TOP AUDITING ISSUES FOR 2013 - CCH

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TOP AUDITING ISSUES FOR 2013 CPE COURSE
c. Incorrect. The clarified standard on opening balances states that the auditor
is responsible for determining whether prior period closing balances are
brought forward correctly and reflect appropriate application of accounting
policies, and for evaluating whether current period audit procedures provide
evidence about opening balances by means of either performing specific
procedures related to opening balances or reviewing a predecessor auditor’s
work. Reviewing a predecessor’s audit documentation cannot by itself provide
sufficient appropriate evidence regarding opening balances.
d. Incorrect. The clarified standard on communicating internal control matters
requires auditors to include in their written communication an explanation
of the potential effects of the significant deficiencies and material weaknesses
identified. It does not, however, require them to quantify those effects.
3. a. Correct. The auditor is prohibited, under the new standards, from
elaborating in the auditor’s report about management’s responsibility,
or making any reference to another document that does so. This might
lead users of the report to the erroneous conclusion that the auditor is
expressing assurances about any representations made by management
concerning its responsibilities.
b. Incorrect. The emphasis-of-matter paragraph is a new concept in the
clarified standards. It is used in the auditor’s report to refer to a matter that
is appropriately presented or disclosed in the financial statements.
c. Incorrect. The new auditor’s report contains paragraphs that expand
significantly on the auditor’s responsibilities as contrasted with those of
management.
d. Incorrect. Other-matter paragraphs are a new concept in the clarified
standards. When present in the auditor’s report, they are required to follow
the opinion paragraph and to be included in a separate section under the
caption “other-matter.”
4. a. Incorrect. Engagement letters will need to be updated to reflect changes
in standards, particularly as they pertain to management’s responsibilities
in the audit.
b. Incorrect. If the firm is relying on outdated practice aids after the effective
date of the new standards, it will most likely be out of compliance with
the new standards. Thus, maintaining current subscriptions to third-party
practice aids is crucial during the implementation of the new standards.
c. Incorrect. The firm’s quality control document will likely need to be
updated to reflect changes in the firm’s audit methodologies resulting from
the new standards.
d. Correct. The new standards do not contain significant substantive
changes in the requirements for auditing cash; thus the audit program
would be unlikely to change significantly.