3.In what instances will the auditor be required to revise the audit strategy and detailed audit plans.

The auditor should modify the overall audit strategy and the audit plan as necessary if circumstances
change significantly during the course of the audit, including changes due to a revised assessment of the
risks of material misstatement or the discovery of a previously unidentified risk of material
misstatement.

The auditor must adjust both the general audit approach and the specific audit plan if significant
changes occur during the audit, such as reassessment of material misstatement risks or the uncovering
of previously unnoticed material misstatement risks.

4.Give and explain briefly at least 8 sources of misstatements of financial statements items.

1. Related Party Transactions - sometimes involve contracts for goods or services that are priced at less
(or more) favorable terms than those in similar arm’s length transactions between unrelated third
parties.

Sometimes involve agreements for goods or services priced less favorably or more favorably compared
to similar transactions between unrelated third parties.

2. Subsequent Events Review – The subsequent events review is an important audit procedure to be
performed up to the date of the auditor’s report. Due to the dynamism of the business’s environment,
the procedures provided in this Practical Guidance are not an exhaustive list. Auditors need to bear in
mind the business environment that the companies operating in and his/her risk assessment of the
company so as to enable him/her to design and perform the appropriate and adequate audit procedures
for subsequent events review. Auditors also need to ensure that the audit documentation prepared in
respect of the audit procedures performed is in accordance with the requirements in SSA 230(R) “Audit
Documentation”.

The review of subsequent events is a crucial audit step conducted until the auditor's report date.
Given the ever-changing nature of the business environment, the procedures outlined in this Practical
Guidance are not exhaustive. Auditors must consider the specific business context and their risk
assessment to tailor appropriate audit procedures for subsequent events. Additionally, auditors must
ensure that the documentation of audit procedures aligns with the standards outlined in SSA 230(R)
"Audit Documentation."

3.Letter of Inquiry/review of contingent liabilities - An auditor should never assume company

management has always disclosed all contingent liabilities. This is particularly true with legal expenses
and unsettled taxes. Auditors have the authority to reviewal Internal Revenue Service, or IRS, reports for
possible undisclosed tax liabilities. All legal expenses are to be accompanied by supporting documents.
An auditor may not always be a sufficient legal authority on a specific topic to understand the likelihood
of the expense. Also, the legalese may be written to be intentionally obtuse. In such cases, the auditor
can review precedent or consult with an expert before making a ruling on possible contingencies.

When conducting a review of contingent liabilities, auditors should avoid assuming that all such
liabilities have been disclosed by company management. This is especially relevant for legal expenses
and unpaid taxes, where undisclosed liabilities may exist. Auditors are empowered to examine
Internal Revenue Service (IRS) reports to identify potential undisclosed tax obligations. Additionally,
all legal expenses must be supported by relevant documentation. It's important to note that auditors
may not always possess sufficient legal expertise to fully assess the likelihood of certain expenses,
especially when legal language is complex or intentionally vague. In such instances, auditors can refer
to past cases or seek advice from experts to determine potential contingencies.

4.Evaluating going concern status - To make your final going-concern assessment, you consider the
company's ability to remain in business. To make this evaluation, you check out negative financial trends
and consider the effect that outside events have on the continuing success of the company.

Assessing the going concern status involves evaluating the company's viability to sustain its
operations. This assessment entails examining adverse financial patterns and analyzing how external
factors impact the company's ongoing viability.

5. Management representations - letter issued by a client to the auditor in writing as part of audit
evidences. The representations letter must cover all periods encompassed by the audit report, and must
be dated the same date of audit work completion.

A management representations letter, provided by the client to the auditor in written form, serves as
audit evidence. This letter should address all periods covered by the audit report and must be dated
upon completion of audit work.

6. Perform final analytical procedures – Analytical procedures are performed as an overall review of the
financial statements at the end of the audit to assess whether they are consistent with the auditor's
understanding of the entity. Final analytical procedures are not conducted to obtain additional
substantive assurance.

Conducting final analytical procedures involves reviewing the financial statements at the conclusion of
the audit to verify their consistency with the auditor's comprehension of the entity. These procedures
are not aimed at acquiring further substantive assurance.

7. Review the minutes of stockholders and Board of Directors –Board meeting minutes are more than a
general accounting of board discussions; they serve as an official and legal record of the meeting of the
Board of Directors. Minutes are used in a variety of ways including tracking progress, detailing future
plans, and serving as a reference point.

Examining the minutes of stockholders and the Board of Directors entails more than just summarizing
board discussions; they function as the formal and legal documentation of the board's meetings.
These minutes have multiple uses, such as monitoring progress, outlining future strategies, and
providing a point of reference.

8.Evaluating findings, formulating an opinion and drafting the audit report - When completing the audit,
the auditor must reconsider materiality and determine a material amount to be used in evaluating the
estimated misstatement in the financial statement. In evaluating whether the statements are presented
fairly, an auditor should aggregate any uncorrected misstatement to be able to consider them in relation
to the financial statements a whole. If audit risk increases due to numerous events and conditions while
the audit is being undertaken, the auditor should evaluate whether additional substantive procedures
need to be performed.
Assessing results, formulating an opinion, and writing the audit report: Upon audit completion, the
auditor must reevaluate materiality and establish a material quantity that will be utilized to assess the
projected financial statement misstatement. To assess if the financial statements are presented fairly,
an auditor should take into account any uncorrected misrepresentation in regard to the financial
statements as a whole. The auditor should determine if more substantial procedures need to be
carried out if audit risk rises as a result of several occurrences and circumstances during the audit.