Auditing II Course

Completing the Audit

Professional Program of Accounting

Universitas Padjadjaran
Tahapan Audit
Tahapan Audit
Evaluasi
 Step 1

Design and perform audit tests related to

presentation and disclosure audit
objectives.
Presentation and Disclosure Audit
Objectives

Occurrence and rights and obligations:

Disclosed events and transactions have
occurred and pertain to the entity.
Completeness:
All disclosures that should have been
included in the financial statements
have been included.
 Step 2

Conduct a review for contingent liabilities

and commitments.
 Contingent Liabilities

A contingent liability is a potential future

obligation to an outside party for an
unknown amount resulting from activities
that have already taken place.

Please refer to PSAK 57: Provisi, Liabilitas Kontinjensi dan Aset

Kontinjensi
 Auditor’s Concerns

 Pending litigation for patent infringement,

product liability, or other actions
 Income tax disputes
 Product warranties
 Notes receivable discounted
 Guarantees of obligations of others
 Unused balances of outstanding letters of credit
 Audit Procedures for Finding
Contingencies

Audit Procedures

Review
Management Review BOD
Revenue
Inquiry Meeting
Agent
Minutes
Reports
 Audit Procedures for Finding
Contingencies

Audit Procedures

Obtain
Examine
Review attorney
Letters of
legal invoices letters
Credit
re: litigation

Review Audit work papers for signs of contingencies

 Step 3

Obtain and evaluate letters from the client’s

attorneys.
 Inquiry of Client’s Attorneys

A request of the law firm to identify any unlisted

pending or threatened legal actions or a
statement that the client’s list is complete.

A statement informing the attorney of the attorney’s

responsibility to inform management of legal matters
requiring disclosure in the financial statements
and to respond directly to the auditor.
 Step 4

Conduct a post-balance-sheet review for

subsequent events.
 Period Covered by Subsequent
Events Review
Client’s ending Audit Date client
balance sheet report issues financial
date date statements

12-31-09 3-11-10 3-26-10

Period to which review for Period for

subsequent events applies processing
the financial
statements
Types of Subsequent Events

 Those that have a direct effect

on the financial statements
and require adjustment
 Those that do not have a direct
effect on the financial statements
but for which disclosure is required
 Requiring Adjustment

 Declaration of bankruptcy by a customer

with an accounts receivable balance
 Settlement of a litigation at an amount
different from the amount recorded
on the books
 Disposal of equipment not being used in
operations at a price below the current
book value
 Sale of investments at a price below
recorded cost
 Advisability of Disclosure

 Decline in the market value of securities

held for temporary investment or resale
 Issuance of bonds or equity securities
 Decline in the market value of inventory
as a consequence of government action
barring further sale of a product
 Uninsured loss of inventories as a result
of fire
 A merger or an acquisition
 Audit Tests

 Inquire of management
 Correspond with attorneys
 Review internal statements prepared
subsequent to the balance sheet date
 Review records prepared subsequent
to the balance sheet date
 Examine minutes issued subsequent
to the balance sheet date
 Obtain a letter of representation
 Dual Dating

The first date is the date for the completion

of field work except for a specific exception

 The second date, which is always later,

deals with the exception

Example: An auditor returned to the client’s premises to

perform audit tests pertaining only to the acquisition and
completes those tests on March 31. The audit report will be
dual-dated as follows: March 11, 2010, except for note 17,
which is dated March 31, 2010.
 Step 5

Design and perform the final steps in the

evidence-accumulation segment of the
audit.
Final Evidence Accumulation

The five types of final evidence accumulation

1. Perform final analytical procedures.

2. Evaluate the going concern assumption.
3. Obtain a management representation letter.
4. Consider information accompanying the
basic financial statements.
5. Read other information in the annual report.
Penyusunan Folder Audit Final
 Final Analytical Procedures

Partner reads financial statements and footnotes

Unusual or Unusual items

Considers
unexpected not
adequacy of
balances or previously
evidence
relationships identified
 Going Concern Assumption

Evaluate a client’s ability to continue operating

another year

Use analytical
Assess as Update
part of initial procedures &
based on
make final
planning audit results
assessment
 Kelangsungan Usaha
• Laporan keuangan bertujuan umum disusun atas suatu
basis kelangsungan usaha, kecuali manajemen
bermaksud untuk melikuidasi entitas atau menghentikan
operasinya, atau tidak memiliki alternatif yang realistis
selain melakukan tindakan tersebut di atas.
• Tanggung jawab auditor adalah untuk mengevaluasi
apakah penggunaan asumsi kelangsungan usaha tepat,
dan untuk menyimpulkan apakah terdapat suatu
ketidakpastian material untuk mempertahankan
kelangsungan usahanya.
Evaluasi Kelangsungan Usaha
 Management Representation Letter

Purposes of the letter:

1. To impress upon management its responsibility
for the assertions in the financial statements.
2. To remind management of potential misstatements
or omissions in the financial statements.
3. To document the responses from management
to inquiries about various aspects of the audit.
 Four Categories in
Management Representation Letter

Auditing standards suggest four categories of

specific matters:

Recording and
Responsibility Completeness Recognition,
disclosing
for financial of measurement,
subsequent
statements information and disclosure
events
 Information Accompanying Basic
Financial Statements

Balance sheet
Income statement Basic Standard
financial auditor’s
Statement of statements report
cash flows
Footnotes
Detailed comparative Information
statements accompanying
basic financial
Statistical data statements
Schedule of
insurance coverage Separate paragraph –
unqualified, qualified,
or disclaimer
 Step 6

Integrate the audit evidence gathered and

evaluate the overall audit results.
 Evaluate Results
 Sufficient appropriate evidence
 Evidence supports auditor’s opinion
 Financial statement disclosures
 Audit documentation review
 Independent review
 Summary of evidence evaluation
Evaluating Results and Reaching
Conclusions
 Step 7

Communicate effectively with the audit

committee and management.

Those Charged with Governance

Communicate with the Audit Committee
and Management

 Communicate fraud and illegal acts

 Communicate internal control deficiencies
 Other communication with audit committee
 Management letters
 Step 8

Identify the auditor’s responsibilities when

facts affecting the audit report are
discovered after its issuance.
 Review for Subsequent Events and
Discovery of Facts
Client’s ending Audit Date client
balance sheet report issues financial
date date statements

12-31-09 3-11-10 3-26-10

Period to which Period for Period in which

review for processing subsequent
subsequent the financial discovery of
events applies statements facts is made