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answer written by BPP in a says about ISA 560 about subsequent event ,on fact discovered after the financial statement have been issued.
Again auditor has no active duty to perform procedure during this period .if some thing is discovered then it should discuss with management how this is going to be address .if management amends the financial statement,a revised auditor report should be issued including an emphasis of matter paragraph discussing the amendment.I found this in BPP revision kit . I want to know how and why emphasis of matter paragraph will be included here ?my second question is but it is not related to LYCHEE it is just my thinking
what would be the audit opinion if management does not acknowledge their responsibility for the prepration of financial statement?, as we know that management has the responsibility for the prepration of financial statementYour question refers to a scenario where the financial statements have been issued (“discovered after the financial statement have been issued.”)
That means the audit report has also been sent out to the members of the company.
Now, what happens? A material matter has been discovered and the directors have decided to amend the financial statements. Well, of course the auditors will need to form and express an opinion on these amended financial statements.
But how can these amended statements show a true and fair view when the previous lot also apparently showed a true and fair view?
That’s why we need an emphasis of matter paragraph – fully to explain to the lovely members the situation that has arisen and that has caused us to withdraw our opinion and issue a new one
OK?
Sorry, I forgot the second part!
By the time you have read the whole of my response, I’ll bet that you wish that I had still forgotten the second part of your post!
“what would be the audit opinion if management does not acknowledge their responsibility for the prepration of financial statement?, as we know that management has the responsibility for the prepration of financial statement”
This requirement should have been brought to the attention of the directors at the preliminary meeting before we accepted appointment as auditors.
It would have been repeated in the engagement letter a copy of which they have signed and returned to us.
In our weakness letter at the end of the interim audit, we brought it to their attention again, as well as in the weakness letter to be sent on conclusion of the final audit.
In the written representations that we should have received at the end of the audit and BEFORE we committed our audit opinion, the opening paragraph would state that the directors acknowledge that it is their responsibility
In the draft audit report that we shall show to the directors, it states that it is the directors’ responsibility
Corporate governance code requires the directors to state within the directors’ report that it is their responsibility to prepare the financial statements
What on this Earth has led you to imagine that the directors could possibly refuse to acknowledge that it is their responsibility?!!!!!
Please, do not introduce anything as naive as this in your attempt at P7
than k u sir but i did not totally understand ,I would like to write question for you so that you could help me to reduce my confusion on my question for LYCHEE
LYCHEE 12/09
a Guidance on subsequent event is given in ISA 560 Subsequent
RequiredExplain the auditor responsibility in relation to subsequent event ( 6 marks )
and the answer is as I posted to you
on fact discovered after the financial statement have been issued.
Again auditor has no active duty to perform procedure during this period .if some thing is discovered then it should discuss with management how this is going to be address .if management amends the financial statement,a revised auditor report should be issued including an emphasis of matter paragraph discussing the amendment.Hi Ashok
So, did I answer your question? And those of Arun too?
I don’t see a question in your most recent posts
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