Subsection 2: Certification of accounts

The professional practice standard relating to the probative nature of evidence gathered (specific applications), approved by the Minister of Justice, is shown below:

PROFESSIONAL PRACTICE STANDARD RELATING TO THE PROBABILITY OF EVIDENCE GATHERED

Introduction

1. The purpose of this standard is to define the audit procedures to be performed by the statutory auditor to collect items that enable it to reach conclusions in respect of:

- the physical inventory of inventories;

- lawsuits, disputes and litigation;

- financial fixed assets;

- segment information given in the notes to the financial statements.

2. The procedures defined in this standard do not exempt the statutory auditor from implementing the principles and procedures defined in other professional practice standards for the items mentioned above.

Physical inventory of stocks

3. Where the statutory auditor considers that the inventories are material, he shall attend the physical stocktaking in order to collect sufficient and appropriate information on the existence and physical condition thereof.

Attending the stocktaking enables the statutory auditor to verify that the procedures defined by management for recording and controlling the results of counts are applied and to assess their reliability.

4. Where stocks are spread over several sites, the statutory auditor shall determine the locations where he considers his presence at the physical inventory to be necessary.

In doing so, he shall take into account the risk of material misstatement at the level of stocks at each site.

5. If, due to unforeseen circumstances, the statutory auditor cannot be present on the date scheduled for the taking of the physical inventory, and insofar as a permanent inventory exists, he shall intervene on another date:

- either by carrying out physical counts himself;

- or by attending such counts.

He shall also carry out, if he deems it necessary, checks on interim movements.

6. Where his presence at the taking of a physical inventory is impossible, in particular because of the nature and location of such inventory, the statutory auditor shall determine whether he can implement alternative audit procedures providing evidence of equivalent probative value.

Proceedings, litigation and disputes

7. The statutory auditor performs audit procedures to identify lawsuits, litigation or disputes involving the entity that may give rise to risks of material misstatement of the financial statements.

If the statutory auditor has identified such risks, the statutory auditor requests the entity's management to obtain information about such lawsuits, litigation or disputes from its lawyers and to provide it to the statutory auditor.

8. If the management of the entity refuses to request information from its lawyers or to communicate to the statutory auditor the information obtained, the statutory auditor shall draw the consequences, if any, in his report.

Financial fixed assets

9. Where the statutory auditor considers that the financial fixed assets are material, he shall perform audit procedures designed to verify their valuation and allocation and to assess the information provided in the notes to the financial statements.

Segment information provided in the notes to the financial statements

10. When the statutory auditor considers that segment information is material, he or she gathers information intended to assess the information provided in the notes to the entity's financial statements.

To this end, he or she performs analytical procedures in particular and discusses with management the methods used to prepare this information.