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Cororate Affairs Commission checklist for auditors to review financial statement

Preparation and Planning

Confirm the engagement letter and scope of the audit.

Verify the signed engagement letter.
Ensure all terms and conditions are clear.
Confirm the scope of the audit aligns with client needs.
Discuss any changes in scope with the client.

Review prior year’s financial statements and audit reports.

Obtain previous financial statements.
Analyze prior audit reports for issues.
Identify trends and changes in financial position.
Assess the effectiveness of prior audit recommendations.

Identify key stakeholders and their expectations.

List all stakeholders involved in the audit.
Conduct interviews to understand their expectations.
Document any specific concerns or areas of focus.
Communicate stakeholder expectations to the audit team.

Gather relevant legislation and regulations applicable to financial services.

Identify applicable financial regulations.
Review industry standards and best practices.
Collect updates on new laws affecting the client.
Ensure compliance with statutory requirements.

Here are some additional steps that could be included in the Preparation and Planning section

Conduct a risk assessment to identify areas of potential concern

Identify potential risks associated with the audit.
Evaluate the likelihood and impact of each risk.
Prioritize risks based on significance.
Document findings for audit planning.

Develop an audit timeline and set key milestones for the audit process

Create a detailed project timeline.
Identify key milestones and deadlines.
Assign responsibilities for each milestone.
Ensure timeline aligns with client expectations.

Establish communication protocols with the client and key stakeholders

Define preferred communication methods.
Schedule regular update meetings.
Create a contact list for all stakeholders.
Document communication plans for transparency.

Determine the audit team composition and assign roles and responsibilities

Identify team members with relevant experience.
Assign specific roles based on expertise.
Clarify responsibilities for each team member.
Ensure team understands the audit objectives.

Review the client’s internal control systems and prior audit findings

Evaluate the effectiveness of internal controls.
Review previous audit findings for recurring issues.
Identify areas for improvement in controls.
Document the assessment of internal controls.

Schedule preliminary meetings with key management personnel

Identify key management personnel to meet.
Set meeting agendas focusing on audit objectives.
Document discussions and key points raised.
Ensure management is aware of audit timeline.

Identify and assess the accounting policies and practices of the client

Review the client's accounting policies.
Assess compliance with applicable standards.
Identify any significant accounting estimates.
Document findings and implications for the audit.

Create a detailed audit plan outlining the approach and methodology

Draft a comprehensive audit plan.
Specify audit objectives and scope.
Outline methodologies and techniques to be used.
Ensure plan is aligned with stakeholder expectations.

Determine the materiality thresholds for the audit

Define materiality based on financial statements.
Consider qualitative and quantitative factors.
Document the rationale for chosen thresholds.
Communicate materiality levels to the audit team.

Review any significant changes in the client's operations or environment

Identify any recent changes in operations.
Assess impact of changes on financial statements.
Document findings related to operational changes.
Discuss changes with the client and stakeholders.

Prepare a checklist of documents and information needed from the client

List all required financial documents.
Specify deadlines for document submission.
Ensure client understands document requirements.
Review checklist with the audit team for completeness.

Plan for any specialized skills or resources needed for the audit

Identify areas requiring specialized knowledge.
Determine if external experts are needed.
Plan for training or resources for the audit team.
Document specialized resource requirements.

Documentation Review

Obtain and review the organization's Articles of Association and Memorandum of Association.

Request the latest versions of both documents.
Ensure they are signed and dated.
Check for any amendments or updates.
Verify alignment with the company's operations.

Verify the registration details with the Corporate Affairs Commission.

Access the Corporate Affairs Commission database.
Confirm the company's registration number.
Check the status of incorporation.
Review any filings for compliance.

Review board minutes for significant transactions and decisions.

Request copies of board meeting minutes.
Identify discussions on key transactions.
Ensure decisions are documented and approved.
Look for any dissenting opinions or concerns.

Ensure compliance with statutory and regulatory requirements.

Identify relevant laws and regulations.
Review documentation for adherence.
Check for any outstanding compliance issues.
Document any areas of non-compliance.

Here are some additional steps that could be included in the Documentation Review section

Review the company's latest financial statements, including the balance sheet, income statement, and cash flow statement

Obtain the most recent financial statements.
Verify the accuracy of figures presented.
Ensure consistency across statements.
Review for any unusual fluctuations.

Examine supporting documentation for key financial transactions, such as invoices, receipts, and contracts

Request supporting documents for major transactions.
Check for proper authorization and signatures.
Ensure documents match recorded transactions.
Assess the completeness of the documentation.

Verify the existence and valuation of assets through review of asset registers and depreciation schedules

Obtain the asset register and depreciation schedules.
Confirm existence of listed assets.
Assess valuation methods used.
Review for any impaired assets.

Assess the adequacy of accounting policies and procedures in accordance with applicable financial reporting standards

Review the documented accounting policies.
Check alignment with relevant standards.
Evaluate the implementation of policies.
Identify any areas needing improvement.

Review tax filings and correspondence with tax authorities to ensure compliance and identify any potential liabilities

Obtain recent tax filings and notices.
Verify timely submission of returns.
Review for any outstanding tax liabilities.
Assess correspondence for compliance issues.

Examine the organization’s insurance policies to confirm coverage and compliance with requirements

Request copies of all insurance policies.
Check coverage against regulatory requirements.
Verify that all necessary policies are in place.
Review for any exclusions or limitations.

Review any regulatory filings or submissions made to government agencies to ensure completeness and accuracy

Gather recent regulatory filings.
Check for completeness of submitted documents.
Confirm accuracy with internal records.
Document any discrepancies found.

Analyze the organization’s internal audit reports and follow up on any identified issues or recommendations

Obtain the latest internal audit reports.
Review findings and recommendations.
Check for management's response to issues.
Follow up on unresolved items.

Review employment contracts and payroll records to ensure compliance with labor laws and regulations

Request copies of employment contracts.
Verify compliance with labor laws.
Review payroll records for accuracy.
Check for any misclassifications or discrepancies.

Assess the organization's risk management policies and procedures as documented in relevant materials

Review documented risk management policies.
Evaluate the effectiveness of procedures.
Identify any gaps in documentation.
Assess alignment with industry best practices.

Financial Statement Review

Analyze the balance sheet for accuracy and completeness.

Verify that all assets, liabilities, and equity are recorded.
Check for mathematical accuracy in totals.
Ensure all accounts are reconciled with supporting documents.
Review for appropriate classification of accounts.
Confirm compliance with applicable accounting standards.

Review the income statement for revenue recognition and expense matching.

Ensure revenue is recognized in accordance with applicable standards.
Match expenses to the revenues they help generate.
Review timing of revenue and expense recognition.
Check for completeness of all revenue and expenses.
Assess any unusual items or one-time transactions.

Validate cash flow statements for consistency with financial position.

Compare cash flow from operations with net income.
Verify cash flows from investing and financing activities.
Check for consistency with the balance sheet changes.
Review any non-cash transactions disclosed.
Ensure proper classification of cash flow components.

Assess the adequacy of disclosures in the financial statements.

Ensure all required disclosures are included.
Check for clarity and understandability of disclosures.
Review for completeness in significant accounting policies.
Assess the relevance of any additional disclosures.
Confirm compliance with disclosure requirements.

Here are some additional steps that could be included in the Financial Statement Review section

Evaluate the accounting policies adopted for appropriateness and consistency with applicable financial reporting frameworks

Review the policies applied by management.
Check alignment with IFRS or GAAP standards.
Assess consistency in application across periods.
Identify any changes and their justifications.
Document findings and recommend improvements.

Compare current financial statements with prior periods to identify significant trends and variances

Gather financial statements for multiple periods.
Perform horizontal and vertical analysis.
Highlight significant variances over time.
Assess reasons for notable trends.
Prepare a summary of comparative insights.

Verify the existence and valuation of assets by conducting physical inspections or confirmations, where applicable

Select a sample of assets for verification.
Conduct physical inspections for existence.
Confirm valuations with supporting documentation.
Document discrepancies and follow up.
Ensure compliance with applicable valuation standards.

Review estimates and judgments made by management, including impairment assessments and provisions for doubtful accounts

Examine methodologies used for estimates.
Assess the reasonableness of assumptions.
Review historical accuracy of estimates.
Document management's rationale for judgments.
Evaluate the impact on financial statements.

Assess the appropriateness of any related party transactions and ensure they are disclosed properly

Identify all related party transactions.
Review terms and conditions for fairness.
Ensure proper disclosure in financial statements.
Evaluate impact on financial position.
Document findings and any recommendations.

Check for compliance with relevant laws and regulations that may impact the financial statements

Identify applicable laws and regulations.
Review compliance documentation and evidence.
Assess any potential legal issues or risks.
Document any non-compliance findings.
Recommend actions for compliance enhancement.

Analyze the notes accompanying the financial statements for clarity, completeness, and relevance

Review each note for clear articulation.
Check for completeness of disclosures.
Assess relevance to the financial statements.
Identify any missing disclosures.
Summarize findings for management review.

Confirm that all significant events occurring after the reporting date are disclosed in accordance with applicable standards

Review events occurring post reporting date.
Assess materiality and impact on statements.
Ensure timely and accurate disclosures.
Document compliance with relevant standards.
Prepare a summary of post-reporting events.

Examine the appropriateness of the classification of assets and liabilities as current or non-current

Review definitions of current vs. non-current.
Assess classifications against reported amounts.
Evaluate liquidity and operational cycles.
Document any misclassifications found.
Recommend corrections for accurate reporting.

Review the completeness of liabilities, including contingent liabilities and commitments, for potential understatement

Identify all liabilities recorded in statements.
Examine contingent liabilities and commitments.
Assess completeness against contractual agreements.
Document any potential understatements.
Recommend improvements for liability recognition.

Internal Controls Assessment

Evaluate the effectiveness of internal controls over financial reporting.

Review existing internal control documentation.
Identify key control activities in financial reporting.
Assess compliance with established policies and procedures.
Determine if controls are designed to prevent misstatements.
Document findings and recommendations for improvement.

Test the operating effectiveness of control activities.

Select a sample of transactions for testing.
Perform walkthroughs of control processes.
Observe control activities in real-time.
Evaluate the reliability of control outputs.
Report any deficiencies found during testing.

Assess the risk management framework and its implementation.

Review the risk management policy documents.
Identify risk assessment methodologies used.
Evaluate the effectiveness of risk mitigation strategies.
Assess roles and responsibilities in risk management.
Document areas for enhancement in the framework.

Review the processes for identifying and managing financial risks.

Examine the risk identification process.
Evaluate how financial risks are classified and prioritized.
Assess the monitoring of identified risks.
Review reporting mechanisms for financial risks.
Document gaps in current processes.

Here are some additional steps that could be included in the Internal Controls Assessment section

Evaluate the segregation of duties within key financial processes

Map out key financial processes and roles.
Identify potential conflicts of interest.
Assess whether duties are appropriately separated.
Document areas where segregation is lacking.
Recommend improvements for segregation of duties.

Review the adequacy of policies and procedures related to financial reporting

Collect and review existing financial reporting policies.
Assess the clarity and comprehensiveness of procedures.
Evaluate compliance with regulatory requirements.
Identify any outdated or redundant policies.
Document recommendations for policy updates.

Assess the design and implementation of IT controls that support financial reporting

Review IT control frameworks in place.
Evaluate access controls for financial reporting systems.
Assess data backup and recovery procedures.
Test system change management processes.
Document any weaknesses in IT controls.

Test the reliability of information systems and data integrity controls

Identify key information systems supporting financial reporting.
Perform data validation and integrity tests.
Evaluate the accuracy of data inputs and outputs.
Assess the effectiveness of data monitoring controls.
Document findings and suggest corrective actions.

Conduct interviews with key personnel responsible for internal controls

Prepare interview questions focused on controls.
Schedule interviews with relevant personnel.
Document responses and insights gained.
Assess the understanding of controls by personnel.
Identify areas for further training or support.

Analyze past audit findings and management's responses related to internal controls

Collect previous audit reports and findings.
Evaluate management's responses to findings.
Assess the effectiveness of corrective actions taken.
Document trends in findings over time.
Identify recurring issues needing attention.

Evaluate the adequacy of training programs related to internal control procedures

Review training materials and programs offered.
Assess participation rates in training sessions.
Evaluate the effectiveness of training content.
Gather feedback from participants on training relevance.
Recommend enhancements to training programs.

Review the process for monitoring and reviewing internal controls on an ongoing basis

Examine the monitoring frameworks in place.
Assess frequency and effectiveness of reviews.
Evaluate the reporting structure for control monitoring.
Document findings on monitoring effectiveness.
Identify areas for improvement in monitoring processes.

Assess the effectiveness of corrective actions taken in response to identified control deficiencies

Review action plans developed for deficiencies.
Evaluate the implementation of corrective actions.
Assess the timeliness of corrective measures.
Document the effectiveness of actions taken.
Recommend additional actions if necessary.

Evaluate the alignment of internal control practices with relevant regulatory requirements and industry standards

Identify applicable regulations and standards.
Review internal controls against these requirements.
Assess gaps in compliance with regulations.
Document alignment with industry best practices.
Recommend adjustments to improve compliance.

Compliance Checks

Verify compliance with tax obligations and filings.

Gather relevant tax documents.
Confirm timely submissions of tax returns.
Check for any outstanding tax liabilities.
Review correspondence with tax authorities.

Review adherence to financial reporting standards (e.g., IFRS, GAAP).

Examine financial statements for compliance with standards.
Verify disclosures are complete and accurate.
Cross-check accounting policies against standards.
Assess consistency in reporting across periods.

Ensure compliance with anti-money laundering (AML) regulations.

Review AML policies and procedures.
Check records of customer due diligence.
Verify reporting of suspicious activities.
Assess training provided to employees on AML.

Check for compliance with consumer protection laws applicable to financial services.

Review customer complaint handling procedures.
Ensure transparency in terms and conditions.
Verify compliance with advertising regulations.
Assess protection measures for customer data.

Here are some additional steps that could be included in the Compliance Checks section of the checklist for auditors reviewing financial statements

Verify compliance with labor laws and regulations, including wage and hour laws

Review employee contracts for compliance.
Check payroll records for accuracy.
Assess adherence to overtime regulations.
Verify employee rights to minimum wage.

Assess adherence to environmental regulations and sustainability practices

Review environmental policies in place.
Check for required environmental assessments.
Evaluate sustainability initiatives undertaken.
Assess compliance with waste disposal regulations.

Review compliance with industry-specific regulations and licensing requirements

Verify all necessary licenses are obtained.
Check for adherence to industry-specific guidelines.
Review any regulatory filings made.
Assess compliance with operational standards.

Ensure compliance with data protection and privacy laws (e.g., GDPR, CCPA)

Review data protection policies and procedures.
Verify consent mechanisms are in place.
Assess data breach response plans.
Check for proper data handling and storage practices.

Check for adherence to corporate governance standards and practices

Review board composition and independence.
Assess governance policies and procedures.
Check for proper documentation of board meetings.
Evaluate compliance with reporting obligations.

Evaluate compliance with contractual obligations with suppliers and customers

Review key contracts for compliance clauses.
Check for adherence to delivery and payment terms.
Assess performance against contract obligations.
Document any breaches or disputes.

Confirm compliance with international trade regulations, if applicable

Review documentation for import/export transactions.
Check for adherence to trade agreements.
Verify compliance with customs regulations.
Assess risk management related to international trade.

Review compliance with insider trading regulations and disclosure requirements

Assess policies on insider trading.
Check for training on disclosure obligations.
Verify reporting of insider trades.
Review communications to ensure compliance.

Ensure proper reporting and compliance with any related party transactions

Review disclosures of related party transactions.
Check for board approval of transactions.
Assess transaction terms for fairness.
Verify compliance with reporting requirements.

Assess adherence to policies regarding gifts, hospitality, and conflicts of interest

Review the company's gift and hospitality policy.
Check records of gifts received and given.
Assess training provided on conflicts of interest.
Evaluate disclosures made by employees.

Final Review and Reporting

Summarize findings and prepare the audit report.

Compile key findings from the audit process.
Organize information in a logical format.
Highlight significant issues and recommendations.
Ensure clarity and conciseness in language used.
Prepare an executive summary for stakeholders.

Discuss any issues or concerns with management.

Schedule a meeting with management.
Present identified issues clearly and objectively.
Encourage open dialogue for feedback.
Document management's responses and concerns.
Agree on timelines for addressing issues.

Ensure the audit report aligns with International Standards on Auditing (ISA).

Review ISA guidelines relevant to the audit.
Cross-check the report against ISA requirements.
Make adjustments as needed for compliance.
Document how ISA standards were met.
Seek input from team members on compliance.

Submit the final report to the Corporate Affairs Commission as required.

Confirm submission deadlines and requirements.
Prepare the final report for submission.
Ensure all required signatures are obtained.
Use secure and appropriate channels for submission.
Keep a record of submission for reference.

Here are some additional steps that could be included in the Final Review and Reporting section

Review the draft audit report for clarity and coherence

Read through the report for logical flow.
Check for grammatical and typographical errors.
Ensure terminology is consistent throughout.
Confirm that all sections are complete.
Solicit feedback from peers for improvements.

Verify that all significant audit findings are clearly documented and supported by evidence

Cross-reference findings with supporting documents.
Ensure evidence is organized and accessible.
Make sure each finding has a clear explanation.
Document the rationale behind conclusions.
Confirm findings are aligned with audit objectives.

Confirm that management responses to audit findings are included in the report

Review management's feedback on findings.
Ensure responses are accurately reflected in the report.
Document any agreed-upon action plans.
Clarify any disagreements or unresolved issues.
Obtain management's sign-off on responses.

Assess the overall presentation of the audit report for professionalism and compliance with reporting standards

Check formatting for consistency and professionalism.
Ensure proper use of logos and branding.
Confirm adherence to regulatory reporting standards.
Review layout for readability and accessibility.
Solicit feedback on presentation from the team.

Conduct a final quality control review of the audit report by a senior auditor or audit manager

Select a qualified senior auditor for review.
Provide the report and any relevant documentation.
Solicit their feedback on the report's quality.
Incorporate their suggestions into the final report.
Document the quality control process followed.

Ensure that any recommendations for improvement are actionable and clearly articulated

Define specific actions required for recommendations.
Use clear and concise language in descriptions.
Prioritize recommendations based on impact.
Include timelines for implementation.
Clarify roles and responsibilities for follow-up.

Schedule a meeting with key stakeholders to discuss the audit report and address any questions or feedback

Identify key stakeholders to invite.
Propose a date and time for the meeting.
Prepare an agenda outlining discussion points.
Send invitations and confirm attendance.
Gather questions or feedback in advance.

Archive the audit documentation and final report in accordance with regulatory requirements and firm policy

Organize all audit documentation systematically.
Ensure compliance with retention policies.
Store documents in a secure location.
Confirm that all files are accessible for future reference.
Maintain a record of archived documents.

Monitor the follow-up actions taken by management in response to the audit findings and recommendations

Establish a timeline for follow-up actions.
Schedule regular check-ins with management.
Document progress on implementing recommendations.
Assess effectiveness of actions taken.
Report back to stakeholders on follow-up status.

Follow-Up Actions

Establish a timeline for addressing any identified issues.

Identify specific issues that need resolution.
Set realistic deadlines for each issue.
Communicate the timeline to all relevant parties.
Ensure alignment with organizational priorities.

Schedule a follow-up audit if necessary.

Determine if issues require further examination.
Coordinate with auditors to establish a date.
Notify all stakeholders of the follow-up audit schedule.
Prepare necessary documents and data for review.

Monitor the implementation of recommended actions.

Assign a team member to oversee implementation.
Set regular check-ins to assess progress.
Document any barriers encountered during implementation.
Adjust timelines as needed based on challenges.

This checklist is designed to ensure that auditors comprehensively review financial statements in accordance with Corporate Affairs Commission requirements.

Here are some additional steps that could be included in the Follow-Up Actions section

Communicate findings and action plans to relevant stakeholders

Draft a clear report of findings and plans.
Distribute the report to all relevant parties.
Encourage feedback and discussion on action plans.
Keep communication channels open for ongoing updates.

Assign responsibility for each action item to specific individuals or teams

List all action items that need addressing.
Identify suitable individuals or teams for each item.
Clearly communicate responsibilities and expectations.
Ensure accountability by setting check-in dates.

Review progress on action items during regular team meetings

Include action item updates on meeting agendas.
Encourage accountability by discussing progress openly.
Identify any additional support needed for completion.
Document discussions and decisions for future reference.

Document all follow-up actions taken and their outcomes

Create a tracking document for all actions.
Record the status and outcomes of each action.
Include notes on any challenges faced.
Make the document accessible for audits.

Evaluate the effectiveness of implemented changes and adjustments

Set criteria for assessing effectiveness.
Gather feedback from stakeholders on changes.
Analyze data to determine impact on issues.
Make further adjustments based on evaluations.

Provide additional training or resources if needed to address identified issues

Identify areas where training is necessary.
Develop training materials or resources.
Schedule training sessions for relevant staff.
Evaluate the effectiveness of the training provided.

Reassess risk areas based on the outcomes of follow-up actions

Analyze data to identify new risk areas.
Update risk assessments based on findings.
Communicate changes in risk status to stakeholders.
Adjust mitigation strategies as needed.

Update internal policies and procedures to prevent recurrence of issues

Review existing policies in light of findings.
Draft amendments to address identified gaps.
Communicate changes to all employees.
Ensure training on updated policies is provided.

Conduct a satisfaction survey with stakeholders regarding the follow-up process

Develop a survey with clear questions.
Distribute the survey to relevant stakeholders.
Analyze the feedback received.
Use results to improve future follow-up processes.

Prepare a summary report of follow-up actions and outcomes for management review

Compile all follow-up actions and their results.
Draft a concise summary for management.
Highlight key successes and areas for improvement.
Schedule a meeting to discuss the report with management.

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Cororate Affairs Commission checklist for auditors to review financial statement

Preparation and Planning

Documentation Review

Financial Statement Review

Internal Controls Assessment

Compliance Checks

Final Review and Reporting

Follow-Up Actions

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