Flashcards in AUD 1.3 - FS Deck (12):
1
Going concern (how to alleviate)
- Increase ownership equity
- borrow money
- restructure debt
- sell assets
- reduce/delay expenditures"
2
Going concern (auditor's report)
- ""substantial doubt"" and ""Going concern"" = auditor's report language
- time period NOT mentioned
Options - if properly disclosed
1. Disclaimer; or
2. Unmodified w/ Emphasis of Matter
Option if NOT properly disclosed
1. Qualified
2. Adverse"
3
Going concern (comparative FS)
"If going concern in PY but removed in CY:
remove PY's emphasis of matter and NO description why going concern removed"
4
Accounting principle change
If NOT material, then do NOT refer in emphasis of matter paragraph
5
Inventory (insufficient evidence @ beginning year)
"Impact to BS and Income Statement:
BS: no impact as long as YE BS amount has sufficient evidence
IS: disclaimer since insufficient for COGS"
6
Contingent liability
"Only accrue if probable AND estimable
If either or neither, then simply disclose"
7
Insufficient audit evidence
Basis of Qualified Opinion preceding the Opinion Paragraph
8
Accounting principle change
Makes reference to the FS in the emphasis of matter paragraph
9
Restrictions on scope of audit
"Qualified or Disclaimer:
- insufficient evidence
- inadequate records
- timing of the work"
10
Scope limitation
"1. Disclaimer; or
2. Qualified"
11
Going concern (ISA vs GAAS)
"ISA - at least 12 months from date of audited FS
US GAAS - no more than 12 months of audited FS"
12