193 paragraphs found
Many of the auditor’s procedures can be used to address a number of assertions. For example, procedures to address the existence of an account balance at period end will also address the occurrence of a class of transactions, and may also assist in …
Procedures that may provide audit evidence to support the completeness, accuracy, and existence assertions include: External confirmation of bank accounts, trades, and custodian statements. This can be done by direct confirmation with the counterparty …
These procedures are particularly important for some financial instruments, such as derivatives or guarantees. This is because they may not have a large initial investment, meaning it may be hard to identify their existence. For example, embedded …
Fair presentation financial reporting frameworks often use fair value hierarchies, for example those used in Australian Accounting Standards. This usually means that the volume and detail of the required disclosures increases as the level of measurement …
The auditor may find it useful to obtain an understanding of how the financial instruments relate to the fair value hierarchy. Ordinarily, the risk of material misstatement, and the level of audit procedures to be applied, increases as the level of …
In accordance with ASA 540 , [26] the auditor considers the entity’s valuation policies and methodology for data and assumptions used in the valuation methodology. In many cases, the applicable financial reporting framework does not prescribe the …
When evaluating whether the valuation techniques used by an entity are appropriate in the circumstances, and whether controls over valuation techniques are in place, the factors considered by the auditor may include: Whether the valuation techniques are …
The auditor’s risk assessment process may lead the auditor to identify one or more significant risks relating to the valuation of financial instruments, when any of the following circumstances exist: High measurement uncertainty related to the valuation …
Where the auditor determines that the high estimation uncertainty related to the valuation of complex financial instruments gives rise to a significant risk, ASA 540 requires the auditor to perform substantive procedures and evaluate the adequacy of the …