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what are features and characteristics of audit plan,i mean what things are included in audit plan and is it amended during the course of the audit
Think of the audit plan as a route map of instructions directing the members of the audit team to focus on relevant areas.
It will include such mundane matters as logistics but also an identification of potential problem areas, deadlines, management letter points brought forward, matters outstanding from last year, key personnel, the overall audit strategy ……
If errors are found, audit senior will frequently recompute materiality and the plan may need to change as a result
It too many “errors” are found in a test of control that we wished to rely on, audit senior may abandon tests of control, decrease materiality level and switch to substantive approach. So, yes, the plan may need to change during thcourse of the audit
Thankyou very much dear tutor
one more thing to ask is that the risk assessment procedures used in Audit plan are the same as the risk assessment process which is at the start of the audit using analytical procedures and knowledge of the business or they are two different thingsIn answer to the first of your two posts, yes, the same
In answer to your second post, analyse WHY (what caused) the change in ROCE. was in a change in asset/turnover, a change in gross profitability or a combination of the two. Now, make deeper enquiry when you have determined the answer to your investigations about the cause
In answer to the first of your two posts, yes, the same
In answer to your second post, analyse WHY (what caused) the change in ROCE. was in a change in asset/turnover, a change in gross profitability or a combination of the two. Now, make deeper enquiry when you have determined the answer to your investigations about the cause
whats the purpose of doing receivable circulisation and inventory count DURING the INTERIM AUDIT
Receivables circularisation – to confirm at interim audit stage that the systems for controlling and recording transactions with credit customers is in fact operating in the efficient way that management hope it is operating
Inventory – to confirm that perpetual inventory records do in fact appear to be well maintained, up to date and apparently reliable
Does that answer it?
Hopefully there is no such thing as “usual” material misstatements. If there are, you should think about resigning your position as auditor and let another firm sort out the problem!
I’m not even sure in which direction your question is trying to lead me. I genuinely do not know how to begin to answer it
Sorry i did not clarified my point.it was that what are the usual threats to the listed company that could pose the material effect on the financial staements
Sir, i have listened that adverse opinion is given when misstatement is material to two relevance of materiality E.g to gross assets and net profit and not to revenue.if its wrong then what are basis for giving an adverse opinion
Usual threats to a listed company audit which could pose a material affect on the financial statements? I’m not aware of any “usual treats” There is an additional risk for the auditor in that the financial statements are for a listed company so will be scrutinised by a far greater number than if they were for a non-listed company so, in theory at least, the auditors will potentially reduce their materiality levels to give even greater assurance that true and fair is satisfied
Does that answer it?
re the adverse opinion post, I have to concede that I have never ever heard of such an approach. In fact, in the part of the World where I am, it seems that the auditors arrive at materiality based on the three measures and then average them to arrive at a single materiality amount. Now, to be honest, I don’t see how that works! Fortunately, I have never been an auditor in this part of the World so this approach is totally alien to me. However ….. it appears to work in practice and there have been no high-profile actions brought against the local auditors – and that includes offices of all the big 4 as well as other “second tier” auditors (Grant Thornton, BDO, Pannell Kerr Forster, Moore Stephens etc etc)
if an amount which is uncorrected is material to two measures of the materiality e.g profit and gross assets.could the adverse opinion be given?
re your first post, if it’s a material misstatement in the context of two measures, is it SO material as to change the view of the financial statements in the mind of an informed reader?
If the answer to that is “Yes” then it would seem that an adverse opinion could be seen to be appropriate.
But this criterion about “changing the view” is very much a subjective one and could differ from one partner to another, even within the same firm
“what do you mean by “change the view the reader’.” I have never written that!
Are you really a P7 student? The definition of materiality (which you should have come across at the F8 level) involves the expression “change the view of the financial statements in the mind of an informed reader”
A material matter becomes a pervasive matter when the issue, if uncorrected, would render the financial statements “misleading” (pervasive material misstatement) or “misleading ie meaningless” (pervasive inability to obtain sufficient appropriate audit evidence)
Is that any clearer?
Does husband & wife working as audit senior in an audit firm and are ACCA qualified ,consider conflict of interest or any other
breach to ethcisNo! You’ll find that there are many family relationships which started as a result of working together. In my former job as an employed tutor, 7 out of 10 of my colleagues were married to accountants. Where else are you going to meet people of comparable intelligence and similar interests – particularly when accountants in this part of the World are starting their INCREDIBLY BUSY season and having to work late into the night – sometimes all night and all the next day too.
In answer, no, no conflict
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