Steps taken by the auditor where client has departed from accounting standard.
– Consider materiality of item. Consider the item in comparison with total of all class of items it relates to
– Consider the impact of departure in financial statements
– Check wither the departure has been properly disclosed and presented by ways of a note to financial statements
– Confirm whether the directors have the intention of correcting the departure by ensuring compliance in subsequent financial statements
– Consider reasons for departure from directors
– Consider whether the reasons for departure are justified
– Consider the possibility of the directors preparing revised financial statements with the correct financial statements i.e. statements that have complied with all the standards
– If the matter is material and the directors fail to do-operate to either revise the statements or disclose by way of note, the auditor should consider qualifying the audit report.
