Audit Reporting: Audit Finalisation

Analytical procedures performed near the end of the audit are designed to provide evidence that the financial statements are consistent with the auditors' understanding of the entity. Analytical procedures at the audit finalisation stage should corroborate conclusions formed based on the substantive procedures and tests of control effectiveness performed on financial statement components at the detailed testing stage. The financial statement closing process is often a higher risk area. Auditors and clients are under pressure to complete the audit and reporting process on time. For these reasons, auditors are required to perform substantive procedures on the closing process including reconciling the financial statements to the underlying records and examining material journal entries and other adjustments made during the course of preparing the financial statements. Auditors also seek written representations asking management to confirm their belief that uncorrected misstatements are immaterial. Audit reporting appears to be in a state of transition and there is much discussion about whether auditors should report on more than the truth and fairness or fair presentation of financial statements. The current debate in this area among professional bodies, standard-setters and regulators seems more likely to result in real and far-reaching change this time than on previous occasions.