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Define schedules in audit work that is carried out. What are the components of a schedule in particular schedules from management and from auditiors ?
“Schedule” is the expression used to describe the working papers prepared by the audit team (or by the audit client’s own personnel) and which, when put together on the audit file, can then be presented for review by the audit manager and then audit partner. They hold the evidence of audit work carried out and the conclusions reached by the audit team based on the audit work carried out.
These schedules are the basis for the partner’s opinion on truth and fairness
There will be schedules to support all the material matters within the financial statements. Historically, these schedules were hand-written but, in the last 20 – 30 years, audit schedules tend to be prepared and held on computers.
The more schedules that are prepared by management, the less extensive should be the work of the auditor. If management do no work in preparing the schedules, that means the auditor will have to do it all – and that’s expensive.
If management prepare all the relevant schedules, the involvement of the auditor is reduced to that of merely checking the accuracy of the schedule-preparer’s work – and that’s a lot less expensive
OK?
What are the contents of a typical schedule prepared. And schedules prepared by management are later audited by the auditor on which audit opinion is based ?
Give me an example of a schedule prepared by management and the reason why they are prepared and what information apart from the financial statements the auditor can extract from them.
And what differences might be between management made schedules and auditor made schedules. And why management prepare schedules ?
Hmm, I’ve read through this post 3 times already and I still cannot find a request. I see a number of “instructions” such as “Give me an example of a schedule prepared by management and the reason why they are prepared….” but the entire post seems to be lacking in any sort of professional respect.
Rather, I feel like I am being interrogated and that it’s my DUTY to respond to these orders.
Well, Droga, I’m not obliged to obey your instructions and, until I start seeing some sort of politeness in your posts, I shall refuse to answer them
I answered your first post on this thread but assumed that you had simply overlooked the element of polite conversation. It appears from this latest thread that my assumption was incorrect
I look forward to hearing from you again 🙂
I apologize for what you felt about my questions but it wasn’t even slightly intended as to what u felt like. I respect you for what you doing for individual students pursuing there accounting studies and may be it was because of the rush of the time that i got stuck up to the points i recognize my mistake.
Never mind if u don’t like to answer my post just wanted to make myself clear with what u felt about my questions.
Thank you for answering to my questions and on behalf of all other students who admire you and this website.
Cheers !! 🙂I am putting my questions up again in order to make up for my mistake
Hi Mike,
In response to your answer, can you please tell me the contents of a schedule and the difference between schedule prepared by management and prepared by the auditor and what it comprise of ? And working papers are primarily the property of auditors than why management prepare them ? and what part of working paper can be done by the management ?
Thanks.Looking forward to your response.
Kind Regards.
Hi Droga
No (permanent) harm done
Working papers / audit schedules – in the old-fashioned traditional sense – were hand-written schedules showing how the figures on the balance sheet and Income Statement were arrived at. Nowadays, they could well be stored on computer and simply transferred from the client to the auditor
So, for a schedule about TNCA, there would be separate columns for the different classes / categories of TNCA and separate lines for “brought forward”,”revaluations”, “additions”,”disposals at cost”,”carried forward” together with another schedule showing the movements in the accumulated depreciation calculations
These could easily be prepared by the chief financial officer and given to the auditor. The total figures on the schedule would agree with the CFO’s figures on the draft balance sheet.
The auditors would then audit the changes (additions, revaluations and disposals) to confirm that, in their opinion, the CFO had arrived correctly at a true and fair summary
The only difference between a schedule prepared by management and one prepared by the auditor is …..who prepared it! They both serve the same purpose of supporting a figure / amount within the financial statements
Yes, working papers ARE the property of the auditor so, when management GIVE their version of working papers to the auditor, they become the auditors’ property. If not, all the auditor would have to do is photocopy the client’s schedules
Management prepare lots of working papers – think about receivables. Management will prepare a list of receivables, age-analysed, and maybe even include an indication of the likelihood of receipt of the amount due or a summary of the up-to-date position with reference to the collectability of the debt
I gather from your question that you have never been on an audit!
Yes i have never been on an audit that is why lack the practical substance of experience being in an audit firm.
Thank you for your assistance and for this valuable insight.
Cheers.Hello I have read the discussion and it has been very clear indeed. A few general questions. I am about to sit three exams in June F5, F6 and & F7 (I might just put F6 on hold until Sept – what do you think – I work as well)?
In terms of the ACCA course and syllabus, is there anywhere that covers the issue concerning the preparation of schedules as was being discussed earlier?
The real concern though is, I am embarking on these exams and I want to ensure that on this occasion I am doing things that I will actually use in the working world. In other words, Sir Tutor (Mr. Mike Little), can you say from your own experience/knowledge that the contents of the ACCA syllabus are truly going to be relevant to my career in terms of work actually being done? I am a little concerned as I need to ensure that unlike a lot of things in my first degree, on this occasion I am truly going to be using these things I need to learn.
You certainly ARE going to be using stuff learned through your ACCA studies
Your working life will give you multiple opportunities to draw on matters learned for ACCA qualification.
By the time you are needing to refer to them, the World will have moved on so what you study and learn today may not be applicable in the same format in 5, 10, 20 years’ time.
(I learned how to use a slide rule to speed up my calculations (calculators had not been invented when I did my exams!) but I’ve not for many many years had the need to remember how a slide rule works)
But in 20 years’ time you will know that there is technical thinking about these matters and you will have a reasonable idea where you can look up the current thinking
Ok?
Thank you so very much Sir, for your insight on the subject. Would you be kind enough to also answer my first two questions in the first two paragraphs?
Thanks in advance for your help, truly appreciated.
Regards
When I did my exams, it was a REQUIREMENT that we do 5 exams in two and a half days.
Can you manage three over a period of one week? I would think that’s possible
Anywhere that covers the topic of preparing schedules? Not that I’m aware of
Sorry I failed to answer those earlier
No problem Sir, thanks very much for the help provided. Thanks to Open Tuition as well, I need no other!!
Thanks and regards
O’Neil
when completing an audit, auditors utilize an ‘under& over schedule’ what is this document called? and also how does the concept of materiality play a role in the final analysis of this document?
“when completing an audit, auditors utilize an ‘under& over schedule’ what is this document called?” – interesting question! I believe, from what you have written, that’s it’s called an ‘under& over schedule’
I can’t believe that that is really what you wanted me to answer, but that’s the strictly correct answer to your question!
Now, “an ‘under& over schedule’ “. The expression is one with which I am not familiar. I shall take a guess and ask that you see whether my guess fits with your understanding.
Throughout the course of the audit, the audit team will have been identifying errors and compiling a schedule of those errors. Towards the end of the audit work, the senior in charge will prepare a schedule with a narrative column and 4 value columns
For each error discovered, the senior will identify the effect on the financial statements were the error to be corrected and will enter the value of the error into (probably) two columns in the schedule – one to increase or decrease the profits for the year and the other to increase the assets or the liabilities on the statement of financial position
At the end of the exercise, it will be a summary of the aggregation of errors discovered throughout the audit and will address the issue of immaterial individual errors being ignored when the aggregation of those errors is material
Does that seem to be a reasonable fit?
Hello Mike,
First of all, thank you for the descriptive explanation above, that was very insightful. (I am suddenly very conscious as to how I am going to phrase my question)
I find that I struggle with coming up with the names of the document when questions ask for audit evidence. Obviously, I lack the working experience that I feel would help with my situation better.
Anyways, you mentioned listing for receivables. Can you tell me which other areas in the financial statements you would obtain a listing for, please? (when it comes to audit evidence). I can think of inventory and payables, correct me if I’m wrong.
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