Audit Completion, Concepts, Meaning, Objectives and Procedures
by The concept of audit completion emphasizes that an audit should not end merely after performing individual audit procedures. The auditor must conduct an overall evaluation of the financial statements and determine whether they are prepared, in all material respects, in accordance with the applicable financial reporting framework. The auditor also considers whether unresolved matters could affect the audit opinion.
Audit completion generally includes reviewing working papers, evaluating corrected and uncorrected misstatements, reviewing subsequent events, assessing going concern, obtaining written representations, and ensuring that the audit team’s work has been properly reviewed. After completing these activities, the auditor determines the appropriate audit opinion and prepares the final audit report.
Meaning of Audit Completion
Audit completion refers to the final stage of the audit process in which the auditor completes the necessary audit procedures, evaluates the evidence obtained, reviews significant findings, and forms a final conclusion about the financial statements. It involves ensuring that all important audit areas have been adequately examined and that sufficient and appropriate audit evidence supports the conclusions reached. During completion, the auditor reviews identified misstatements, performs final analytical procedures, considers going concern issues, obtains management representations, and completes audit documentation.
Objectives of Audit Completion
1. Ensure Completion of Audit Procedures
The primary objective of audit completion is to ensure that all planned audit procedures have been properly performed. The auditor reviews the audit programme and working papers to identify whether any important procedure remains incomplete. Significant audit areas, transactions, balances, and disclosures must receive appropriate attention. This review helps ensure that the audit has been conducted systematically and that the auditor has sufficient appropriate evidence to support the final conclusions and audit opinion.
2. Obtain Sufficient Appropriate Audit Evidence
Audit completion aims to confirm that the auditor has obtained sufficient and appropriate audit evidence to support the conclusions reached. The auditor reviews evidence obtained from inspection, confirmation, analytical procedures, tests of controls, and substantive procedures. Any evidence gaps or contradictory information are investigated. This ensures that the final audit opinion is based on reliable and relevant evidence rather than incomplete examination or unsupported professional judgement.
3. Evaluate Identified Misstatements
Another objective is to evaluate all identified misstatements, including corrected and uncorrected errors. The auditor considers the individual and aggregate effect of misstatements in relation to materiality. Qualitative factors are also considered because certain misstatements may be significant due to their nature. Management may be requested to correct material errors. The final evaluation helps determine whether remaining misstatements affect the financial statements or require modification of the audit opinion.
4. Perform Final Analytical Procedures
The auditor performs final analytical procedures to assess whether the financial statements are consistent with the auditor’s understanding of the entity. Significant trends, relationships, ratios, and unexpected fluctuations are reviewed. Unusual or unexplained results may indicate errors, omissions, or other matters requiring further investigation. These procedures help the auditor form an overall conclusion regarding the financial statements and identify issues that may have been overlooked during earlier audit stages.
5. Assess Going Concern
Audit completion includes the objective of evaluating the entity’s ability to continue as a going concern. The auditor considers financial difficulties, cash flow problems, debt obligations, losses, and other relevant conditions. Management’s assessment and future plans are examined where necessary. The auditor determines whether any material uncertainty exists and whether appropriate disclosure has been made. This evaluation helps ensure that significant going concern matters are properly considered in the final audit report.
6. Review Subsequent Events
The auditor aims to identify and evaluate events occurring after the reporting date but before the date of the auditor’s report. Such events may provide additional evidence about conditions existing at the reporting date or may require disclosure because of their significance. The auditor performs appropriate procedures to identify relevant subsequent events. This ensures that material developments are properly reflected or disclosed before the audit report is finalized.
7. Complete Audit Documentation
A further objective is to ensure that audit documentation is complete and properly organized. Working papers should clearly record the procedures performed, evidence obtained, significant matters identified, professional judgements made, and conclusions reached. Proper documentation supports the auditor’s opinion and demonstrates compliance with applicable Standards on Auditing. It also facilitates review by senior audit personnel and provides an appropriate record of the completed audit.
8. Form an Appropriate Audit Opinion
The ultimate objective of audit completion is to enable the auditor to form an appropriate audit opinion. After evaluating evidence, misstatements, disclosures, going concern matters, and other significant issues, the auditor determines whether the financial statements comply with the applicable financial reporting framework. Depending on the findings, the auditor may issue an unmodified or modified opinion. The final opinion must be supported by sufficient appropriate evidence and professional judgement.
Procedures of Audit Completion
Step 1. Review of Audit Working Papers
The auditor performs a detailed review of audit working papers to ensure that all planned procedures have been completed and properly documented. The review covers significant account balances, transactions, disclosures, risk areas, and audit conclusions. Senior members of the audit team examine the work performed by other team members and resolve outstanding review points. This procedure helps ensure consistency, completeness, and compliance with the audit plan and applicable auditing standards.
Step 2. Evaluation of Audit Evidence
The auditor conducts a final evaluation of audit evidence obtained throughout the engagement. Evidence from different sources and procedures is considered collectively to determine whether it adequately supports the audit conclusions. Contradictory or insufficient evidence is investigated and additional procedures may be performed. The auditor ensures that sufficient appropriate evidence exists for significant assertions and material balances before finalizing the audit opinion.
Step 3. Evaluation of Misstatements
All identified misstatements are accumulated and evaluated individually and in aggregate. The auditor determines whether management has corrected the identified errors and assesses the effect of any remaining uncorrected misstatements. Their amount, nature, and circumstances are considered in relation to materiality. If uncorrected misstatements are material, the auditor discusses them with management and considers whether they affect the final audit opinion.
Step 4. Performance of Final Analytical Procedures
The auditor performs final analytical procedures to determine whether the financial statements are consistent with the auditor’s understanding of the entity. Comparisons, ratios, trends, and relationships are reviewed to identify unusual or unexpected movements. Significant unexplained differences are investigated. These procedures provide an overall assessment of the financial statements and may identify matters that require additional audit procedures before the audit is completed.
Step 5. Review of Going Concern
The auditor performs a final going concern assessment by considering available financial and operational information. Indicators such as recurring losses, liquidity problems, defaults, negative cash flows, or significant obligations are evaluated. Management’s plans for addressing financial difficulties are also considered. The auditor determines whether appropriate disclosures have been made and whether the circumstances have implications for the audit report.
Step 6. Review of Subsequent Events
The auditor performs procedures to identify subsequent events occurring between the reporting date and the date of the auditor’s report. The auditor may review recent financial information, minutes of meetings, legal correspondence, and other relevant information. Management may also be questioned about significant developments. If a subsequent event requires adjustment or disclosure under the applicable framework, the auditor ensures that appropriate action is taken before issuing the report.
Step 7. Obtaining Written Representations
The auditor obtains written representations from management regarding important matters relevant to the audit. These may include management’s responsibility for the financial statements, completeness of information provided, disclosure of known misstatements, and other significant matters. Written representations supplement other audit evidence but do not replace necessary audit procedures. They are documented and retained as part of the audit file before completion of the engagement.
Step 8. Finalizing Audit Report and Documentation
After completing all necessary procedures, the auditor finalizes audit documentation and prepares the audit report. Significant matters, conclusions, unresolved issues, and professional judgements are reviewed before the report is issued. The auditor determines the appropriate opinion based on the evidence and financial reporting framework. Finally, the audit report is signed and issued in accordance with applicable professional and legal requirements.