Guide to Using International Standards on Auditing in - IFAC
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Guide to Using International Standards on Auditing in - IFAC

Guide to Using International Standards on Auditing in - IFAC Guide to Using International Standards on Auditing in - IFAC

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17.03.2014 Views

156 ong>Guideong> ong>toong> ong>Usingong> ong>Internationalong> ong>Standardsong> on Auditing in the Audits of Small- and Medium-Sized Entities Volume 1—Core Concepts Paragraph # Relevant Extracts from ISAs 560.8 If, as a result of the procedures performed as required by paragraphs 6 and 7, the audiong>toong>r identifies events that require adjustment of, or disclosure in, the financial statements, the audiong>toong>r shall determine whether each such event is appropriately reflected in those financial statements in accordance with the applicable financial reporting framework. 560.9 The audiong>toong>r shall request management and, where appropriate, those charged with governance, ong>toong> provide a written representation in accordance with ISA 580 that all events occurring subsequent ong>toong> the date of the financial statements and for which the applicable financial reporting framework requires adjustment or disclosure have been adjusted or disclosed. 560.10 The audiong>toong>r has no obligation ong>toong> perform any audit procedures regarding the financial statements after the date of the audiong>toong>r’s report. However, if, after the date of the audiong>toong>r’s report but before the date the financial statements are issued, a fact becomes known ong>toong> the audiong>toong>r that, had it been known ong>toong> the audiong>toong>r at the date of the audiong>toong>r’s report, may have caused the audiong>toong>r ong>toong> amend the audiong>toong>r’s report, the audiong>toong>r shall: (Ref: Para. A11) (a) Discuss the matter with management and, where appropriate, those charged with governance. (b) Determine whether the financial statements need amendment and, if so, (c) Inquire how management intends ong>toong> address the matter in the financial statements. 560.11 If management amends the financial statements, the audiong>toong>r shall: (a) Carry out the audit procedures necessary in the circumstances on the amendment. (b) Unless the circumstances in paragraph 12 apply: (i) Extend the audit procedures referred ong>toong> in paragraphs 6 and 7 ong>toong> the date of the new audiong>toong>r’s report; and (ii) Provide a new audiong>toong>r’s report on the amended financial statements. The new audiong>toong>r’s report shall not be dated earlier than the date of approval of the amended financial statements. 560.12 Where law, regulation or the financial reporting framework does not prohibit management from restricting the amendment of the financial statements ong>toong> the effects of the subsequent event or events causing that amendment and those responsible for approving the financial statements are not prohibited from restricting their approval ong>toong> that amendment, the audiong>toong>r is permitted ong>toong> restrict the audit procedures on subsequent events required in paragraph 11(b) (i) ong>toong> that amendment. In such cases, the audiong>toong>r shall either: (a) Amend the audiong>toong>r’s report ong>toong> include an additional date restricted ong>toong> that amendment that thereby indicates that the audiong>toong>r’s procedures on subsequent events are restricted solely ong>toong> the amendment of the financial statements described in the relevant note ong>toong> the financial statements; or (Ref: Para. A12) (b) Provide a new or amended audiong>toong>r’s report that includes a statement in an Emphasis of Matter paragraph or Other Matter(s) paragraph that conveys that the audiong>toong>r’s procedures on subsequent events are restricted solely ong>toong> the amendment of the financial statements as described in the relevant note ong>toong> the financial statements.

157 ong>Guideong> ong>toong> ong>Usingong> ong>Internationalong> ong>Standardsong> on Auditing in the Audits of Small- and Medium-Sized Entities Volume 1—Core Concepts Paragraph # Relevant Extracts from ISAs 560.13 In some jurisdictions, management may not be required by law, regulation or the financial reporting framework ong>toong> issue amended financial statements and, accordingly, the audiong>toong>r need not provide an amended or new audiong>toong>r’s report. However, if management does not amend the financial statements in circumstances where the audiong>toong>r believes they need ong>toong> be amended, then: (Ref: Para. A13-A14) (a) If the audiong>toong>r’s report has not yet been provided ong>toong> the entity, the audiong>toong>r shall modify the opinion as required by ISA 705 and then provide the audiong>toong>r’s report; or (b) If the audiong>toong>r’s report has already been provided ong>toong> the entity, the audiong>toong>r shall notify management and, unless all of those charged with governance are involved in managing the entity, those charged with governance, not ong>toong> issue the financial statements ong>toong> third parties before the necessary amendments have been made. If the financial statements are nevertheless subsequently issued without the necessary amendments, the audiong>toong>r shall take appropriate action, ong>toong> seek ong>toong> prevent reliance on the audiong>toong>r’s report. (ref. Para. A15-A16) 560.14 After the financial statements have been issued, the audiong>toong>r has no obligation ong>toong> perform any audit procedures regarding such financial statements. However, if, after the financial statements have been issued, a fact becomes known ong>toong> the audiong>toong>r that, had it been known ong>toong> the audiong>toong>r at the date of the audiong>toong>r’s report, may have caused the audiong>toong>r ong>toong> amend the audiong>toong>r’s report, the audiong>toong>r shall: (a) Discuss the matter with management and, where appropriate, those charged with governance. (b) Determine whether the financial statements need amendment and, if so, (c) Inquire how management intends ong>toong> address the matter in the financial statements. 560.15 If management amends the financial statements, the audiong>toong>r shall: (Ref: Para. A17) (a) Carry out the audit procedures necessary in the circumstances on the amendment. (b) Review the steps taken by management ong>toong> ensure that anyone in receipt of the previously issued financial statements ong>toong>gether with the audiong>toong>r’s report thereon is informed of the situation. (c) Unless the circumstances in paragraph 12 apply: (i) Extend the audit procedures referred ong>toong> in paragraphs 6 and 7 ong>toong> the date of the new audiong>toong>r’s report, and date the new audiong>toong>r’s report no earlier than the date of approval of the amended financial statements; and (ii) Provide a new audiong>toong>r’s report on the amended financial statements. (d) When the circumstances in paragraph 12 apply, amend the audiong>toong>r’s report, or provide a new audiong>toong>r’s report as required by paragraph 12. 560.16 The audiong>toong>r shall include in the new or amended audiong>toong>r’s report an Emphasis of Matter paragraph or Other Matter(s) paragraph referring ong>toong> a note ong>toong> the financial statements that more extensively discusses the reason for the amendment of the previously issued financial statements and ong>toong> the earlier report provided by the audiong>toong>r. 560.17 If management does not take the necessary steps ong>toong> ensure that anyone in receipt of the previously issued financial statements is informed of the situation and does not amend the financial statements in circumstances where the audiong>toong>r believes they need ong>toong> be amended, the audiong>toong>r shall notify management and, unless all of those charged with governance are involved in managing the entity, those charged with governance, that the audiong>toong>r will seek ong>toong> prevent future reliance on the audiong>toong>r’s report. If, despite such notification, management or those charged with governance do not take these necessary steps, the audiong>toong>r shall take appropriate action ong>toong> seek ong>toong> prevent reliance on the audiong>toong>r’s report. (Ref: Para. A18)

156<br />

<str<strong>on</strong>g>Guide</str<strong>on</strong>g> <str<strong>on</strong>g>to</str<strong>on</strong>g> <str<strong>on</strong>g>Us<strong>in</strong>g</str<strong>on</strong>g> <str<strong>on</strong>g>Internati<strong>on</strong>al</str<strong>on</strong>g> <str<strong>on</strong>g>Standards</str<strong>on</strong>g> <strong>on</strong> <strong>Audit<strong>in</strong>g</strong> <strong>in</strong> the Audits of Small- and Medium-Sized Entities Volume 1—Core C<strong>on</strong>cepts<br />

Paragraph #<br />

Relevant Extracts from ISAs<br />

560.8 If, as a result of the procedures performed as required by paragraphs 6 and 7, the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r<br />

identifies events that require adjustment of, or disclosure <strong>in</strong>, the f<strong>in</strong>ancial statements, the<br />

audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r shall determ<strong>in</strong>e whether each such event is appropriately reflected <strong>in</strong> those f<strong>in</strong>ancial<br />

statements <strong>in</strong> accordance with the applicable f<strong>in</strong>ancial report<strong>in</strong>g framework.<br />

560.9 The audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r shall request management and, where appropriate, those charged with<br />

governance, <str<strong>on</strong>g>to</str<strong>on</strong>g> provide a written representati<strong>on</strong> <strong>in</strong> accordance with ISA 580 that all events<br />

occurr<strong>in</strong>g subsequent <str<strong>on</strong>g>to</str<strong>on</strong>g> the date of the f<strong>in</strong>ancial statements and for which the applicable<br />

f<strong>in</strong>ancial report<strong>in</strong>g framework requires adjustment or disclosure have been adjusted or<br />

disclosed.<br />

560.10 The audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r has no obligati<strong>on</strong> <str<strong>on</strong>g>to</str<strong>on</strong>g> perform any audit procedures regard<strong>in</strong>g the f<strong>in</strong>ancial<br />

statements after the date of the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r’s report. However, if, after the date of the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r’s<br />

report but before the date the f<strong>in</strong>ancial statements are issued, a fact becomes known <str<strong>on</strong>g>to</str<strong>on</strong>g> the<br />

audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r that, had it been known <str<strong>on</strong>g>to</str<strong>on</strong>g> the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r at the date of the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r’s report, may have<br />

caused the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r <str<strong>on</strong>g>to</str<strong>on</strong>g> amend the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r’s report, the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r shall: (Ref: Para. A11)<br />

(a) Discuss the matter with management and, where appropriate, those charged with<br />

governance.<br />

(b) Determ<strong>in</strong>e whether the f<strong>in</strong>ancial statements need amendment and, if so,<br />

(c) Inquire how management <strong>in</strong>tends <str<strong>on</strong>g>to</str<strong>on</strong>g> address the matter <strong>in</strong> the f<strong>in</strong>ancial statements.<br />

560.11 If management amends the f<strong>in</strong>ancial statements, the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r shall:<br />

(a) Carry out the audit procedures necessary <strong>in</strong> the circumstances <strong>on</strong> the amendment.<br />

(b) Unless the circumstances <strong>in</strong> paragraph 12 apply:<br />

(i) Extend the audit procedures referred <str<strong>on</strong>g>to</str<strong>on</strong>g> <strong>in</strong> paragraphs 6 and 7 <str<strong>on</strong>g>to</str<strong>on</strong>g> the date of the new<br />

audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r’s report; and<br />

(ii) Provide a new audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r’s report <strong>on</strong> the amended f<strong>in</strong>ancial statements. The new<br />

audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r’s report shall not be dated earlier than the date of approval of the amended<br />

f<strong>in</strong>ancial statements.<br />

560.12 Where law, regulati<strong>on</strong> or the f<strong>in</strong>ancial report<strong>in</strong>g framework does not prohibit management<br />

from restrict<strong>in</strong>g the amendment of the f<strong>in</strong>ancial statements <str<strong>on</strong>g>to</str<strong>on</strong>g> the effects of the subsequent<br />

event or events caus<strong>in</strong>g that amendment and those resp<strong>on</strong>sible for approv<strong>in</strong>g the f<strong>in</strong>ancial<br />

statements are not prohibited from restrict<strong>in</strong>g their approval <str<strong>on</strong>g>to</str<strong>on</strong>g> that amendment, the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r<br />

is permitted <str<strong>on</strong>g>to</str<strong>on</strong>g> restrict the audit procedures <strong>on</strong> subsequent events required <strong>in</strong> paragraph 11(b)<br />

(i) <str<strong>on</strong>g>to</str<strong>on</strong>g> that amendment. In such cases, the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r shall either:<br />

(a) Amend the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r’s report <str<strong>on</strong>g>to</str<strong>on</strong>g> <strong>in</strong>clude an additi<strong>on</strong>al date restricted <str<strong>on</strong>g>to</str<strong>on</strong>g> that amendment<br />

that thereby <strong>in</strong>dicates that the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r’s procedures <strong>on</strong> subsequent events are restricted<br />

solely <str<strong>on</strong>g>to</str<strong>on</strong>g> the amendment of the f<strong>in</strong>ancial statements described <strong>in</strong> the relevant note <str<strong>on</strong>g>to</str<strong>on</strong>g> the<br />

f<strong>in</strong>ancial statements; or (Ref: Para. A12)<br />

(b) Provide a new or amended audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r’s report that <strong>in</strong>cludes a statement <strong>in</strong> an Emphasis of<br />

Matter paragraph or Other Matter(s) paragraph that c<strong>on</strong>veys that the audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r’s procedures<br />

<strong>on</strong> subsequent events are restricted solely <str<strong>on</strong>g>to</str<strong>on</strong>g> the amendment of the f<strong>in</strong>ancial statements<br />

as described <strong>in</strong> the relevant note <str<strong>on</strong>g>to</str<strong>on</strong>g> the f<strong>in</strong>ancial statements.

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