Review of working paper

All audit work should be reviewed by an audit team member senior to the person preparing the working papers. Thus, senior-in-charge should conduct a detailed review of the working papers prepared by the staff and follow up on any unresolved problems or issues. In turn, the manager should review all working papers although the extent of the managers review may vary with how much the manager relies on the senior-in-charge. The engagement partner normally reviews working papers related to critical audit areas as well as working papers prepared by the manager. In reviewing the working papers, the viewers must ensure that the working papers document that the audit was properly planned and supervised, that he evidence supports the assertions tested, and that the evidence is sufficient for the type of audit report issued.

Final assessment of audit result

During the source of an audit engagement, a variety of audit test are performed. These often performed by staff personnel whose participation in the audit may be limited to a few areas or accounts. As the tests for each functional area or statement items are completed, the staff auditor is expected to summarize his or her findings. It is necessary in completing the audit for the separate findings to be summarized and evaluated for the purpose of expressing an opinion on the financial statement taken as a whole. The ultimate responsibility for these steps rests with the partner in charge of the engagement. In some cases, the audit manager makes the initial determinations that are then carefully reviewed by the partner. The evaluation of the results of the financial audit is concerned with two issues: (1) the sufficiency of the audit evidence; and (2) the effects of detected misstatements in the financial statements. In evaluating the audit evidence, the auditor determines whether there is sufficient evidence to support each relevant assertion. This evaluation considers evidence obtained to support the assessment of inherent and control risk. If this evaluation indicated that the evidence is not sufficient to meet the planned level of audit risk, the auditor may need to gather additional evidence. Any misstatements detected during the audit process must be considered in terms of their effects on the financial statements. In particular, the auditor must compare the amount of uncorrected misstatements to arrive at the amount of materiality allocated to the relevant component of the financial statement. The auditor should also consider the effects of uncorrected misstatements on aggregated components of the financial statements such as assets, liabilities equity, revenues and expenses. Before reaching a final decision on the opinion, a conference is generally held with the client. At this meeting, the auditor reports the findings orally and attempts to provide a rationale for proposed adjustments and/or additional disclosures. Managements, in turn, may attempt to defend its position. In the end, some agreement is generally reached on the changes to be made and the auditor can proceed to issue an unmodified opinion. When such an agreement is not

obtained, the auditor may have to issue another type of opinion. Communication of the auditors opinion is made through an audit report. Evaluating financial statement presentation and disclosure: Either the client or the auditor normally prepares a draft of the financial statements, including notes. The auditor reviews the financial statements to ensure compliance with the applicable financial reporting framework, proper presentation of accounts, and inclusion of all necessary disclosure. Most audit firms use some types of financial statement checklist that is completed by the auditor who performs the initial review of the financial statements. The completed checklist is hen reviewed by the manager and partner in charge of the engagement. The checklist includes matters pertaining to the form and content of each basic financial statements as well as the required disclosures. The completed checklist and the findings of the reviewers should be included in the working papers.

.Independent engagement quality review

Most audit firms have a policy requiring an independent (or second) review by concurring partner of the financial statements and audit reports for listed companies and those financial statements expected to be widely distributed. Auditing standards (psa220) require for the audit of financial statement of listed companies that the engagement partner appoints an engagement quality review. The reviewer is generally not associated with details of the engagement and is expected to provide an independent review. An engagement quality review should include an objective evaluation of the significant judgments made by the engagement team and the conclusion reached in formulating the auditors reports. The extent of the review depends on the complexity of the audit engagement and the risk that the auditors report might not be appropriate in the circumstances.