Topic: Completion Procedures and Reporting

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  • 10 Marks

AA – Nov 2024 – L2 – Q4b – Audit Report and Basis for Opinion

Justify the audit report type and draft the basis for the opinion section.

You are part of the audit team auditing a client in the retail business. During your risk assessment procedures, you were informed by management that accounts receivable records in one of the company’s branches were destroyed in a fire. The company is in the process of obtaining these accounts receivable records but was not able to do so prior to the approval of the financial statements. The fire incident happened on 31 December 2023 and the estimated amount involved is GH¢20 million. The audit team assessed that they are unable to obtain sufficient appropriate audit evidence due to inadequate accounting records. Possible effects are deemed material but not pervasive.

Required:
i) Justify the type of audit report to be issued in the above scenario.

ii) Draft the basis for the above opinion section of the auditor’s report.

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  • 15 Marks

AA – Nov 2024 – L2 – Q4a – Going Concern Considerations and Audit Reporting

Outline factors raising concerns about going concern and how auditors should report findings.

During the audit of Darko Retail LTD, the audit team from Zalia Audit Firm observed that management has not performed a formal assessment of the entity’s ability to continue as a going concern. It was noted that though the financial statements show a favourable financial position, the company has been facing liquidity issues and has not been able to secure funds for a significant loan due shortly after the balance sheet date.

Required:
i) Outline FOUR factors that can raise questions about the going concern of Darko Retail LTD in the absence of a formal assessment by management.

ii) Describe how the audit team should report their findings related to the going concern assumption in their auditor’s report if they conclude that a material uncertainty exists but is not adequately disclosed in the financial statements.

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  • 10 Marks

AA – July 2023 – L2 – Q5c – Completion Procedures and Reporting

Identification of circumstances leading to modified audit opinions and types of opinions issued in each case.

c) According to ISA 705: Modification of the auditor’s report, the auditor’s opinion on financial statements other than unmodified opinion depends on his/her judgement on two major circumstances.

Required:
i) State the TWO (2) circumstances that may result in an audit opinion being modified. (2 marks)
ii) Discuss the types of opinion that may be issued under each of the two circumstances. (8 marks)

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  • 10 Marks

AA – Nov 2023 – L2 – Q5c – Completion Procedures and Reporting

This question requires brief notes on the terms: Qualified opinion, Disclaimer of opinion, Emphasis of Matter paragraph, and Other Matter paragraph.

ISA 705: Modifications to the opinion in the independent auditor’s report and ISA 706: Emphasis of Matter paragraphs and Other Matter paragraphs in the independent auditor’s report provide modifying phrases for use when issuing modified reports.

Required:
Write brief notes on the following terms:

i) Qualified opinion
ii) Disclaimer of opinion
iii) Emphasis of Matter paragraph
iv) Other Matter paragraph
(10 marks)

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  • 3 Marks

AA – Nov 2023 – L2 – Q4b – Completion Procedures and Reporting

This question explains circumstances where the audit opinion should refer to comparative figures.

ISA 710: Comparative information—corresponding figures and comparative financial statements deals with audit work on corresponding amounts and other comparative information for the preceding financial reporting period.

Required:
Explain THREE (3) circumstances under which the audit opinion should refer to the comparatives figures.
(3 marks)

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  • 10 Marks

AA – Nov 2019 – L2 – Q4a – Completion Procedures and Reporting

Classifies subsequent events and indicates the required treatment in financial statements.

During the audit of Die Hard Company Limited, the following items were listed on the file divider under subsequent events:
i) Kodjo Armah, a major debtor for GH¢400,000 has been found to be insolvent.
ii) Large quantities of stocks were destroyed by fire in the first month after the reporting date.
iii) Judgment in respect of litigation that was ongoing before the year-end has been given against the company shortly after the end of the financial year. The judgment debt was GH¢5 million.
iv) Two customers had put in a claim in respect of goods sold to them under warranty before the year-end of GH¢300,000 and GH¢450,000 respectively. No provision was made for warranty claims in the financial statements.
v) The company issued fresh equity shares after the year-end. The number of shares was 2.5 million which generated GH¢5 million.

Required:
Classify the above items and indicate the treatment required in the financial statements.
(10 marks)

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  • 10 Marks

AA – Nov 2020 – L2 – Q5c – Completion Procedures and Reporting

Discuss key matters to include in the communication with those charged with governance.

You have completed the audit engagement for ABC Company Ltd, and the engagement partner has asked the audit manager to bring the draft communication with those charged with governance for discussion. You were among the audit field staff who performed the audit and prepared the working papers and documented issues for management’s considerations.

Required:
Discuss the main matters that should be included in the communication with those charged with governance.
(10 marks)

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  • 10 Marks

AA – Nov 2020 – L2 – Q4a – Completion Procedures and Reporting

Outline reasons for obtaining a letter of representation before signing the audit report.

The audit engagement team of which you are a member, for the audit of Survival Ltd, has almost completed the audit of the financial statements for the year ended 31 October 2019. You have been told that your firm will need to obtain a letter of representation from management as part of the audit evidence needed to form an opinion on the financial statements.

Required:
i) Outline FOUR (4) reasons why your audit firm needs to obtain a letter of representation before the audit report is signed.
(6 marks)

ii) Outline TWO (2) factors you will consider determining the adequacy of management representation as audit evidence.
(4 marks)

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  • 5 Marks

AA – May 2016 – L2 – Q4b – Completion Procedures and Reporting

This question explains the possible audit reports that can be issued when the going concern status of a company is questioned.

(b) Describe the possible audit reports that can be issued where the going concern status of a company is called into question; your answer should describe the circumstances in which they can be issued. (5 marks)

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  • 5 Marks

AA – May 2016 – L2 – Q4a – Completion Procedures and Reporting

This question outlines the external auditor's responsibilities and the work required regarding the going concern status of a company.

(a) Describe external auditor’s responsibilities and the work that the auditors must perform in relation to the going concern status of companies. (5 marks)

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  • 10 Marks

AA – Nov 2024 – L2 – Q4b – Audit Report and Basis for Opinion

Justify the audit report type and draft the basis for the opinion section.

You are part of the audit team auditing a client in the retail business. During your risk assessment procedures, you were informed by management that accounts receivable records in one of the company’s branches were destroyed in a fire. The company is in the process of obtaining these accounts receivable records but was not able to do so prior to the approval of the financial statements. The fire incident happened on 31 December 2023 and the estimated amount involved is GH¢20 million. The audit team assessed that they are unable to obtain sufficient appropriate audit evidence due to inadequate accounting records. Possible effects are deemed material but not pervasive.

Required:
i) Justify the type of audit report to be issued in the above scenario.

ii) Draft the basis for the above opinion section of the auditor’s report.

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  • 15 Marks

AA – Nov 2024 – L2 – Q4a – Going Concern Considerations and Audit Reporting

Outline factors raising concerns about going concern and how auditors should report findings.

During the audit of Darko Retail LTD, the audit team from Zalia Audit Firm observed that management has not performed a formal assessment of the entity’s ability to continue as a going concern. It was noted that though the financial statements show a favourable financial position, the company has been facing liquidity issues and has not been able to secure funds for a significant loan due shortly after the balance sheet date.

Required:
i) Outline FOUR factors that can raise questions about the going concern of Darko Retail LTD in the absence of a formal assessment by management.

ii) Describe how the audit team should report their findings related to the going concern assumption in their auditor’s report if they conclude that a material uncertainty exists but is not adequately disclosed in the financial statements.

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  • 10 Marks

AA – July 2023 – L2 – Q5c – Completion Procedures and Reporting

Identification of circumstances leading to modified audit opinions and types of opinions issued in each case.

c) According to ISA 705: Modification of the auditor’s report, the auditor’s opinion on financial statements other than unmodified opinion depends on his/her judgement on two major circumstances.

Required:
i) State the TWO (2) circumstances that may result in an audit opinion being modified. (2 marks)
ii) Discuss the types of opinion that may be issued under each of the two circumstances. (8 marks)

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  • 10 Marks

AA – Nov 2023 – L2 – Q5c – Completion Procedures and Reporting

This question requires brief notes on the terms: Qualified opinion, Disclaimer of opinion, Emphasis of Matter paragraph, and Other Matter paragraph.

ISA 705: Modifications to the opinion in the independent auditor’s report and ISA 706: Emphasis of Matter paragraphs and Other Matter paragraphs in the independent auditor’s report provide modifying phrases for use when issuing modified reports.

Required:
Write brief notes on the following terms:

i) Qualified opinion
ii) Disclaimer of opinion
iii) Emphasis of Matter paragraph
iv) Other Matter paragraph
(10 marks)

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  • 3 Marks

AA – Nov 2023 – L2 – Q4b – Completion Procedures and Reporting

This question explains circumstances where the audit opinion should refer to comparative figures.

ISA 710: Comparative information—corresponding figures and comparative financial statements deals with audit work on corresponding amounts and other comparative information for the preceding financial reporting period.

Required:
Explain THREE (3) circumstances under which the audit opinion should refer to the comparatives figures.
(3 marks)

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  • 10 Marks

AA – Nov 2019 – L2 – Q4a – Completion Procedures and Reporting

Classifies subsequent events and indicates the required treatment in financial statements.

During the audit of Die Hard Company Limited, the following items were listed on the file divider under subsequent events:
i) Kodjo Armah, a major debtor for GH¢400,000 has been found to be insolvent.
ii) Large quantities of stocks were destroyed by fire in the first month after the reporting date.
iii) Judgment in respect of litigation that was ongoing before the year-end has been given against the company shortly after the end of the financial year. The judgment debt was GH¢5 million.
iv) Two customers had put in a claim in respect of goods sold to them under warranty before the year-end of GH¢300,000 and GH¢450,000 respectively. No provision was made for warranty claims in the financial statements.
v) The company issued fresh equity shares after the year-end. The number of shares was 2.5 million which generated GH¢5 million.

Required:
Classify the above items and indicate the treatment required in the financial statements.
(10 marks)

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  • 10 Marks

AA – Nov 2020 – L2 – Q5c – Completion Procedures and Reporting

Discuss key matters to include in the communication with those charged with governance.

You have completed the audit engagement for ABC Company Ltd, and the engagement partner has asked the audit manager to bring the draft communication with those charged with governance for discussion. You were among the audit field staff who performed the audit and prepared the working papers and documented issues for management’s considerations.

Required:
Discuss the main matters that should be included in the communication with those charged with governance.
(10 marks)

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  • 10 Marks

AA – Nov 2020 – L2 – Q4a – Completion Procedures and Reporting

Outline reasons for obtaining a letter of representation before signing the audit report.

The audit engagement team of which you are a member, for the audit of Survival Ltd, has almost completed the audit of the financial statements for the year ended 31 October 2019. You have been told that your firm will need to obtain a letter of representation from management as part of the audit evidence needed to form an opinion on the financial statements.

Required:
i) Outline FOUR (4) reasons why your audit firm needs to obtain a letter of representation before the audit report is signed.
(6 marks)

ii) Outline TWO (2) factors you will consider determining the adequacy of management representation as audit evidence.
(4 marks)

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  • 5 Marks

AA – May 2016 – L2 – Q4b – Completion Procedures and Reporting

This question explains the possible audit reports that can be issued when the going concern status of a company is questioned.

(b) Describe the possible audit reports that can be issued where the going concern status of a company is called into question; your answer should describe the circumstances in which they can be issued. (5 marks)

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  • 5 Marks

AA – May 2016 – L2 – Q4a – Completion Procedures and Reporting

This question outlines the external auditor's responsibilities and the work required regarding the going concern status of a company.

(a) Describe external auditor’s responsibilities and the work that the auditors must perform in relation to the going concern status of companies. (5 marks)

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