Examine financial statement footnotes for appropriate disclosure of sales to related parties.
In recent years, the International Auditing and Assurance Standards Board (IAASB) has considered the issue of auditing disclosures in financial statements, prompted by a number of factors including developments in IFRS requirements and the increased level of complexity and subjectivity involved in the preparation of information to be disclosed in financial statements. This article examines this issue, and reminds candidates to review the examinable documents list for guidance. Show
Disclosures in financial statementsAuditors are required to express an opinion on the financial statements as a whole. This includes the notes to the financial statements which are an integral part of the accounts, providing additional information on balances and transactions and other relevant information. Therefore, it is important that during all stages of the audit the auditor gives appropriate consideration to, and plans to obtain sufficient and appropriate audit evidence in relation to the disclosures made in the notes to the financial statements. ISA 200, Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing specifies that the financial statements include related notes which ‘comprise a summary of the significant accounting policies and otherexplanatory information’. The notes to financial statements contain different types of information, some quantitative and some qualitative, as required by IFRS. Some examples are given below: Quantitative disclosures:
The challenges for auditors
|