Directors’ assessment of going concern focusses on (3)
- Preparation and review of forecasts and budgets
- Review of lending facilities
- Review of any pending legal cases
Requirement for the auditor to review two statements in relation to going concern
- Director’s statement in the financial statements about the appropriateness of the going concern basis
- Director’s explanation of the prospects of the entity, the period considered and whether that is appropriate
If auditor does not consider disclosure to be adequate regarding subsequent event
Constitutes a material misstatement and appropriate audit report must be given
Extent of subsequent events review will depend on
Length of time between completion of fieldwork and date of auditors report
If subsequent events are identified, should be tested
Substantively
Summary of audit misstatements (SAM)
Record of all misstatements identified, excluding those that are clearly trivial
Consider when determining of misstatement requires revision of audit procedures performed (3)
- The misstatement is an isolated incident
- There is evidence of a breakdown in internal control
- Inappropriate assumptions or methods have been applied elsewhere
Once misstatement corrections have been made, the auditor will
Re-evaluate the risk of material misstatement, focusing on both individual items and the financial statements overall
Representation letters are usually provided by management but drafted by
The auditor
Internal completion documents (3)
- Points forward schedule
- Audit highlights memorandum
- Accounts disclosure checklist
Audit opinion cannot be issued until
EQCR review has been concluded
