Introduction
The completion stage of an audit is a critical phase where auditors consolidate all the evidence gathered throughout the audit, review the final version of the financial statements, and ultimately form their audit opinion. This stage ensures compliance with key International Standards on Auditing (ISA) and serves as the final quality control step before issuing the audit report.
This article explores the key requirements of various ISAs relevant to the completion stage and their practical implications for auditors.
Review of Audit Files and Evaluation of Misstatements
Audit File Review
All audit work must be reviewed to ensure that sufficient appropriate audit evidence has been obtained. This is a fundamental quality control requirement under ISA 220, Quality Control for an Audit of Financial Statements.
The audit file review is essential for:
✅ Ensuring compliance with audit procedures
✅ Identifying misstatements or contradictory evidence
✅ Determining if additional audit procedures are needed
The review process must be documented according to ISA 230, Audit Documentation, including:
- Who reviewed the audit work
- The date and extent of the review
Evaluation of Misstatements – ISA 450
ISA 450, Evaluation of Misstatements Identified During the Audit, requires auditors to:
📌 Accumulate all misstatements identified (except those that are clearly trivial)
📌 Communicate misstatements to management and request corrections
📌 Assess uncorrected misstatements for materiality—individually and in aggregate
📌 Discuss implications with governance if misstatements remain uncorrected
Key Actions:
- The auditor presents the audit error schedule listing misstatements.
- If adjustments are made, the auditor must verify the corrections.
- If uncorrected, the auditor must assess whether the misstatements are material and may impact the audit opinion.
Management must provide a written representation confirming whether uncorrected misstatements are immaterial.
Final Analytical Procedures – ISA 520
At the completion stage, auditors must perform final analytical procedures as per ISA 520, Analytical Procedures.
Objectives of Final Analytical Procedures
🔍 Confirm that the financial statements are consistent with the auditor’s understanding of the entity
🔍 Identify unexpected trends or risks of misstatement
🔍 Validate the reasonableness of the financial statements
Common Analytical Procedures
📊 Ratio analysis (e.g., profitability, liquidity, leverage ratios)
📊 Comparisons with prior-period financial statements
📊 Trend analysis to identify unusual fluctuations
If unexpected discrepancies arise, the auditor must:
✅ Reassess the risk of material misstatement
✅ Modify planned audit procedures
✅ Perform additional audit work
The auditor must also review financial statement disclosures for completeness and compliance with IFRS or other applicable frameworks.
Subsequent Events and Going Concern Considerations
Two key ISAs apply near the end of the audit:
1. ISA 560 – Subsequent Events
ISA 560 requires auditors to:
📆 Identify events occurring between the date of financial statements and the auditor’s report.
📆 Determine whether adjustments or disclosures are needed.
📆 Perform specific audit procedures (e.g., reviewing board minutes, discussing with management).
⚠️ If subsequent events procedures are performed too early and not updated, significant events may be missed.
2. ISA 570 – Going Concern
ISA 570 states that auditors must:
✅ Continuously assess whether the entity can continue as a going concern.
✅ Review all evidence gathered and consider any new risks before finalizing the audit report.
Written Representations and Communication with Governance
Written Representations – ISA 580
According to ISA 580, Written Representations, auditors must:
📄 Obtain a written statement from management confirming their responsibility for financial statements.
📄 Ensure that the date of the written representation is as close as possible to the auditor’s report date.
The auditor cannot issue the audit report before receiving written representations.
Communication with Governance – ISA 260
ISA 260 requires the auditor to communicate significant audit findings with those charged with governance, including:
📌 Issues related to internal controls
📌 Uncorrected misstatements and their potential impact
📌 Audit independence matters
The auditor must also assess whether communication with governance has been effective throughout the audit.
Audit Clearance Meeting
At the conclusion of the audit, an audit clearance meeting is typically held between the auditor and the client’s management/governance team.
Key Topics Discussed in the Clearance Meeting:
✅ Internal controls and financial statement preparation process
✅ Proposed adjustments to financial statements
✅ Challenges encountered during the audit
✅ Regulatory updates affecting financial reporting
✅ Confirmation of accounting policies
Although not required under ISA, the audit clearance meeting helps prevent misunderstandings regarding financial statements and the auditor’s opinion.
Conclusion
The completion stage of an audit requires careful execution to comply with ISA standards and ensure the accuracy of the financial statements.
Key Takeaways:
✔ Audit file reviews ensure that all necessary procedures are completed.
✔ Evaluation of misstatements helps determine their materiality and impact.
✔ Final analytical procedures validate the overall reasonableness of financial statements.
✔ Subsequent events and going concern assessments ensure completeness and accuracy.
✔ Written representations and governance communication are crucial final steps.
✔ Audit clearance meetings facilitate a smooth conclusion of the audit.
🚀 By effectively planning and executing the completion stage, auditors can avoid issuing an inappropriate opinion and ensure compliance with international auditing standards.
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