Auditing accounting Estimates – ISA 540 revised • Requirements of the applicable financial reporting framework • Evaluating controls • Understanding and documenting MAD • Consideration of Management Bias • Reviewing the outcome of accounting estimates included in the prior period financial statements • Identifying and assessing the risks of material misstatement o Degree of estimation uncertainty o Significant risks • Responses to the Assessed Risks of Material Misstatement o 3 different methods for testing estimates o Auditing the work performed by a management expert • Consider whether specialized skills or knowledge in relation to one or more aspects of the accounting estimates are required • Evaluating the Reasonableness of the Accounting Estimates, and Determining Misstatements • Disclosures Related to Accounting Estimates Trading under insolvent circumstances During this presentation I will be answering the following questions. What is the difference between the following? • Technical or factual insolvency • Commercial insolvency • Financially distressed • Going concern problems • Fraudulent or reckless conduct • Common law fraud When does any form of insolvency becomes an irregularity? When does insolvency constitute an offence or infringe a statutory or common rule? When should the auditor report insolvencies? When should the independent reviewer report insolvencies? When should the accounting officer report insolvencies? When must the directors of a company perform a solvency and liquidly test? Under which circumstances will the Commission issue a notice to a company to cease trading? What effect will the following have on the insolvency position of a company? • Subordination agreements • Letter of comfort • Guarantees • Letter of support What type of liability could an auditor, independent reviewer, accounting officer or director of a company of a director incur for not dealing in an appropriate manner with any form of insolvency