Information about MON ALMAZI

Published on June 30, 2009

Author: almazi



Slide 1: Task 1: Auditors responsibilities with regard to issues related to subsequent events. SAS 1 (AU 110) states The auditor has responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether caused by error or fraud. Because of the nature of audit evidence and the characteristics of fraud, the auditor is able to obtain reasonable, but not absolute, assurance that material misstatement is detected. The auditor has no responsibility to plan and perform the audit to obtain reasonable assurance that misstatement whether caused by errors or frauds that are not material to the financial statements are detected. . Slide 2: There are several reasons why the auditor is responsible for reasonable but not absolute assurance. First, most audit evidence results from testing a sample of a population such as accounts receivable or inventory. Second, accounting presentation contain complex estimates, which inherently involve uncertainty and can be affected by future events. Tired, fraudulently prepared financial statements are often extremely difficult, if not impossible, for the auditor to detect, especially when there is collusion among management. Auditor’s responsibilities for detecting material errors. Auditor’s responsibilities for detecting material fraud. Assessing risks of fraud. An important part of SAS 82 is the requirement that auditors specifically assess the risk of material misstatement due to fraud. The two SAS 82 categories of Risk Factors for misappropriation of assets and three Example of each. : The two SAS 82 categories of Risk Factors for misappropriation of assets and three Example of each. Slide 4: Auditor’s responsibilities for discovering illegal Act. Illegal Acts are defined in SAS 54 (AU 317) Direct effect illegal Acts. Indirect effect illegal Acts. Setting audit related auditor’s responsibilities. Management assertions related auditor’s responsibilities Existence or occurrence Completeness Valuation or allocation Rights and obligations Transaction related auditor responsibilities. Completeness Accuracy Classification Timing Posting and summarization. Balance related auditor responsibilities. Slide 5: Task 2: Identify the process of evaluating going concern status of an entity. Slide 6: The procedures that the auditors undertake for their going concern review will depend on the risk that the company may not be a going concern. In a company where profile are high, cash flows are positive, finance is in place, and there is no obvious exposure to large losses, going concern procedures are likely to be minimal. Where any doubts regarding going concern exist, procedures are more extensive. When companies go out of business, it is more likely to be due to a lack of cash then a lack of profits. Slide 7: Indication of going concern problem Net current liabilities (or net liabilities overall) Borrowing facilities not agreed. Default on loan agreements. Unplanned sales of non-current assets. Behind with paying tax payment. Behind with paying staff. Major cash outflows. Unable to obtain credit from suppliers. Major technology changes in the industry. Legal claims against the company Loss of key management or staff. Over-reliance on a small number of products or staff. Slide 8: Action an auditor can carry out to determine whether the entity is a going concern. The auditor could do the following. Review management’s plans for future actions based on its going concern basis. Seek written representation form management regarding its plans for future action. Obtain information form company bankers regarding continuance of loan facilities. Look at cash flow forecasts for the twelve months to identify if they have enough cash to trade. Review long term contracts for loss of business when the contracts com up for tender. Review legislation that the company has to comply with and ensures they are complying. Slide 9: Task 3: Identify issues relevant to auditing of smaller entities and not-for-profit organization. Slide 10: Lower risk: Smaller entities may well be engaged in activity that is relatively simple and therefore lower risk. Direct control by owner managers: Is strength because they can know what is going on and have the ability to exercise real control. Simpler systems: Smaller entitles are less likely to have sophisticated IT system, but pure, manual systems are becoming increasingly rate. Slide 11: Not-for-profit organization. Nature of the not-for-profit organization Operations Geographic location Governance Financing Management Key personnel and Related party transaction. Slide 12: Audit procedures Auditors should properly plan and control their work in the light of the accounting and auditing requirements of the charity under review. Collections form the public should be checked for validity and completeness: There should be strict numerical control over collection boxes, which should be sealed to prevent unauthorized opening. The boxes should be regularly collected, and dual counting and recording of the contents should be made. There should be dual control if possible over the opening of mail, and all postal receipts should be immediately recorded and later reconciled to cash books. Deeds of covenant should be safely filed and a regular cheek made to follow up outstanding receipts. Tex on covenants should be recovered on a regular basis if permitted. Slide 13: Auditors should cheek that: banking are made promptly banking are cheeked to receipt records regular bank reconciliations are made returned cheques are examined for date, signature, payee, endorsement, etc. Auditor’s report This should be in line with legal or constitutional requirements and in accordance with the forms of report dealt with earlier in the text. Slide 14: Conclusion Not-for-profit organizations may present significant risk for auditors, particularly where significant income is involved. There have been many cases of levels of fraud occurring in such organization, usually because internal controls have been weak or overridden. Slide 15: Types of external audit opinion Unmodified Modified Unqualified Qualified Task 4: Analyze the different types audit opinion. Slide 16: The large majority of audit reports are unmodified reports. ISA 700 contains a standard form of wording to be used, in which the auditor reports that he has no reservations in stating that the financial statements give a true and fair view. Any departure from this standard wording is called a modified audit report. Modified In a modified but unqualified report, the auditor states that although his opinion is that the financial statements give a true and fair view, there is an aspect of the accounts that he wishes to draw attention to in his report. Qualified In a qualified report, the auditor states that, due to uncertainty or disagreement, there is some aspect of the accounts either that he is unable to decide whether it gives a true and fair view, or in his opinion it does not give a true and fair view. Unmodified Slide 17: THE AUDIT REPORT The audit report is usually the only channel of communication between the auditor and the shareholders of the company whose financial statements have been subject to audit. A company's auditors must report their opinions to shareholders / members on two primary matters: Whether the financial statements give a true and fair view. Whether the financial statements have been properly prepared in accordance with relevant rules, e.g. International Accounting Standards , A particular country's legal requirements. Task 5: Describe elements of an audit report. Slide 18: The unmodified audit report consists of a number of elements which must follow ISA 700 Slide 19: TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LTD. (AUDITORS REPORT) INDEPENDENT AUDITORS' REPORT The Board of Directors and the Shareholders Taiwan Semiconductor Manufacturing Company, Ltd. 1 Appropriate title and address We have audited the accompanying financial statements of the Taiwan Semiconductor Manufacturing Company LTD. Company, which comprise the balance sheet as of 31 December, 2008, and the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and explanatory notes. 2 Introductory paragraph Management responsibly Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. Auditors responsibility Auditors responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in according with International Standards on Auditing. 3 Respective responsibilities of directors and auditors Slide 20: An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall financial statement presentation. 4 Scope paragraph In our opinion, the financial statements give a true and fair view of (or “present fairly, in all material respects,”) the financial position of the Company as of 31 December, 2008, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards. 5 Opinion 3rd March 2009 National State Auditors Association 449 Lewis Hargett Circle, Suite 290, Lexington, Kentucky. 6 Date of report, auditors address & signature Slide 21: FINANCIAL STATEMETNS ASSERTIONS Financial statements assertions are the assertions by management that are embodied in the financial statements. ISA 500 identifies the following categories of assertions: Assertions about transactions and events for the period: Occurrence Completeness Accuracy Cut- off Classification Task 7: Evaluate the importance of assertions to auditors. Slide 22: 3. Assertions about presentation and disclosure: Occurrence and rights and obligations Completeness Classification and understandability Accuracy and valuation 2. Assertions about balances at the period end: Existence Rights and obligations Completeness Valuation and allocation Slide 23: Why assertions matter to auditors The auditor chooses suitable procedures based on the nature of the item in the financial in the statements being audited. The procedures will be refined further depending on which assertion about the item the auditor is testing. Slide 24: Audit procedures Inspection of records or documents Inspection of tangible assets Observation Enquiry Confirmation Recalculation Re performance analytical procedures Task 8: From different type of audit procedures as stated above classify the different types of audit evidence.

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