Completing the audit, review of financial statements and audit reporting
Completing the audit
Procedures include reviewing subsequent events, going concern assessment, obtaining written representations, and reviewing working papers. Also consider contingent liabilities and commitments.
Review of financial statements
Final review ensures financial statements comply with applicable framework and are consistent with auditor's knowledge. Analytical procedures at review stage help identify unusual items.
Audit reporting
The auditor forms an opinion based on evidence. Types of opinion: unmodified (unqualified), qualified (except for), adverse, disclaimer. Modifications depend on nature of matter (material vs pervasive) and whether misstatement or inability to obtain evidence. Emphasis of Matter and Other Matter paragraphs do not modify opinion.
Traps in questions
- Confusing qualified opinion with adverse.
- Assuming Emphasis of Matter modifies opinion (it doesn't).
- Forgetting that going concern issues may lead to modification.
- Overlooking written representations as audit evidence.
- Mixing up material vs pervasive.
Worked example / rule of thumb
If a misstatement is material but not pervasive, issue qualified opinion. If material and pervasive, adverse. If inability to obtain evidence material but not pervasive, qualified; if material and pervasive, disclaimer. Rule: material + pervasive = adverse (misstatement) or disclaimer (scope limitation).
Key points
- Subsequent events and going concern are key completion procedures.
- Written representations are required.
- Opinion types: unmodified, qualified, adverse, disclaimer.
- Emphasis of Matter does not modify the opinion.
- Materiality and pervasiveness determine type of modification.