HELPSHEET
COLD FILE AUDIT COMPLIANCE REVIEW CHECKLIST
ASSIGNMENT DETAILS
Client name
Type of business
Reporting period, months:
Audit report date:
Balance sheet date :
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Qualified: Yes (Specify):
Reason for selection
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Unqualified: Yes
Emphasis of matter: Yes(Specify):
Listed client:
High Risk:
Public interest:
Other:
(Specify):
Personnel
Accounting data
Responsible Individual:
Turnover:
£
Engagement quality control reviewer:
Net assets:
£
Manager:
Audit fee:
£
Staff:
Other:
£
£
£
1.0
FINANCIAL STATEMENTS
A cold file review should confirm that the financial statements comply with statutory and
financial reporting standard disclosure requirements. A disclosure checklist is not mandatory,
but is evidence of compliance with ISA 250.
Y NI N N/A Ref:
1.1
Directors report:
a)
Physically signed?
b)
Name of signatory stated?
c)
Small company statement correct?
1.2
Audit report:
a)
Physically signed?
b)
Signed as appropriate in correct name and as Senior
Statutory Auditor / Statutory Auditor?
Dated:
Dated:
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c)
Correct reference to FRSSE including effective date?
d)
Complies with ISA 700 to 720 and Bulletin 2010/2?
Y = YES
NI = Needs Improvement
N = No
Reg 3.16
N/A = Not Applicable
Y NI N N/A
1.3
Balance sheet:
a)
Physically signed?
b)
Name of signatory stated?
c)
Small company statement correct?
1.4
Abbreviated accounts:
a)
Physically signed?
b)
Audit report complies with Bulletin 2008/4?
c)
Consistent with full financial statements?
1.5
Disclosure:
a)
Appropriate checklist used?
b)
No disclosure errors noted?
1.6
Other third-party report or return signed:
a)
Copy on file?
b)
Physically signed?
c)
Consistent with audited financial statements?
d)
Referenced to specific work?
2.0
APPOINTMENT AND REAPPOINTMENT
Dated:
Dated:
Dated:
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Ref:
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Before accepting an appointment, at the planning stage of the audit and at completion an
auditor should assess their independence and resources. Issues identified relating to
independence and the APB Ethical standards need to be communicated to management
and those charged with governance.
2.1
Appointment acceptance:
a)
Approved by Responsible Individual?
b)
Integrity of the client considered?
c)
Ethical standards including independence considered?
d)
Adequate resources and competence confirmed?
e)
Communication with previous auditor?
2.2
Engagement letter:
a)
Dated:
b)
Wording appropriate (eg refers to Companies Act 2006 and
include the preconditions for an audit ISA 210.6)?
c)
Complaints and fees paragraphs (Regulations and guidance
– ‘The duty on firms to investigate complaints’ and ‘Code of
Ethics’.)?
d)
Covers services provided?
2.3
Has any change in the terms of the engagement been fully
considered and new terms agreed?
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Reg 3.03
ES &
ISQC 1
ISA 210
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Up to date?
Y NI N N/A
Ref:
2.4
Continuation of client relationship (at planning):
a)
Approved by Responsible Individual?
ISA 300
b)
Integrity of the client considered?
ISA 220
c)
Ethical standards including independence considered?
ISQC 1
d)
Previous fees paid and current fee level considered?
ES 4
2.4
Continuation of client relationship (cont):
e)
Provision of non-audit services assessed?
ES 5
f)
Adequate resources and competence confirmed?
ISQC 1
2.5
Where ethical and independence issues have been identified:
ES
a)
Is there informed management and if so have the persons
been identified and documented?
b)
Have appropriate safeguards been determined?
Specify:
c)
Is it a small company in accordance with PASE?
d)
Where there is informed management have the PASE
alternative procedures been adopted?
e)
Where there is no informed management have the PASE
exemptions been applied and disclosed in the notes to the
financial statements and audit report?
f)
Have all issues been communicated with those charged with
governance at planning and completion?
3.0
UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT
An audit must be undertaken in the light of the client’s specific circumstances. The
International Standards on Auditing require certain matters to be considered and
documented. Much of the information required may not change materially from year to
year. It is therefore efficient to document it and then carry it forward updating regularly for
changes. Such information can be kept in a permanent file, a brought forward permanent
section in the current file or included within the current audit documentation (most
normally within the planning section). It is not good practice to retain this information
within a general correspondence file, as it can be "lost" amongst other documents and
not easily accessed.
3.1
Detailed information on the entity and its environment (know
your client):
a)
Relevant industry, regulatory and other external factors,
including the applicable financial reporting framework?
b)
Nature of its operations?
c)
Ownership and governance?
d)
Investments and special-purpose entities?
e)
Structure and financing?
f)
Significant accounting policies and their appropriateness?
g)
Objectives, strategies and related business risks?
h)
Measurement and review of financial performance?
ISA 315
Y NI N N/A
Ref:
3.1
(Continued)
i)
Laws and regulations and compliance procedures?
ISA 250A
j)
Related parties and their related transactions?
ISA 550
k)
Accounting estimates (including the outcome of prior period
estimates)?
ISA 540
l)
Service organisations?
ISA 402
3.2
Internal control and information systems:
ISA 315
a)
Operations and transaction flows recorded?
b)
Accounting records description and detail?
c)
Journals and error correction process documented?
d)
Control environment and control activities identified?
e)
Design and implementation of controls assessed?
f)
Completeness and accuracy of records assessed?
g)
Skills and bias of management and key staff assessed?
h)
Management’s risk assessment and reporting controls
understood, including those in relation to fraud?
4.0
AUDIT STRATEGY, PLANNING AND RISK ASSESSMENT
The audit plan together with other permanent notes should be sufficient to explain the
business, how transactions are generated, how they are recorded and the control over them.
It should identify the important, significant and material balances, transactions and events,
the audit approach, methods and procedures to be adopted to address these areas and the
risks associated therewith. The assessed risk should clearly link to the audit programmes
and procedures to be adopted.
4.1
Audit strategy and plan:
a)
Approved by Responsible Individual?
b)
Dated:
4.2
New appointment or previous year not audited:
a)
Reliability of opening balances considered?
ISA 510
b)
Reliability of comparatives considered?
ISA 710
c)
Prior year audit report reviewed?
ISA 510
4.3
Risk assessment procedures:
a)
Prior period information considered and updated?
ISA 315
b)
Analytical review adequately annotated,
considered and queries identified?
ISA 315
c)
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ISA 300
Appropriate?
expectations
Risk of material misstatement considered for transaction
classes, account balances and disclosures?
ISA 315
d)
Risk of fraud assessed and discussed with client?
ISA 240
e)
Risk of revenue recognition fraud recorded?
ISA 240
f)
Management override of controls identified as a significant
risk?
ISA 240
Y NI N N/A
4.3
Risk assessment procedures (continued)
g)
Risk assessment (including risk of fraud) of significant related
party relationships and transactions recorded?
Ref:
ISA 240
h)
Significant related party transactions outside the normal
course of business identified as significant risks?
i)
Accounting estimates; management bias and estimation
uncertainty evaluated? If high, then has this been identified as
a significant risk?
ISA 540
4.4
Internal controls:
ISA 315
a)
Design of controls assessed as appropriate and key controls
identified for testing?
b)
Implementation of controls confirmed and evaluated by walk
through or observation tests?
c)
Significant deficiencies in internal controls identified?
4.5
Materiality:
a)
Has materiality for the financial statements as a whole been
determined?
b)
Has separate materiality levels been set for particular classes
of transactions, account balances or disclosures?
c)
Have disclosures been identified for which materiality is not
relevant?
d)
Has performance materiality been set?
e)
Has materiality been set at appropriate levels?
4.6
Has the audit approach, methodology and procedures to be
adopted to address the risks been clearly defined?
4.7
Specialist and additional audit programmes adopted for the
nature of the client?
4.8
Is the audit plan specific to the client and adequately
documented?
4.9
Has the requirement for an independent or hot file review been
determined in accordance with the firm’s procedures?
4.10
Is there evidence of a discussion with the audit engagement
team of:
a)
The overall audit plan?
ISA 300
b)
Going concern?
ISA 300
4.11
Is the team discussion documented on the risk of material
misstatement and fraud in respect of:
ISA 315
a)
Revenue recognition?
b)
Related party transactions? and
c)
Management override?
d)
Fraud
ISA 550
ISA 320
Y NI N N/A
4.12
Have the following matters been documented as discussed with
those charged with governance:
a)
The auditors responsibilities in relation to the audit
b)
Planned scope and timing of the audit
c)
Going concern
d)
Fraud
e)
Related parties
f)
Compliance with laws and regulations
5.0
AUDIT SAMPLING AND EVALUATION OF ERRORS
Ref:
ISA 260
Samples, where used, should be based on an assessment of audit risk, materiality and
population. Samples selected should be representative of the whole population and cover
the whole of the period under review. The determination of the items to be tested should
be recorded to document these considerations. Tests should be recorded with sufficient
detail such that the individual items tested could be subsequently identified.
5.1
Sample planning and recording:
a)
Are sample sizes based on risk, performance materiality and
population?
b)
Is sample selection explained?
c)
Are samples representative of the transaction type and period?
ISA 530
Is coverage in relation to the population summarised?
d)
5.2
Misstatements and errors (items that cannot be tested must be
treated as errors):
a)
Has a threshold been set for ‘trivial’ errors?
b)
Has the effect of projected errors been assessed on the
population?
c)
Were additional procedures undertaken when errors were
found?
d)
Are isolated errors supported by audit evidence?
e)
Were misstatements assessed for implication of fraud?
f)
Has the aggregate of uncorrected misstatements been
identified?
g)
Has the summary been assessed and considered in relation to
the audit opinion and conclusions?
h)
Does the summary consider the effect of uncorrected
misstatements from prior periods?
i)
Does the representation letter include a representation that the
uncorrected misstatements are immaterial both individually
and in aggregate?
j)
Is a schedule of uncorrected misstatements attached to the
representation letter?
ISA 530
ISA 450
ISA 450
6.0
DOCUMENTATION AND EVIDENCE
The audit evidence should be recorded in such a way that an experienced auditor with no
prior knowledge of the client should be able to determine the extent of the work done and
how the conclusion has been arrived at in respect of satisfaction of the financial statement
assertions.
Y NI N N/A Ref:
6.1
Audit programmes and conclusions:
a)
Appropriate proprietary audit programmes used?
b)
Tailored for the specific audit client?
c)
Appropriately completed and signed?
d)
Adequately annotated, cross-referenced and dated?
e)
Programme followed and all relevant tests undertaken?
f)
Are conclusions recorded for each audit section, confirming
that the relevant financial statement assertions have been
satisfied?
6.2
Detailed working papers:
a)
Initialled and dated?
b)
Record objectives, sampling method, extent of work, matters
arising and action taken?
c)
Do lead schedules agree with the financial statements?
d)
Comparatives on lead schedules and detailed analysis?
e)
All material disclosures supported by working papers?
f)
All significant professional judgements documented?
6.3
Evidence of review:
a)
Evidence of review by RI?
b)
Evidence of review of the detailed working papers in
accordance with the firm’s policies and procedures?
6.4
Where the audit work results in the audit evidence being
insufficient to confirm the objective has the planning been
revisited and additional tests added?
6.5
Specific audit procedures:
a)
Analytical review minimum steps followed and fully recorded?
ISA 520
b)
Accounting policies reviewed and revised?
ISA 315
c)
Opening balances agreed?
ISA 510
d)
Attendance at physical inventory counting and minimum
required audit procedures followed?
ISA 501
Litigation and claims minimum required audit procedures
followed?
ISA 501
f)
Letters obtained from all banks and building societies?
ISA 505
g)
External confirmations received as appropriate?
ISA 505
h)
Journal entries, adjustments and estimates examined?
ISA 330
i)
Where reliance is being placed on controls have they been
tested?
ISA 315
e)
ISA 230
ISA 220
ISA 300
Y NI N N/A
Ref:
6.5
Specific audit procedures (continued):
j)
Evidence of going concern assessment by management and
review by auditor?
ISA 570
k)
Subsequent events review minimum procedures evidenced
and documented?
ISA 560
l)
Related party transactions (RPT) determined and appropriate
audit evidence obtained (Note specific procedures for RPT
outside the normal course of business?
ISA 550
m)
Compliance with laws and regulations considered?
ISA 250
n)
Service organisations considered and addressed?
ISA 402
o)
Has the competence, objectivity and work of management’s
and auditor’s experts been adequately evaluated?
ISA 500
& 620
p)
Has appropriate audit evidence been obtained in respect of
accounting estimates?
ISA 540
6.6
Have all material balances and transactions been subject to
appropriate audit work and adequate audit evidence obtained
in respect of:
a)
Existence, classification, rights and obligations?
b)
Occurrence and completeness?
c)
Cut-off and allocation?
d)
Accuracy and valuation?
7.0
ISA 500
AUDIT COMPLETION
The audit completion should evidence the checking, review and control of the audit in order to
support a conclusion that:
- the audit opinion is appropriate and supported by adequate audit evidence documented
within the file;
- the financial statements comply with relevant statutory and financial reporting standard
disclosure requirements and give a true and fair view ; and
- the audit work complies with International Standards on Auditing and Regulations.
The completion section should record the work undertaken, matters considered, decisions
made and conclusions reached.
7.1
Final conclusion and post balance sheet events:
a)
Signed by Responsible Individual?
b)
Conclusion that sufficient, appropriate audit evidence has been
obtained?
c)
Dated:
d)
Specific procedures followed to confirm post balance sheet
events updated to audit report date?
7.2
Justification of audit report:
a)
Unqualified audit report confirmed?
b)
Modifications to audit report adequately considered?
c)
Reasons for emphasis of matter or qualification documented?
Specify:
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ISA 220
Appropriate?
ISA 560
ISA 700,
705 &
706
Y NI N N/A
Ref:
7.3
Review:
ISA 220
a)
Evidence of adequate review and supervision?
b)
Outstanding and review points satisfactorily cleared?
c)
Summary of significant matters and decisions?
d)
Consideration of appropriateness of treatment of unadjusted
errors?
7.4
Review of financial statements:
a)
Analytical review documented at completion?
b)
Adequately annotated and explained?
c)
Final overall review evidenced?
7.5
Meetings and consultations:
a)
Client meeting and discussions documented?
b)
Consultations documented?
ISA 220
c)
Independent / hot file review undertaken when required?
ISQC 1
7.6
Is there evidence that continuance procedures have been
considered and confirmed?
7.7
Letter of representation:
a)
Dated:
b)
Representations included:
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ISA 520
Appropriate?
– Management has fulfilled its responsibilities regarding the
accounts
ISA 580
– All relevant information and access has been provided
– All transactions recorded and reflected in the financial
statements
– Reasonable assumptions in respect of accounting
estimates including fair value measurements
ISA 540
– Related party relationships advised, accounted for and
disclosed
ISA 550
– Post balance sheet events adjusted or disclosed
ISA560
– Uncorrected misstatements are immaterial and a list is
attached
ISA 450
– Internal controls, risk and knowledge in respect of fraud
ISA 240
– Laws and regulations
ISA 250
– Going concern for 12 months
ISA 570
– Litigation and claims have been advised and properly
accounted for
ISA 250
–Specific matters raised in the file
7.8
Have the following matters been documented
communicated to those charged with governance:
– Qualitative aspects of the entity’s accounting practices
– Selection and application of accounting policies
as
ISA 260
Y NI N N/A
7.8
(Continued)
Ref:
ISA 260
– Significant difficulties, if any encountered during the audit
– Independence issues and safeguards applied
7.9
Have significant deficiencies in internal control been
communicated to those charged with governance and where
different the management team in writing?
7.10
Have the risks assessed at the planning been addressed by
the audit by the work and reviewed at completion?
7.11
Does the completion section sufficiently document the quality
control processes applied?
7.12
Has the audit been planned and undertaken with an attitude of
professional scepticism?
8.0
CONCLUSIONS
8.1
The following matters have been identified where compliance with auditing standards could
be improved.
Standard
8.2
ISA 200
Matters identified
The following errors, omissions or inadequate detail in the financial statements in respect of
statutory requirements, financial reporting standards and other applicable regulations have
been identified.
Ref (FRS etc)
8.3
ISA 265
Matters identified
The audit report didcomply with ISA 700 and was signed as Statutory Auditor.
8.4
The following matters were identified which indicate doubt as to the appropriateness of the
audit report.
While this review has been carried out with all due diligence, it cannot be relied upon to be exhaustive
and to have identified all areas where errors may have been made or where improvements may be
required.
Signed
Reviewer
Date
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