A6 M5 Review Reports Flashcards
(28 cards)
forming opinions for review engagements
1) F/S adequately described applicable financial reporting framework
2) consider impact of uncorrected misstatements
3) F/S adequately disclose accting policies
4) accting estimates appear reasonable
5) F/S have adequate disclosures
6) overall presentation, structure, and content of F/S fairly presented
unmodified conclusion
when limited assurance obtained and no evidence that F/S have not been prepared in accordance with applicable financial reporting framework
qualified conclusion
when effect of a matter gives rise to modification is material but not pervasive to F/S
-Basis for Qualified Conclusion and Qualified Conclusion paragraphs put after auditors responsibilities
adverse conclusion
when effect of a matter gives rise to modification is material and pervasive to F/S
-Basis for Adverse Conclusion and Adverse Conclusion paragraphs put after auditors responsibilities
when an emphasis of matter or other matter paragraph should be included?
1) when mgmt revises F/S for subsequent discovered fact known after report release date and review report differs from original review report
2) F/S prepared in accordance with special purpose framework
3) changed reference to a departure from applicable reporting framework when reporting on comparative F/S
4) reporting on comparative F/S when prior period audited
5) acctnt concludes substantial doubt on going concern for reasonable period of time
6) supplementary info with reviewed F/S
7) respect to required supplementary info
other reasons emphasis of matter paragraphs can be included:
1) an uncertainty relating to future outcome of unusually important litigation or regulatory action
2) major catastrophe has significant effect on financial position
3) significant transactions with related parties
4) unusually important subsequent events
review report with special purpose frameworks
-make reference to mgmt’s responsibility for determining applicable financial reporting framework
-emphasis of matter paragraph indicates F/S prepared in accordance with special purpose framework
-if regulatory or contractual basis, description of purpose of which F/S prepared or refer to note in F/S in mgmt responsibility and include other matter paragraph restricting use
acctnt modifies the review report when F/S do not include:
1) description of special purpose framework
2) summary of significant accting policies
3) adequate description about how special purpose framework differs from GAAP
4) informative disclosures similar to GAAP
reference to work of other acctnts in review report
acctnt of reporting entity decides not to assume responsibility for audit or review performed by other acctnts, can make reference to other acctnts as long as report not restricted
consideration of entity’s ability to continue as a going concern
1) if applicable financial reporting framework has requirements to evaluate GC
OR
2) conditions made aware of a GC
-includes whether GC basis appropriate, mgmt eval of GC, mgmt plans to mitigate it and adequacy of disclosures
when going concern is alleviated vs. if going concern remains
-accountant can (but not required) to include an emphasis of matter paragraph
-paragraph labeled Substantial Doubt About the Entity’s Ability to Continue as a Going Concern as note to F/S (this does not modify opinion)
when all periods of F/S presented
update report on one or more periods presented on comparative basis with those of current period
-acctnt considers any matters that arise on acctnt’s report
when current period reviewed and prior period compiled
report on prior periods should be updated and issued as last paragraph of current period’s report
current period compiled and prior period reviewed
1) issue compilation report with added paragraph to current period statements (state responsibility assumed for prior period statements, date of original report and no review procedures performed after date of review report)
OR
2) reissue prior period review report and can be combined with current period compilation OR presented separately from current period compilation
when a combined report is used, use statement:
No review procedures were performed in connection with review engagement after date of review report
current period prepared and prior period compiled or reviewed
no requirement to reference prior period
omission of required disclosures
accountant does not issue a report on comparative F/S when statements omit substantially all of disclosures required by GAAP
information impacting previous reports
if acctnt finds info that would have impacted prior reports, than disclose a departure from GAAP on previous reports made
-an other matter paragraph added to prior report noting: 1) date of original report 2) that statements of prior period have been changed 3) reason for change in original report
does the predecessor accountant need to reissue report on prior periods?
No, but they can if they want to to make sure reports are still appropriate and follow the procedures done in a typical audit
when the predecessor performed a compilation or review and it is not presented, what does the successor do?
not required to make reference to comp or review on prior period F/S but can make reference in current report or perform service himself
how does successor make reference to predecessor auditor in current report?
by adding a paragraph with:
1) statement that prior periods compiled or reviewed by other accountants
2) date of report
3) description of any modifications contained in report
what if predecessor’s report was compiled in prior year, what does successor do?
the paragraph should include statement that other accountants did not audit or review F/S and did not express an opinion or provide assurance about whether F/S in accordance with applicable financial reporting framework
what if predecessor’s report was reviewed in prior year, what does successor do?
the paragraph includes a statement that based on review other accountants not aware of material modifications that should be made to F/S to be in accordance with applicable financial reporting framework
restated prior period F/S
predecessor or successor may report on changed prior period F/S as restated; successor accountant may report only on restatement adjustment, while indicating a predecessor acctnt reported on prior period F/S before restatement
