Auditing of consolidation

Role
- To understand consolidation process include instruction by MGNT to its components- allow
assessment risk involved in consli process
- GA will conform done by client group:
1) Full & accurate transfer info from individual F/s compenent group to F/S group
2) Appropriate consli adjustment made

Audit procedures
1) Clerical accuracy
a. Conform figure transfer accurately F/S component to consolidate schedual
b. Check arithmetical accuracy all console calculate ( consili total bal & trans value)
2) Status investment
a. Parent correctly classified inves subsidary,associate JV accordance standart
accounting
b. Appropriate accounting treatment adopted of classification invement of group
F/S
3) Consolidate adjustment
a. Reconcile inter-com transc and bal-made by client
b. Check all inter-com bal and trans hed eliminate from group F/S
4) Related parties
a. Accounting treatment- disclocure RP comply
5) Reporting
a. F/S present at true and f.value

Joint venture involved two or more audit firm be appointed to audit F/S entity. Joint audit provide
opinion of F/S subsidiary

advantages disadvantages
- Client company large required services
more audit firm
- Join auditor provide higher level
technical expert rather audit provide
individualy
- Improved geographical coverage for
audit
- Medium audit firm can break monopoly
big 4

- Extra cost client
- Dificul audit firm work division work
- Inconsistence method use in audit
method use
- Problem in monitoring and controlling
two difference firm
- Dificlu work together and cause leading
in audit firm



Compenent auditor
CA underst and comply ethical requremt are relevant to GA in particular independent
CA professional competence
Group engament will able involved work in CA to fine appropriate evidence
CA operate in regulatory environment
Significant component = individual financial significant to group, GA on his behalf, must perform
audit using component materiality.
1) Using compenent materialty
2) Audit more account bal
3) Specific audit procedure to detect risk

Communication CA and GA no good communication. GA will unable to obtain sufficient audit
evidence in express opinion in G.F/s
Audit stock
Main risk is overstatement of ci distort profit
2

issue
exsistance & ownership
measure & valuation
at cost
net realizable value at below cost
audit existance
inventory
main is to evidance regard existance & condition by attance physical count
procuder
before
examine last year file about info-nature,location,system & problem
enquries client-change,problem face
asistance expert-high specilized nature
riview quality instr count- stocsheet(control/numbred), ident/spred SMODS & caount
in pair
during
count instruc follow
perform test count-count sheet/inventory
consider opening seald pack-inventory have/not
cut off procuder-detail received.dispach
fprm opinion

SMODS
dificul to sell
NRV less Cost
obtain schedlu-compare last year & iview count conduct by client
obtain record-reconcile scheddule
riview year end movement to comform acuracy-price & cost