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Auditing - Essay Example

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Auditing Table of Contents Subsequent Events 3 Solutions 4 Reference 8 Bibliography 9 Subsequent Events According to the Auditing Standard under section 560, when external auditors conduct auditing in a firm, they usually refer to the historical financial evidences that connect to the present financial statement…
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Auditing

Download file to see previous pages... These occurrences are known as subsequent events.1 There are two types of subsequent events which an external auditor must evaluate: Firstly, the auditors must consider those evidences which involved conditions with respect to those that existed at the date of the balance sheet and it would affect the financial statements. All the information that is achieved prior to the issuance of the financial statements should be taken into consideration. The second types of event are those events that did not existed even at the time of balance sheet. Some of these types of events are such that disclosing this information would save the financial statements form being misleading. The effects of the subsequent events can be seen in the assets such as receivables and inventories or in the estimation of liabilities because these kinds of events represent the functionalities which exist over a long period of time.2 After the balance sheet date is over, there is a time period when the auditors are concerned about completing their different phase of audits. This time period is known as subsequent period and this period extends till the date of the auditor's report. This period may vary from time to time depending on the situations. In addition to the main duties, it is also the task of the external auditor to conduct other auditing procedures and require adjusting and disclosing the essential financial events and occurrences so as to present a completely transparent report, according to the stated accounting principles.3 Solutions Further Audit Evidences This study is on the Platinum Pokie Club in Western Australia. The evidences in the subsequent period are giving for the external audit firm to analyze their outcomes. Audit evidences are basically the information that auditors use for arriving at a conclusion. Auditors do not examine all the information given because generally many of the information are cumulative in nature that is they occur over a long period of time and may sometimes be analyzed after the date of balance sheet during the subsequent period. Audit evidences are more reliable when they are receiving from external sources that are unbiased. The evidences acquired directly by the auditor are more authentic that information received indirectly. Moreover, information available in a documented form is trusted more than verbally transmitted information.4 The financial controller of the club reported on 5th august, before the auditor’s report, that Mr. Tan, the general manager has made fraudulent expenses claims of $ 40000 over 5 years. The profit and loss account for the five years during which Mr. Tan was working in the club should be properly analyzed. All the evidences supporting all the expenditures should be received and then estimate the actual amount of fraud expenditures. Moreover, the account details of Mr. Tan can be collected with the help of police authorities to see his bank balances. In the second evidence we see Ms. Peters taking legal action against the company and claiming medication and damage charge from the club. For this kind of even, solicitor's advice can be taken, so as to see the likelihood of the customer winning the case and estimate the costs that they would be incurring. The financial controller informed on 18th of August about some serious fire that occurred during a football celebration. For this the insurance money has already been received. But the problem is that the bistro and bar would remain close ...Download file to see next pagesRead More
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