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Auditing of consolidation

Role

- To understand consolidation process include instruction by MGNT to its components- allowassessment risk involved in consli process

- GA will conform done by client group:1) Full & accurate transfer info from individual F/s compenent group to F/S group2) Appropriate consli adjustment made

Audit procedures

1) Clerical accuracya. Conform figure transfer accurately F/S component to consolidate schedualb. Check arithmetical accuracy all console calculate ( consili total bal & trans value)

2) Status investmenta. Parent correctly classified inves subsidary,associate JV accordance standart

accountingb. Appropriate accounting treatment adopted of classification invement of group

F/S

3) Consolidate adjustmenta. Reconcile inter-com transc and bal-made by clientb. Check all inter-com bal and trans hed eliminate from group F/S

4) Related partiesa. Accounting treatment- disclocure RP comply

5) Reportinga. F/S present at true and f.value

Joint venture involved two or more audit firm be appointed to audit F/S entity. Joint audit provide

opinion of F/S subsidiary

advantages disadvantages

- Client company large required servicesmore audit firm

- Join auditor provide higher leveltechnical expert rather audit provide

individualy

- Improved geographical coverage foraudit

- Medium audit firm can break monopolybig 4

- Extra cost client- Dificul audit firm work division work- Inconsistence method use in audit

method use

- Problem in monitoring and controllingtwo difference firm

- Dificlu work together and cause leadingin audit firm

Compenent auditor

CA underst and comply ethical requremt are relevant to GA in particular independent

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CA professional competence Group engament will able involved work in CA to fine appropriate evidence CA operate in regulatory environment

Significant component = individual financial significant to group, GA on his behalf, must perform

audit using component materiality.

1) Using compenent materialty2) Audit more account bal3) Specific audit procedure to detect risk

Communication CA and GA no good communication. GA will unable to obtain sufficient audit

evidence in express opinion in G.F/s

Audit stock

Main risk is overstatement of ci distort profit

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2

issue

exsistance & ownershipmeasure & valuation

at cost

net realizable value at below cost

audit existanceinventory

main is to evidance regard existance & condition by attance physical count

procuder

beforeexamine last year file about info-nature,location,system & problem

enquries client-change,problem face

asistance expert-high specilized nature

riview quality instr count- stocsheet(control/numbred), ident/spred SMODS & caountin pair

during

count instruc follow

perform test count-count sheet/inventory

consider opening seald pack-inventory have/not

cut off procuder-detail received.dispach

fprm opinion

SMODS

dificul to sell

NRV less Cost

obtain schedlu-compare last year & iview count conduct by client

obtain record-reconcile scheddule

riview year end movement to comform acuracy-price & cost