AUE3702 EXAM PACK UPDATED.

AUE3702 EXAM PACK. AUE3702 - Substantive Procedures And Finalising An Audit. Audit the bank reconciliation at 30 June 2015 - Agree the cashbook balance of to cash book - Agree the balance per bank statement of to the bank confirmation letter and cut off bank statement - Follow outstanding cheques specifically (cheque13521) through to cash back before year end - Agree the amount of 1455 698 - Agree the date as 30 June 2015 - follow outstanding deposits on the reconciliation (specifically receipts 1369) through to the cash book before year end - follow the deposit through to the following months bank statement, ensure first deposit in the new year - Follow outstanding cheques through to the following month’s bank statement or valid supporting documents if not yet drawn - compare the outstanding cheques with the mail register ensure posted before year end, if not add back as creditors - investigate reasons for long outstanding cheques , consider whether cheques should not be written back written back - agree the balance per cash book to the list, trial balance and financial statements - test castings and calculations - test outstanding cheques on the reconciliation for understatement at year end ; - select cheques through the bank after year end (from cut off bank statement ) compare it with the list of outstanding cheques , or entry in cash book after year end . 12 Subsequent Events Audit Procedures to identify Possible Significant Events in terms of ISA 560 - the auditor shall take into account the auditors risk assessment in determining the nature and extend of such audit procedures which shall include ; a) Obtaining and understanding of any procedures management has established to ensure that subsequent events are identified b) inquiring of management and those charged with governance as to whether any subsequent events have occurred which might affect statements c) Reading minutes, if any of the meetings of the entity’s owner’s management and these charged with governance that have been held after the date of the financial statement d) Enquire about matters discussed@ any such meetings for which minutes are not yet available f) Auditors shall request management to provide a witten representation that all events occurring subsequent to the date of financial statements g) discuss the matter with management h) Determine whether the financials need amendment i) inquire how management intends to address the matter 5. UNRESOLVED MATTERS -effect of each unresolved matter on the audit report of Edison for the year ended 30 June 2015 Unresolved matter 1 - Asset are being overstated by 3800 000 - The overstatement is above final materiality of 3500 000 - It is therefore quantitatively material as it exceeds matenality by 300 000 - Management refused to correct the overstatement - It is therefore a disagreement with management - Trade receivables will only affect certain confined balances not the whole statements - It is not pervasive - The audit report will be qualified 13 Unresolved matter 2 - Considering that management could not identify and reconcile the lost accounting information, the auditor was unable to detain sufficient appropriate audit evidence - Several weeks’ worth of accounting information was lost which might lead to the issue being quantitatively material. - Edson retail stores work on 100% paperless basis , and management could not identify the lost accounting information, this is regarded as qualitatively material - As the information lost relates to various transactions including sales this is regarded as pervasive. - Auditor shall disclaim the opinion because; (i) He is unable to obtain sufficiently audit evidence (ii) He 13concludes that the possible effects on the statement could be both material and pervasive AUE 3702 – OCTOBER / NOVEMBER 2015 1. Substantive audit procedures to audit credit sales for the year ending 31 December 2015 - General procedures - Obtain management representation letter confirming the accuracy of credit sales - Review the sales journal and general ledger account for extraordinary items and follow it up - Compare with the budget and previous years amount, investigate reasons for deviations , fluctuation - Perform final analytical procedures e.g