Review F8

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Day 4

1. Audit for inventory

2. Subsequent events

3. Going concern 4. Review

5. Case

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1. nventoryAudit ob!ective for inventory

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1. nventory

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1. nventory

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1. nventory

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1. nventory

nventory count

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1. nventory

nventorycount

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1. nventorynventory count

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"uestion

n connection wit# your e$a%ination of t#e &nancia' state%ents of Ca%ry(roducts Co) a 'i%ited 'iabi'ity co%*any) for t#e year ended 31 +arc# 2,-)you are reviewing t#e *'ans for a *#ysica' inventory count at t#e co%*any/sware#ouse on 31 +arc# 2,-. 0#e co%*any asse%b'es do%estic a**'iances)and inventory of &nis#ed a**'iances) unasse%b'ed *arts and sundry inventoryare stored in t#e ware#ouse w#ic# is ad!acent to t#e co%*any/s asse%b'y*'ant. 0#e *'ant wi'' continue to *roduce goods during t#e inventory countunti' 5*% on 31 +arc# 2,-. n 3, +arc# 2,-) t#e ware#ouse sta wi''de'iver t#e esti%ated quantities of unasse%b'ed *arts and sundry inventoryw#ic# wi'' be required for *roduction for 31 +arc# 2,- #owever) e%ergencyrequisitions by t#e factory wi'' be &''ed on 31 +arc#. During t#e inventorycount) t#e ware#ouse sta wi'' continue to receive *arts and sundry inventory)and to dis*atc# &nis#ed a**'iances. A**'iances w#ic# are co%*'eted on 31

+arc# 2,- wi'' re%ain in t#e asse%b'y *'ant unti' after t#e count #as beenco%*'eted.

Required

a 6ist t#e *rinci*a' *rocedures w#ic# t#e auditors s#ou'd carry out w#en*'anning attendance at a co%*any/s *#ysica' inventory count.

b Describe t#e *rocedures w#ic# Ca%ry (roducts s#ou'd estab'is# in order to

ensure t#at a''inventory ite%s are counted and t#at no ite% is counted twice

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4. Audit review and &na'isation

4.1 Subsequent events

Subsequent eventsare events occurringbetween the period-end and t#e date of

t#e auditor's reportand a'so inc'ude factsdiscovered after the auditor's report hasbeen issued. Auditors s#a'' consider t#eeect of suc# events on t#e &nancia'state%ents and on t#eir audit o*inion.

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AS 1, 7vents after t#e re*orting *eriod dea'swit# t#e treat%ent in t#e &nancia' state%ents ofevents) bot# favourab'e and unfavourab'e)occurring after t#e *eriod8end. 0#ere are twoty*es of event de&ned by AS 1,9

0#ose t#at *rovide evidence of conditions t#atexistedat t#e year8end date adjustingevents

0#ose t#at are indicative of conditions t#ataroseafter t#e year8end date non-adjustingevents

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4.1 Subsequent events7$a%*'e

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7$a%*'e

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SA 5:, Subsequent events *rovides guidance toauditors in t#is area. 0#e ob!ectives of t#e auditorare9

0o obtain sucient appropriate audit

evidence about w#et#er) events occurringbetween t#e date of t#e &nancia' state%entsand t#e date of t#e auditor/s re*ort t#at needadjustment or disclosure in t#e &nancia'state%ents) are *ro*er'y re;ected in t#e&nancia' state%ents

0o respond appropriately to facts t#atbeco%e

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Auditors #ave a responsibility toreview subsequent events beforet#ey sign t#e auditor/s re*ort) and %ay

#ave to ta

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1. Events occurring up to the date of theauditor's report

0#e auditor s#a'' perform procedures designed toobtainsu=cient a**ro*riate audit evidence t#at all

events up to the date of the auditor's reportt#at%ay require ad!ust%ent of) or disc'osure in) t#e&nancia' state%ents #ave been identi&ed.

0#ese *rocedures s#ou'd be a**'ied to any %atters

e$a%ined during t#e audit w#ic# %ay be susce*tib'eto c#ange after t#e year8end. 0#ey are in addition totests on specic transactions after the periodend) eg cut8o tests.

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2. acts discovered between the date of theauditor's report and the nancial statements areissued

0#e &nancia' state%ents are t#e %anage%ent/s

res*onsibi'ity. 0#ey s#ou'd t#erefore informt#e auditorsof any material subsequent events between t#edate of t#e auditors/ re*ort and t#e date t#e &nancia'

state%ents are issued. 0#e auditor does not have any

obligation to perform procedures) or ma!eenquires

regarding t#e &nancia' state%ents) after t#e date of t#ere*ort.

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2.acts discovered between""

>owever if t#e auditor beco%es aware of a fact t#at)#ad it been

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4.1 Subsequent events3. acts discovered after the nancial statementshave been issued

Auditors #ave no obligations to perform proceduresor ma!e enquiries regarding t#e &nancia' state%entsafter t#ey #ave been issued.

>owever if t#e auditor beco%es aware of a fact t#at)#ad it been

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f %anage%ent a%ends t#e &nancia' state%ents) t#eauditor s#a'' carry out any necessary *rocedures on t#ea%end%ent and review t#e ste*s ta

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4.2 Going concern

f t#e entity has inappropriately used t#e goingconcern assu%*tion or a material uncertainty exists%t#is

%ay i%*act on t#e auditor/s re*ort.

?nder t#e going concern assu%*tion) an entity is viewedas continuing in business for the foreseeable

future. @#en t#e use of t#e going concern assu%*tion isa**ro*riate) assets and 'iabi'ities are recorded

on t#e basis t#at t#e entity wi'' be ab'e to rea'ise itsassets and disc#arge its 'iabi'ities in the normal course

of business"

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4.2 Going concern

f t#e going concern basis is not a**ro*riate t#e &nancia'state%ents are *re*ared using on a brea!-up basis.

?sing t#e brea

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4.2 Going concern

SA 5, Going concern *rovides guidance to auditorsin t#is area. 0#e ob!ectives of t#e auditor are9

&o obtain sucient appropriate audit evidenceregarding t#e a**ro*riateness of %anage%ent/s use

of t#e going concern assu%*tion &o conclude whether a material uncertainty

exists re'ated to events or conditions t#at %ay castsignicant doubt on t#e entity/s abi'ity to continue

as a going concern 0o deter%ine t#e i%*'ications for t#e auditor/s re*ort

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4.2 Going concern

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Review B

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Day 1

1. Audit *ur*ose2. Audit o*inion

3. Res*onsibi'ity

4. Audit ris

Review F8

Documents

Transcript of Review F8