A1 - Audit reports Flashcards
(17 cards)
Opinions
Audit issues:
Disclaimer - material & pervasive
Qualified - material but not pervasive
FS materiality correct:
Unqualified (issuer) -
Unmodified (nonissuer) -
FS issues:
Adverse - material & pervasive
Qualified - material but not pervasive
Pervasive definition: misstatement is evident throughout the FS.
Emphasis of matter paragraphs (nonissuer)
If presented or disclosed.
Required to describe a justified change in accounting principle that has material effect.
Subsequent discovery of facts that lead to change in opinion.
FS are prepared in accordance with applicable special purpose framework. Refers to note in FS describing basis of accounting.
Other matter paragraphs (nonissuer)
If not presented or disclosed.
Required anytime an auditor includes an alert that restricts the use of the auditor’s report.
Subsequently discovered facts that lead to change in opinion.
FS and report of predecessor auditor not reissued.
Prior period not audited.
Restricted use of auditor’s report when using special purpose FS.
A report on compliance is included in the auditor’s report.
Other Information
•Report by mgmt or those charged with governance
•Financial summaries
•Employment data
•Planned capital expenditures
•Financial ratios
•Names of officers & directors
•Selected qtrly data
-Other information is referenced in audit report separate section with heading “Other Information”.
Or
-An explanatory paragraph disclaiming opinion on other information.
Supplementary Information
*Info presented outside the basic FS that may be presented in document containing audited FS or separate from FS.
Objectives for reporting on Supplementary Information:
-Evaluate presentation in relation to FS as a whole.
-Fairly stated, in all material respects, in relation to FS as a whole.
-No requirement to restrict supplementary info.
Updated Opinion
If updated opinion differs from previous, auditor should disclose the reason in either an; emphasis of matter, other matter, or explanatory paragraph.
Disclose:
-Date
-Opinion
-Reason
-Changes
-Statement
Opinions - Issues
Inadequate disclosures of material matters including FS’s & footnotes. Departure from GAAP: Qualified or Adverse
Group Audit (Component Auditor)
Not assuming responsibility for component auditor. Divides responsibility, only change opinion paragraph.
Engagements
Independent:
-Audit - assurance
-Review - limited assurance. “Independent” in title of FS.
-Attestation - assurance
Not independent:
-Preparation - no assurance
-Compilation - no assurance, limitation of scope. No title. Disclose lack of independence
Adverse Opinion Verbiage
“In our opinion” is an appropriate phrase
Accounting change with no material effect on comparability
No reference is necessary
Predecessor responsibilities
-Comparative - Read current FS, Compare, & obtain rep letter from Successor & Mgmt.
-Reissue/Reevaluate - Re-evaluate to reissue original report, Modify, or Withdraw.
Successor responsibilities
-Comparative - Not responsible for prior period, If predecessor does not reissue then Other matter paragraph is added.
-Restated by mgmt - Audit restatement adj & add emphasis of matter or other matter paragraph.
Subsequent Events
Dual date the audit report to extend responsibility only for the particular subsequent event.
Compare latest available interim FS with statements being audited.
Special Purpose Framework
Cash, Tax, Regulatory, Contractual, & Other Basis
Unmodified Opinion
Refer to GAAP in Opinion section & the Mgmt responsibility section
DEALER
Debits:
Dividends
Expenses
Assets
Credit:
Liabilities
Equity
Revenue
