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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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4.1 Subsequent events
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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4.1 Subsequent events
7$a%*'e
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4.1 Subsequent events
SA 5:, Subsequent events *rovides guidance toauditors in t#is area. 0#e ob!ectives of t#e auditorare9
0o obtain sucient appropriate audit
evidence about w#et#er) events occurringbetween t#e date of t#e &nancia' state%entsand t#e date of t#e auditor/s re*ort t#at needadjustment or disclosure in t#e &nancia'state%ents) are *ro*er'y re;ected in t#e&nancia' state%ents
0o respond appropriately to facts t#atbeco%e
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4.1 Subsequent events
Auditors #ave a responsibility toreview subsequent events beforet#ey sign t#e auditor/s re*ort) and %ay
#ave to ta
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4.1 Subsequent events
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4.1 Subsequent events
1. Events occurring up to the date of theauditor's report
0#e auditor s#a'' perform procedures designed toobtainsu=cient a**ro*riate audit evidence t#at all
events up to the date of the auditor's reportt#at%ay require ad!ust%ent of) or disc'osure in) t#e&nancia' state%ents #ave been identi&ed.
0#ese *rocedures s#ou'd be a**'ied to any %atters
e$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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4.1 Subsequent events
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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4.1 Subsequent events
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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4.1 Subsequent events
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