℃ opening PART V (chapter 23) Good Review Requires More Than Looking At Working Papers Arens, Loebbecke, Auditing, &/E o2000 by Prentice Hall, Il
Arens, Loebbecke; Auditing, 8/E © 2000 by Prentice Hall, Inc. 23 Good Review Requires More Than Looking At Working Papers PART V (chapter 23)
LEARNING OBJECTIVES Objective 23-1 Conduct a review for contingent Objective 23-2 liabilities and commitments L Objective 23-3 Obtain and evaluate letters form the Conduct a post-balance sheet client's attorneys review for subsequent event Objective 23-4 Objective 23-5 Design and perform the final steps in Integrate the audit evidence gathered, the evidence accumulation segment and evaluate the overall audit results of the audit Objective 23-6 Obiective 23-7 Communicate effectively with Identify the auditors responsibilities the audit committee and management when facts affecting the audit report are discovered after its issuance Arens, Loebbecke, Auditing, &/E o2000 by Prentice Hall, Il
Arens, Loebbecke; Auditing, 8/E © 2000 by Prentice Hall, Inc. Objective 23 - 1 Conduct a review for contingent liabilities and commitments. LEARNING OBJECTIVES Objective 23 - 2 Obtain and evaluate letters form the client’s attorneys.. Conduct a post-balance sheet review for subsequent event. Objective 23 - 4 Design and perform the final steps in the evidence accumulation segment of the audit. Objective 23 - 5 Integrate the audit evidence gathered, and evaluate the overall audit results. Objective 23 - 6 Communicate effectively with the audit committee and management. Objective 23 - 7 Identify the auditor’s responsibilities when facts affecting the audit report are discovered after its issuance. Objective 23 - 3
A Contingent Liabilities A contingent liability is potential future obligation to an outside party for an unknown amount resulting from activities that have already taken place. Arens, Loebbecke, Auditing, &/E o2000 by Prentice Hall, Il
Arens, Loebbecke; Auditing, 8/E © 2000 by Prentice Hall, Inc. A Contingent Liabilities A contingent liability is potential future obligation to an outside party for an unknown amount resulting from activities that have already taken place
Certain contingent liabilities are of considerable concern to the auditor Pending litigation for patent infringement, product liability, or other actions · Income tax disputes Product warranties Notes receivable discounted Guarantees of obligations of others Unused balances of outstanding letters of credit Arens, Loebbecke, Auditing, &/E o2000 by Prentice Hall, Il
Arens, Loebbecke; Auditing, 8/E © 2000 by Prentice Hall, Inc. Certain contingent liabilities are of considerable concern to the auditor: • Pending litigation for patent infringement, product liability, or other actions • Income tax disputes • Product warranties • Notes receivable discounted • Guarantees of obligations of others • Unused balances of outstanding letters of credit
Audit procedures for Finding Contingencies 2 Inquire of management (orally and in writing) about the possibility of unrecorded contingencies. 2 Review current and previous years' internal revenue agent reports for income tax settlements. p Review the minutes of directors and stockholders' meetings for indications of lawsuits or other contingencies. continued Arens, Loebbecke, Auditing, &/E o2000 by Prentice Hall, Il
Arens, Loebbecke; Auditing, 8/E © 2000 by Prentice Hall, Inc. Audit Procedures for Finding Contingencies Inquire of management (orally and in writing) about the possibility of unrecorded contingencies. Review current and previous years’ internal revenue agent reports for income tax settlements. Review the minutes of directors’ and stockholders’ meetings for indications of lawsuits or other contingencies. continued