The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
As discussed in Note 3 to the financial statements, the financial statements include investments valued at $8,658,675 (49% of net assets) as of September 30, 2018, whose fair values have been estimated by management in accordance with policies approved by and under the general oversight of the Board of Trustees in the absence of readily determinable fair values.
The principal considerations for our determination of the investments whose fair values have been estimated by management in accordance with policies approved by and under the general oversight of the Board of Trustees in the absence of readily determinable fair values are that auditing these investments involved our complex and subjective judgment and the investments are material to the financial statements as a whole.
Our audit procedures related to these investments included the following procedures, among others to address the critical audit matter: We tested the effectiveness of the controls over the Fund’s valuation methodologies and evaluated the relevance of the qualitative components embedded in the methodology models. We also agreed underlying supporting documentation from outside specialists where applicable, agreed to actual empirical sales data as available and tested the computational accuracy of the models.
CAMs: Lessons Learned & Illustrative Example
This new publication from the “Center for Audit Quality” is useful. It presents early lessons learned from “dry runs” that auditors have conducted on critical audit matters. It also contains an illustrative example of a CAM, along with a set of new questions to foster dialogue and understanding of the impact that CAMs will have on the audit process. See this Cooley blog…
PCAOB’s Post-Implementation Review: Engagement Quality Review
Last week, the PCAOB Staff posted a post-implementation review of AS 1220 about engagement quality. This is the PCAOB’s first post-implementation review for one of its standards. The review includes key findings, messages for auditors and audit committees and enhancements to achieve more effective reviews…
Last week, the PCAOB also adopted a new standard to enhance the requirements that apply when auditing accounting estimates, including fair value measurements…
– Broc Romanek