management bias? For example:** - - - - **Does such bias indicate additional material misstatement?** **Evaluate Fraud Risk and FS Presentation** **Evaluate fraud risk** - - - - - - **Evaluate FS presentation** - - - - - **Evaluate Evidence** **Evaluate sufficiency and appropriateness of evidence by considering:** - - - - - **Evaluating the materiality of uncorrected misstatements** **Staff Accounting Bulletins (SABs)** - - **SAB 99 and SAB 108 both relate to the auditor's consideration of whether uncorrected misstatements are material.** **SAB 99** **We have previously considered materiality from a planning perspective** - **SAB 99 focuses on the role of materiality in evaluating detected misstatements to determine whether they must be corrected or not.** **Materiality concerns the significance of an item to users of a registrant\'s financial statements.** - **In the 1990s, auditors and managers only considered quantitative aspects when evaluating materiality of detected misstatements.** **SAB 99, requires that auditors also consider qualitative factors** **Auditors must evaluated uncorrected misstatements from a qualitative (as well as a quantitative) standpoint. -- make auditors consider the nature of the misstatement and not just the size of the misstatement** **For example, small misstatements could still be material if the misstatement:** - - - - - - - - - **SAB 99 also requires auditors to consider misstatements individually and in the aggregate.** **For example, consider the following:** - - - - - - - **SAB 108** **Prior to 2006, auditors often evaluated misstatements based on their effects on either the income statement (roll-over approach) or the balance sheet (iron curtain approach).** - - - - **SAB 108 points out that this can result in uncorrected misstatements in the current year when prior year misstatements were left uncorrected.** **SAB 108 requires that auditors evaluate the impact of misstatements on both the income statement and the balance sheet** **This approach potentially results in restatement of prior year amounts even when those prior year misstatements were judged as immaterial during the prior year audit.**
