Book description
Written by Steven Collings, winner of Accounting Technician of the Year at the British Accountancy Awards 2011, this book deals with the significant changes auditing has undergone in recent years, due in large part to well-publicised corporate disasters such as Enron and Parmalat, which have shaken the profession. In response, many countries have replaced pre-existing domestic standards with International Standards on Auditing (ISAs) in an attempt to ensure that auditors throughout the world apply the same level of standards during all audit assignments, and that audit quality remains consistent on a global basis.
International Standards on Auditing are frequently updated to improve and clarify their application throughout the audit and accounting profession. They can be extremely complex and difficult to apply in real life situations. It is essential to apply the standards with sufficient rigor to enable an efficient audit to take place, to satisfy the regulators and ensure that the client receives and audit which is beneficial, cost effective, and which conforms to the prescribed framework; however, auditors are often criticised for failing to do so.
Recognising that auditing is not always an exact science, and that in many cases the auditor is called upon to make a judgement in situations open to differing opinions, this book takes a practical and pragmatic approach to following International Standards on Auditing. Steve Collings looks at the full ISAs in their final form, as reissued following the IAASB 'Clarity Project', and give auditors guidance on how to interpret and apply them in real life situations. Each redrafted or rewritten ISA is dealt with in a separate chapter, containing case studies and illustrative examples. The book also covers the regulatory framework of auditing and gives a summary of the five ethical standards applicable to auditors, as mapped by the IAASB. Detailed appendices provide an overview of IFRS and IAS, illustrative audit tests and illustrative financial statements.
Table of contents
- Cover
- Title Page
- Copyright
- Preface
- Acknowledgements
- About the Author
- Chapter 1: The History of Auditing
-
Chapter 2: The Clarity Project
- ISA 600 (revised and redrafted) The Audit of Group Financial Statements
- ISA 550 (revised and redrafted) Related Parties
- ISA 540 (revised and redrafted) Auditing Accounting Estimates, Including Fair Value Accounting Estimates and Related Disclosures
- ISA 265 Communicating Deficiencies in Internal Control to Those Charged with Governance and Management
- ISA 450 Evaluation of Misstatements Identified During the Audit
- ISA 530 Audit Sampling
- ISA 260 Significant Difficulties
- ISA 570 Going Concern
- Auditor’s Reports
- Chapter 3: The Code of Ethics for Professional Accountants
- Chapter 4: ISA 200 (revised and redrafted) Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing
- Chapter 5: ISA 210 (redrafted) Agreeing the Terms of Audit Engagements
- Chapter 6: ISA 220 (redrafted) Quality Control for an Audit of Financial Statements
- Chapter 7: ISA 230 (revised) Audit Documentation
- Chapter 8: ISA 240 (redrafted) The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements
- Chapter 9: ISA 250 (redrafted) Consideration of Laws and Regulations in an Audit of Financial Statements
- Chapter 10: ISA 260 (revised and redrafted) Communication with Those Charged with Governance
- Chapter 11: ISA 265 Communicating Deficiencies in Internal Control to Those Charged with Governance and Management
- Chapter 12: ISA 300 (redrafted) Planning an Audit of Financial Statements
- Chapter 13: ISA 315 (redrafted) Identifying and Assessing the Risks of Material Misstatement Through Understanding the Entity and its Environment
- Chapter 14: ISA 320 (revised and redrafted) Materiality in Planning and Performing an Audit
- Chapter 15: ISA 330 (redrafted) The Auditor’s Responses to Assessed Risks
- Chapter 16: ISA 402 (revised and redrafted) Audit Considerations Relating to an Entity Using a Service Organisation
- Chapter 17: ISA 450 (revised and redrafted) Evaluation of Misstatements Identified during the Audit
-
Chapter 18: ISA 500 (redrafted) Audit Evidence
- METHODS OF OBTAINING AUDIT EVIDENCE
- AUDIT PROCEDURES AND THE FINANCIAL STATEMENT ASSERTIONS
- RECURRING AUDITS
- USE OF MANAGEMENT REPRESENTATIONS AS AUDIT EVIDENCE
- THE USE OF EXPERTS AS AUDIT EVIDENCE
- EVALUATING THE EXPERT’S WORK FOR AUDIT EVIDENCE
- SELECTION AND SAMPLING TECHNIQUES
- DOCUMENTATION AND WORKING PAPERS
- REVIEW
- Chapter 19: ISA 501 (redrafted) Audit Evidence — Specific Considerations for Selected Items
- Chapter 20: ISA 505 (revised and redrafted) External Confirmations
- Chapter 21: ISA 510 (redrafted) Initial Audit Engagements — Opening Balances
- Chapter 22: ISA 520 (redrafted) Analytical Procedures
- Chapter 23: ISA 530 (redrafted) Audit Sampling
- Chapter 24: ISA 540 (revised and redrafted) Auditing Accounting Estimates, Including Fair Value Accounting Estimates, and Related Disclosures
- Chapter 25: ISA 550 (revised and redrafted) Related Parties
-
Chapter 26: ISA 560 (redrafted) Subsequent Events
- AUDIT PROCEDURES ON SUBSEQUENT EVENTS PRIOR TO THE DATE OF THE AUDITOR’S REPORT
- SUBSEQUENT EVENTS DISCOVERED AFTER THE DATE OF THE AUDITOR’S REPORT BUT BEFORE THE FINANCIAL STATEMENTS ARE ISSUED
- FINANCIAL STATEMENTS AMENDED BEFORE ISSUE BUT AFTER THE DATE OF THE AUDITOR’S REPORT
- ADJUSTING AND NON-ADJUSTING EVENTS
-
Chapter 27: ISA 570 (redrafted) Going Concern
- GOING CONCERN PRESUMPTION
- PERIOD COVERED BY THE ASSESSMENT OF GOING CONCERN
- PRELIMINARY ASSESSMENT
- EVALUATION OF MANAGEMENT’S ASSESSMENT OF GOING CONCERN
- SUFFICIENT AND APPROPRIATE AUDIT EVIDENCE
- BORROWING FACILITIES
- AUDIT PROCEDURES WHEN EVENTS OR CONDITIONS ARE IDENTIFIED
- INFORMATION SYSTEMS
- REPORTING
- Chapter 28: ISA 580 (revised and redrafted) Management Representations
-
Chapter 29: ISA 600 (revised and redrafted) Special Considerations — Audits of Group Financial Statements (Including the Work of Component Auditors)
- CONSOLIDATION PROCESS
- ACCEPTANCE AS GROUP ENGAGEMENT PARTNER
- OBTAINING AN UNDERSTANDING OF THE GROUP, ITS COMPONENTS AND THE ENVIRONMENT IN WHICH THEY OPERATE
- MATERIALITY
- SUBSEQUENT EVENTS
- CONSOLIDATING SUBSIDIARIES REPORTING UNDER ALTERNATIVE GAAP
- COMMUNICATION
- PROCEDURES FOR PLANNING AND UNDERTAKING GROUP AUDITS
- PROCEDURES FOR COMPLETION OF GROUP AUDITS
- Chapter 30: ISA 610 (redrafted) Using the Work of Internal Auditors
- Chapter 31: ISA 620 (revised and redrafted) Using the Work of an Auditor’s Expert
- Chapter 32: ISA 700 (revised) Forming an Opinion on the Financial Statements
- Chapter 33: ISA 705 (revised and redrafted) Modifications to the Opinion in the Independent Auditor’s Report
- Chapter 34: ISA 706 (revised and redrafted) Emphasis of Matter Paragraphs and Other Matter(s) Paragraphs in the Independent Auditors’ Report
- Chapter 35: ISA 710 (redrafted) Comparative Information — Corresponding Figures and Comparative Financial Statements
- Chapter 36: ISA 720 (redrafted) The Auditor’s Responsibilities Relating to Other Information in Documents Containing Audited Financial Statements
- Chapter 37: ISA 800 (revised and redrafted) Special Considerations — Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks
- Chapter 38: ISA 805 (revised and redrafted) Special Considerations — Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement
-
Chapter 39: ISA 810 (revised and redrafted) Engagements to Report on Summary Financial Statements
- ACCEPTANCE
- UNACCEPTABLE APPLIED CRITERIA OR UNOBTAINABLE MANAGEMENT AGREEMENT
- AUDIT PROCEDURES
- REPORTING
- MODIFIED OPINIONS
- ADVERSE OR DISCLAIMER OF OPINIONS
- DISTRIBUTION
- COMPARATIVES
- UNAUDITED SUPPLEMENTARY INFORMATION
- OTHER INFORMATION WITHIN SUMMARY FINANCIAL STATEMENTS
- TIMING AND SUBSEQUENT EVENTS
- AUDITOR ASSOCIATION
- Chapter 40: The Framework for the Preparation and Presentation of Financial Statements
-
Chapter 41: IFRS for Small and Medium Entities (SMEs)
- SMALL–MEDIUM ENTERPRISE
- FALL BACK TO FULL IFRS
- COMPLIANCE WITH IFRS FOR SMEs
- EXCEPTIONS TO THE RETROSPECTIVE APPLICATION OF OTHER IFRSS
- FULL-COST OIL AND GAS ASSETS
- DETERMINING WHETHER AN ARRANGEMENT CONTAINS A LEASE
- OPTIONAL EXEMPTIONS FROM THE BASIC MEASUREMENT PRINCIPLES IN IFRS 1
- IFRS FOR SMEs VERSUS UK GAAP
- INVESTMENT PROPERTIES
- FIXED ASSET REVALUATION
- BORROWING COSTS
- INTANGIBLE ASSETS — DEVELOPMENT COSTS
- GOODWILL AND INTANGIBLE ASSETS
- REVALUATION OF INTANGIBLE ASSETS
- LEASES
- BUSINESS COMBINATIONS
- REVENUE RECOGNITION
- DEFERRED TAXATION
- ASSOCIATES AND JOINT VENTURES (CONSOLIDATED FINANCIAL STATEMENTS)
- DEFINED BENEFIT PENSION SCHEMES
- STOCK (INVENTORY) VALUATION
- ACCOUNTING POLICIES
- AGRICULTURE
- SUBSIDIARY UNDERTAKINGS
- FINANCIAL INSTRUMENTS
- DERECOGNITION OF A FINANCIAL INSTRUMENT
- DERIVATIVES
- HEDGE ACCOUNTING
- DIVIDENDS FROM ASSOCIATES AND JOINT VENTURES
- PROPERTY, PLANT AND EQUIPMENT
- NEGATIVE GOODWILL
- MEASUREMENT OF SHARES
- Chapter 42: ISQC 1 ‘Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements’
-
Appendix 1: Overview of IFRS and IAS
- IFRS 1 ‘FIRST-TIME ADOPTION OF IFRS’
- EXEMPTIONS
- DISCLOSURE
- IFRS 2 ‘SHARE-BASED PAYMENT’
- IFRS 3 ‘BUSINESS COMBINATIONS’
- DISCLOSURE REQUIREMENTS
- AMENDMENTS TO IFRS 3
- IFRS 4 ‘INSURANCE CONTRACTS’
- IFRS 5 ‘NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS’
- DISCONTINUED OPERATIONS
- IFRS 6 ‘EXPLORATION FOR AND EVALUATION OF MINERAL RESOURCES’
- IFRS 7 ‘FINANCIAL INSTRUMENTS: DISCLOSURE’
- QUALITATIVE DISCLOSURES
- QUANTITATIVE DISCLOSURES
- IFRS 8 ‘OPERATING SEGMENTS’
- IFRS 9 ‘FINANCIAL INSTRUMENTS’
- INITIAL RECOGNITION OF FINANCIAL ASSETS
- THE BUSINESS MODEL FOR RECOGNITION OF FINANCIAL ASSETS
- WITHDRAWAL OF OTHER TYPES OF FINANCIAL ASSET
- EMBEDDED DERIVATIVES
- OPTION TO RECOGNISE AT FAIR VALUE
- RECLASSIFICATION
- INVESTMENTS IN EQUITY INSTRUMENTS
- MEASUREMENT
- IMPAIRMENT
- CHANGES IN FAIR VALUE OF FINANCIAL ASSETS
- FINANCIAL LIABILITIES
- IAS 1 ‘PRESENTATION OF FINANCIAL STATEMENTS’
- GOING CONCERN
- ASSESSING GOING CONCERN
- BUDGETS AND FORECASTS
- SENSITIVITY ANALYSIS AND ‘STRESS-TESTING’
- BORROWING FACILITIES
- CONTINGENT LIABILITIES
- PRODUCTS AND SERVICES
- TIMING OF CASH FLOWS
- PERIOD OF REVIEW
- DISCLOSURES
- NO MATERIAL UNCERTAINTIES
- MATERIAL UNCERTAINTIES BUT THE GOING CONCERN BASIS IS APPROPRIATE
- GOING CONCERN BASIS IS INAPPROPRIATE
- OFFSETTING
- ACCOUNTING POLICIES
- IAS 2 ‘INVENTORY’
- COST
- VALUATION
- NET REALISABLE VALUE
- IAS 7 ‘STATEMENT OF CASH FLOWS’
- DIRECT AND INDIRECT METHOD
- BASIS OF PREPARATION
- IAS 8 ‘ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRORS’
- ACCOUNTING POLICIES
- CHANGES IN ACCOUNTING POLICY
- CHANGES IN ESTIMATION TECHNIQUES
- ERROR
- IAS 10 ‘EVENTS AFTER THE REPORTING PERIOD’
- ADJUSTING EVENT
- NON-ADJUSTING EVENT
- IAS 11 ‘CONSTRUCTION CONTRACTS’
- REVENUE
- CONTRACT COST
- PROFIT-MAKING CONTRACTS
- LOSS-MAKING CONTRACTS
- UNCERTAIN CONTRACTS
- PERCENTAGE OF COMPLETION METHOD
- DOUBLE ENTRY
- RECTIFICATION COSTS
- IAS 12 ‘INCOME TAXES’
- CURRENT TAX
- DEFERRED TAX
- DEFERRED TAX ASSETS
- DEFERRED TAX LIABILITIES
- DISCOUNTING TO PRESENT DAY VALUES
- DEFERRED TAX IN UK GAAP
- DEFERRED TAX ASSETS
- DEFERRED TAX LIABILITIES
- UK INDUSTRIAL BUILDINGS ALLOWANCE
- GOVERNMENT GRANTS IN THE UK
- DISCOUNTING DEFERRED TAX
- CURRENT DEVELOPMENTS
- IAS 16 ‘PROPERTY, PLANT AND EQUIPMENT’
- INITIAL MEASUREMENT
- SUBSEQUENT MEASUREMENT
- DEPRECIATION
- IMPAIRMENT
- SUBSEQUENT EXPENDITURE
- IAS 17 ‘LEASES’
- OPERATING LEASES
- FINANCE LEASES
- LESSOR ACCOUNTING
- EXISTING REQUIREMENTS
- PROPOSED REQUIREMENTS
- MEASUREMENT OF ASSETS AND LIABILITIES
- IMPLEMENTATION
- IAS 18 ‘REVENUE’
- IAS 19 ‘EMPLOYEE BENEFITS’
- SHORT-TERM EMPLOYEE BENEFITS
- POST-EMPLOYMENT BENEFITS
- OTHER LONG-TERM EMPLOYEE BENEFITS
- TERMINATION BENEFITS
- IAS 20 ‘ACCOUNTING FOR GOVERNMENT GRANTS AND DISCLOSURE OF GOVERNMENT ASSISTANCE’
- GOVERNMENT GRANTS
- GOVERNMENT ASSISTANCE
- GOVERNMENT GRANTS: RECOGNITION
- IAS 21 ‘THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES’
- FOREIGN CURRENCY TRANSACTIONS
- IAS 23 ‘BORROWING COSTS’
- CAPITALISATION RATE
- IAS 24 ‘RELATED PARTY DISCLOSURES’
- RELATED PARTIES
- WHO IS A RELATED PARTY?
- ONE DIRECTOR IN COMMON
- PERSONS ACTING ‘IN CONCERT’
- IAS 26 ‘ACCOUNTING AND REPORTING BY RETIREMENT BENEFIT PLANS’
- IAS 27 ‘CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS’
- CONSOLIDATED FINANCIAL STATEMENTS
- CONSOLIDATION PROCEDURE
- SEPARATE FINANCIAL STATEMENTS
- IAS 28 ‘INVESTMENTS IN ASSOCIATES’
- EQUITY METHOD
- IAS 29 ‘FINANCIAL REPORTING IN HYPERINFLATIONARY ECONOMIES’
- IAS 31 ‘INTERESTS IN JOINT VENTURES’
- JOINT VENTURE
- IAS 32 ‘FINANCIAL INSTRUMENTS: PRESENTATION’
- FINANCIAL INSTRUMENT
- IAS 33 ‘EARNINGS PER SHARE’
- BASIC EARNINGS PER SHARE
- PREFERENCE DIVIDENDS
- PARTICIPATING PREFERENCE SHARES
- WEIGHTED AVERAGE NUMBER OF SHARES
- MULTIPLE CHANGES IN CAPITAL DURING A REPORTING PERIOD
- DILUTED EARNINGS PER SHARE
- DISCLOSURE
- IAS 34 ‘INTERIM FINANCIAL REPORTING’
- INTERIM FINANCIAL REPORTS
- MINIMUM CONTENT REQUIREMENTS
- IAS 36 ‘IMPAIRMENT OF ASSETS’
- IMPAIRMENT
- INDICATORS OF IMPAIRMENT
- INTANGIBLE ASSETS
- RECOGNITION OF AN IMPAIRMENT LOSS
- IAS 37 ‘PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS’
- PROVISION
- CONTINGENT LIABILITIES
- CONTINGENT ASSETS
- IAS 38 ‘INTANGIBLE ASSETS’
- RECOGNITION OF AN INTANGIBLE ASSET
- INTERNALLY GENERATED INTANGIBLE ASSETS
- RESEARCH EXPENDITURE
- DEVELOPMENT EXPENDITURE
- SUBSEQUENT MEASUREMENT
- INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIVES
- INTANGIBLE ASSETS WITH FINITE USEFUL LIVES
- IAS 39 ‘FINANCIAL INSTRUMENTS: RECOGNITION AND MEASUREMENT’
- FINANCIAL ASSETS
- FINANCIAL LIABILITIES
- EFFECTIVE INTEREST METHOD
- INITIAL MEASUREMENT
- DERIVATIVES
- EMBEDDED DERIVATIVES
- DERECOGNITION OF A FINANCIAL INSTRUMENT
- SUBSEQUENT MEASUREMENT OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
- HEDGE ACCOUNTING
- CATEGORIES
- IAS 40 ‘INVESTMENT PROPERTY’
- INVESTMENT PROPERTY
- RECOGNITION
- SUBSEQUENT MEASUREMENT
- IAS 41 ‘AGRICULTURE’
- AGRICULTURAL ACTIVITY
- BIOLOGICAL ASSET
- AGRICULTURAL PRODUCE
- INITIAL MEASUREMENT
- FAIR VALUE
- GOVERNMENT GRANTS
-
Appendix 2: Illustrative Audit Tests
- SHARE CAPITAL AND RESERVES
- TRANSACTIONS WITH DIRECTORS AND RELATED PARTIES
- INTANGIBLE NON-CURRENT ASSETS
- TANGIBLE NON-CURRENT ASSETS
- INVESTMENTS
- INVENTORY
- ATTENDANCE AT INVENTORY COUNT
- TRADE AND OTHER RECEIVABLES
- CASH AT BANK AND IN HAND
- PAYABLES
- HIRE PURCHASE AND LEASING
- PROVISIONS AND CONTINGENCIES
- EMPLOYEE WAGES AND SALARIES
- TAXATION
- Appendix 3: Illustrative Financial Statements
- Appendix 4: Illustrative Auditor Report (UK and Ireland)
- Index
Product information
- Title: Interpretation and Application of International Standards on Auditing
- Author(s):
- Release date: April 2011
- Publisher(s): Wiley
- ISBN: 9780470661123
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