Guide to Using International Standards on Auditing in - IFAC

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<strong>Guide</strong> <strong>to</strong> <strong>Using</strong> <strong>International</strong> <strong>Standards</strong> on Auditing in the Audits of Small- and Medium-Sized Entities Volume 1—Core Concepts
Date of Financial Statement Approval
This may be determined as shown in the exhibit below.
Exhibit 13.1-2
Date of the Report
The Recognized
Authority
Need for
Shareholder
Approval
The earlier date on which those with the recognized authority:
• Determine that all the statements that comprise the financial statements,
including the related notes, have been prepared; and
• Have asserted that they have taken responsibility for those financial statements.
• Individuals prescribed by law or regulation who follow the necessary financial
statement approval procedures; and
• Individuals specified by the entity itself who follow their own financial
statement approval procedures.
Final approval by shareholders is not necessary for the audi<strong>to</strong>r <strong>to</strong> conclude that
sufficient appropriate audit evidence on which <strong>to</strong> base the audi<strong>to</strong>r’s opinion on the
financial statements has been obtained.
In determining the existence of subsequent events and assessing their impact, the audi<strong>to</strong>r would carry out the
steps set out below.
Exhibit 13.1-3
Procedure
Identify Any
Subsequent
Events
Description
Perform audit procedures <strong>to</strong> identify any subsequent events that would require
adjustment of, or disclosure in, the financial statements. This would include:
• Understanding management procedures (if any) <strong>to</strong> identify subsequent events;
• Making inquiries of management (and those charged with governance) about:
– New commitments, borrowings, or guarantees,
– Sales or acquisitions of assets that have occurred or are planned,
– Increases in capital or issuance of debt instruments,
– Agreements <strong>to</strong> merge or liquidate,
– Assets that have been appropriated by government or destroyed (e.g., by
fire or flood),
– Litigation, claims, and contingencies,
– Any unusual accounting adjustments made or contemplated,
– Any events that have occurred or are likely <strong>to</strong> occur that will bring in<strong>to</strong>
question the appropriateness of the going-concern assumption or other
accounting policies,
– Any events relevant <strong>to</strong> the measurement of estimates or provisions in the
financial statements, and
– Any events relevant <strong>to</strong> the recoverability of assets;
• Reading minutes, if any, of the meetings (management and those charged with
governance) held after the date of the financial statements, and inquiring about
matters discussed at meetings for which minutes are not yet available; and
• Reading financial reports produced after the period end, if any.