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Flashcards in A1-A2 REVIEW Deck (17):

When an auditor concludes there is substantial doubt about a continuing audit client's ability to continue as a going concern for a reasonable period of time

The auditor would include an emphasis-of-matter paragraph following the unmodified opinion, or disclaim an opinion due to a material uncertainty. The auditor's RESPONSIBILITY is to to consider the ADEQUENCY of DISCLOSURE about the entity's possible inability to continue as a going concern and include an emphasis-of-matter paragraph in the audit report


The Public Company Accounting Oversight Board (PCAOB) was established by

The Sarbanes-Oxley Act of 2002


Generally accepted auditing standards for the audits of NONISSUERS are issued by the AICPA's Auditing Standards Board (ASB)

in the form of Statements on Auditing Standards (SAS)


If an accountant decides that the change of ENGAGEMENT is JUSTIFIED

the report should NOT make reference to the original engagement.


When an accountant issues to an underwriter a comfort letter containing comments on data that have NOT been audited

the underwriter most likely will receive NEGATIVE ASSURANCE on CAPSULE (概要的) information.


In a review engagement, an accountant may become aware of a material departure from the applicable financial reporting framework, the accountant should recommend that the F.S be revised to conform with the framework

If the F.S are not revised or the management refuse to revise the F.S, the accountant must
1.(Modified the report) disclose this departure in a separate paragraph of the report
2. (modification or disclosure is not adequate) withdraw from the engagement and provide no further service.


F.S prepared in accordance with a comprehensive basis of accounting other than GAAP that are NOT suitably titled

Require a QUALIFIED opinion with a basis for modification paragraph.


An auditor would most likely obtain a letter from the entity's legal counsel describing any pending litigation, unasserted claims, or loss contingencies (或者Inquiring as to whether any unusual adjustments were made after year-end.)

to obtain evidence that during the review of subsequent event.


Review of quarterly financial data included in F.S of a NONISSUER is performed under Statements on Auditing Standards(SAS), not under PCAOB standards.

A review of interim financial information under PCAOB standards is conducted for public companies (or companies anticipating going public).


The study of relationships among financial statement elements is part of performing analytical procedures (review engagement)

Is NOT part of a compilation engagement


PCAOB ( public company accounting oversight board) deals with SEC

SSARS deals with nonissuers (non-public companies).
An accountant is required to comply with SSARS when engaged to prepare, compile or review the F.S.


Compilation requirement
1. knowledge of industry accounting principles and practice
2. understanding of client's business
a. Staff qualification
b. Transaction type and frequency
c. Accounting basis used to prepare the F.S
d. Form of accounting records.
f. Form of F.S.

Review requirement
1. Understanding with client
2. Learn and obtain sufficient knowledge of the entity's business
3.Inquires should be addressed to appropriate individuals
4. Analytical procedures should be performed
5.Review-other procedures should be performed.
6. Client representation letter should be obtained from management
7. Professional judgement should be used
8.Accountant should communicate results.


Report on compliance include

a paragraph that RESTRICT THE USE of the report to management, those charged with governance, others within the organization, the regulatory agency, or other parties to the contract or agreement.


If the prescribed specific LAYOUT, FORM OR WORDING of the auditor's report is NOT ACCEPTABLE

The auditor should REWORD the prescribed form of report OR attach an appropriately worded separate report.


If the predecessor accountants decide to reissue their compilation or review report unchanged.

they should perform the following procedures:
1. read the statements and the report of the current period
2. compare the prior period statement with those issued previously and currently.
3.obtain a letter from the successor accountant stating that they are not aware of any relevant info that might have a material effect on the prior period statement.


An opinion, even qualified or adverse, requires an audit. When an accountant performing a COMPILATION or REVIEW becomes aware of a GAAP departure, the report should be

Modified or the accountant would withdraw. An opinion WOULD NOT be expressed, DO NOT issue an "adverse" or "except for" opinion.


Report on Agree-upon procedure should contain

A statement of restrictions on the use of the report.