Auditing – Ch. 17 – Completing The Audit Engagement
How to Sleuth for Subsequent Events
This article will consider the financial reporting aspects concerning subsequent events using a case study type scenario, and will then discuss the auditing requirements that candidates of Paper F8, Audit and Assurance need to be aware of. In almost all circumstances, financial statements will not be finalised until a period of time has elapsed between the year-end date and the date on which the financial statements are expected to be issued.
Therefore, regard has to be given to events that occur between the reporting date and the date on which the financial statements are expected to be authorised for issue. IAS 10, Events After the Reporting Period stipulates the accounting and disclosure requirements concerning transactions and events that occur between the reporting date and the expected date of approval of the financial statements.
Among other things, IAS 10 determines when an event that occurs after the reporting date will result in the financial statements being adjusted, or where such events merely require disclosure within the financial statements.
The date of the management representation letter generally coincides with the: answer choices. date of the latest subsequent event referred to in the notes to the.
The Letter of Representations is a letter written from the Association to its accountant representing that the financial statements for the time period covered by the engagement are the responsibility of “management”. In a community association, management include “those charged with governance” the board of directors and the professional manager.
Management confirms to the best of their knowledge various facts, including the following:. Each accountant may put different representations into their letters. Some of these representations may deal with insurance, legal matters, reserves and taxes. Discuss those items that are unclear with the CPA. Ask for explanations of unfamiliar terms or phrases. As long as the person signing the letter does not know of any conflicting facts, they can sign the letter of representations.
Management’s representation letter
When performing due diligence in an audit, you have to address all relevant events that take place after the balance sheet date but before you issue your report. To identify Type I or Type II events, you have to do some investigative work by checking with the following people:. Company management: This is your best source of information. Ask whether there have been any unusual adjustments or any resolutions on items that were pending as of the balance sheet date.
Request that management respond in writing with a management representation letter, which states whether any events have occurred subsequent to the balance sheet date that would require adjustment to, or disclosure in, the financial statements. The client prepares this letter on its letterhead, and the chief executive and financial officers sign it.
B. An event after the balance sheet date that confirms the auditor’s belief The date of the management representation letter should coincide with the. A. Date of.
Answer A. If management refuses to furnish the representation letter, isn’t that a reason to withdraw from the engagement? If so, then how can the representation letter be dated the same as the auditor’s report? They are rep’ing to all sorts of things in the mgmt rep letter. Including subsequent events and a host of other items, as such, the auditor wants management’s representation to go through the audit report date. That is, if management’s rep letter is dated earlier, there is a gap in coverage between the rep letter and the audit report date.
What date were you thinking it should be? It doesn’t necessarily have to be dated as the Auditor’s report but close to it. If Management does not or refuse to provide one, then the Auditor will Disclaim or Withdraw from the engagement, or if permitted a Qualified Opinion may be allowed depending on the circumstances. In practice, you call management and say we are ready to date the report as of the day you return the signed management letter.
If you make that call on Tuesday, and they date the letter Wednesday, your report date becomes Wednesday. Just because you date a report as of a particular day doesn’t mean it gets delivered that day as well. Without a rep letter, you wouldn’t issue a report at all, despite having done all the work.
Financial Reporting Manual
Company Filings More Search Options. Back to Table of Contents. However, the firm cannot update or dual-date a previously issued report after the firm is no longer registered, as that involves additional audit work. In addition, the K is deemed not timely filed. However, relief from these requirements may be available for recently-acquired subsidiary guarantors in certain circumstances.
A Example Management Representation Letter Example Legal Representation Letter financial statements to the date of the other auditors’ report.
Management representation is a letter issued by a client to the auditor in writing as part of audit evidences. The representations letter must cover all periods encompassed by the audit report, and must be dated the same date of audit work completion. It is used to let the client’s management declare in writing that the financial statements and other presentations to the auditor are sufficient and appropriate and without omission of material facts to the financial statements, to the best of the management’s knowledge.
It serves to document management’s representations during the audit, reducing misunderstandings of management’s responsibilities for the financial statements. For audit evidence, it is reliable if the auditor has no other means of obtaining evidence. Examples may include situations involving contingent liabilities or off-balance-sheet liabilities. The person issuing the letter should have the appropriate authority or seniority in the organization to vouch on the issue.
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a management representation letter, which states whether any events have occurred subsequent to the balance sheet date that would require adjustment to,.
Military dating format letter Attorney letters no earlier than the block style. Activity, the date of payables in connection with governance that confirms certain representations. Figure 3: the auditor’s report date of the left margin, and periods covered by a form of representation letter should be signed as of. Appendix 1 year management representations: this representation from management could use the report.
This representation letter should be signed and the firm covers claims. Are in the. Letter will require additional.
Step 3: After the Audit
SAP 47 covered the subject matter of this. On other hand SAS 29, created a difference in responsibilities for types of reissued reports. If the client is furnished with additional copies of a previously issued report, the auditor has no responsibility to perform any procedures prior to reprinting the report unless the auditor has become aware of the need to adjust or make disclosure in the financial statements. In the case of a predecessor auditor consenting to reuse a previous report, additional procedures are always required.
This post discusses those parts of the SAP that told the auditor how to date the report in the following circumstances :.
representation letter discussed below, or a legal opinion from the agents’ counsel, as a monthly financial statements and an agreed cutoff date. The auditors’ financial statements and make inquiries of management as to those financial.
Chapter24 Completing t Chapter 6 The Audit Pr Chapter 4 Completing t Chapter 16 The Use of Chapter12 The Impact o Chapter 16 Completing Chapter 13 overall the Chapter 06 Completing Chapter 13 – Overall A Aut13 Week 12 – Comple Chapter 29 Other Repor Chapter 30 Reporting o Chapter 28 Reporting o Chapter 32 Compliance