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News in the LEAF Training Division.

Business Combinations and Related Disclosures

2024-03-11T13:26:05+02:00

Business Combinations and Related Disclosures When performing a group audit, one can become so involved in verifying the detailed consolidation workings that one may omit to specifically consider the impact of business combinations. The relevant financial reporting framework establishes principles and requirements for the recognition, measurement and disclosure of business combinations by the acquirer during the financial reporting period. It is important that the auditor verifies whether business combinations are correctly dealt with in terms of the requirements. Accounting for business combinations IFRS for SMEs Section 19 para 19.6 refers to the application of the purchase [...]

Business Combinations and Related Disclosures2024-03-11T13:26:05+02:00

Group Audit Timelines

2023-06-01T13:48:16+02:00

Group Audit Timelines Although auditors often end up doing group audits at some point, surprisingly, many of them don't realise the importance of adhering to timelines during the audit. Generally, group auditors perform the fieldwork and conclusion work first, and only later include planning working papers and group instructions to complete the audit file. They do this at their peril, as group and component auditors may not identify and respond to all risks during fieldwork. Pre-engagement and planning The key considerations of a group audit are: • The quality of evidence to be obtained for the [...]

Group Audit Timelines2023-06-01T13:48:16+02:00

Investments in Associates

2023-04-03T16:30:46+02:00

Investments in Associates When considering, during an audit, whether investments have been correctly accounted for, in terms of the relevant accounting framework, it is important to know whether the entity is required to compile consolidated financial statements. This can make a difference when determining whether the accounting policy applied for investments in associates is appropriate based on the accounting framework. IFRS for SMEs International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) Section 14, Investments in associates, indicates that its requirements apply to accounting for associates in consolidated financial statements, and in [...]

Investments in Associates2023-04-03T16:30:46+02:00

Evaluating the System of Quality Management

2023-01-31T22:14:20+02:00

Evaluating the system of quality management In the past year, firms have been making a significant effort to update their systems of quality management and start implementing the new risk-based standards of managing quality. Throughout this coming year, firms will perform the first round of monitoring to determine whether they are complying with their updated systems. The final step of implementing the new standards must not be overlooked, namely evaluating the system of quality management. Evaluating the system The individual or individuals carrying the ultimate responsibility and accountability for the system of quality management, normally [...]

Evaluating the System of Quality Management2023-01-31T22:14:20+02:00

Resources, information and communication

2023-01-31T22:11:24+02:00

Newsletter April Significant Risk Assessment When considering whether appropriate resources are available to perform engagements, practitioners have traditionally only considered human resources available within the firm. The new quality management standards expand on this, however, by requiring firms to also consider the technological and intellectual resources available. Firms should also consider whether appropriate resources are available to maintain their quality management system; they should establish an information system to support the operation of their quality management system, and ensure that the necessary communication takes place internally and externally. Firm-level considerations ISQM 1 para 32 requires [...]

Resources, information and communication2023-01-31T22:11:24+02:00

Ethics, acceptance and continuance

2023-01-31T22:11:43+02:00

Ethics, acceptance and continuance 30 September 2022 Ethics is a fundamental concept that needs to be established in an auditing and accounting practice. It cannot merely be given lip service, and should lead to proactively managing the risk of ethical threats and breaches that could inappropriately influence the firm’s compliance with relevant ethical requirements. One of the occasions when ethics may be involved in audit considerations is when deciding whether to accept, or continue with client relationships and engagements. Quality, integrity and independence should be the overriding factors. Firm-level considerations ISQM 1 para 29 [...]

Ethics, acceptance and continuance2023-01-31T22:11:43+02:00

Governance and leadership

2022-09-13T14:29:51+02:00

Governance and leadership Governance and leadership set the tone at a firm, and create the environment in which all the other components of the firm’s system of quality management operate. For a system of quality management to achieve the intended outcomes, firm leadership needs to ensure that quality management requirements and principles are incorporated into all aspects of practice management, including a culture that facilitates proactive and regular self-scrutiny. Firm level considerations ISQM 1 para 28 requires firms to establish the following quality objectives that address the firm’s governance and leadership, and establish the environment [...]

Governance and leadership2022-09-13T14:29:51+02:00

Going concern

2022-06-30T16:02:52+02:00

Newsletter April Significant Risk Assessment Auditors are required to obtain sufficient appropriate audit evidence regarding the appropriateness of management’s use of the going concern basis of accounting in the preparation of the financial statements, and to determine its impact on the audit report. However, results from monitoring reviews point to a significant documentation gap in the audit working papers when it comes to this important assessment, resulting in inadequate support for conclusions drawn and the opinion expressed. Risk assessment procedures and related activities Risk assessment procedures performed during the planning phase of the audit include [...]

Going concern2022-06-30T16:02:52+02:00

Audit Procedures – Related Parties

2022-06-30T16:03:01+02:00

Audit procedures - Related Parties In certain sections of our monthly newsletters, we may address audit procedures to provide guidance in a format that provides easy reference on engagements. The guidance provided is not exhaustive, and is intended to share observations from real cases of deficiencies on engagement files. Background Over the years, Related Parties has developed as a section of the audit that requires detailed attention. As the required procedures have been modified over time, I believe that the real objective of testing related parties has become unclear. Dependent on the risk and circumstances [...]

Audit Procedures – Related Parties2022-06-30T16:03:01+02:00

Group audits 3 of 3 – Joint Audits

2022-05-30T16:01:46+02:00

Group audits 3 of 3 – Joint Audits Group audits represent some of the most risky audits to undertake, as most public interest audits comprise the audit of groups of companies. However, the standards and audit principles relevant to group audits do not always receive the detailed attention they deserve, This article addresses audit procedures relating to joint audit engagements, which are often relevant to group audits, and should be read in conjunction with parts 1 and 2 to reach an understanding of group audits as a whole. It addresses key requirements which auditors would be wise [...]

Group audits 3 of 3 – Joint Audits2022-05-30T16:01:46+02:00

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