AUD 1.3 - FS Flashcards Preview

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Flashcards in AUD 1.3 - FS Deck (12):

Going concern (how to alleviate)

- Increase ownership equity
- borrow money
- restructure debt
- sell assets
- reduce/delay expenditures"


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"


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"


Accounting principle change

If NOT material, then do NOT refer in emphasis of matter paragraph


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"


Contingent liability

"Only accrue if probable AND estimable

If either or neither, then simply disclose"


Insufficient audit evidence

Basis of Qualified Opinion preceding the Opinion Paragraph


Accounting principle change

Makes reference to the FS in the emphasis of matter paragraph


Restrictions on scope of audit

"Qualified or Disclaimer:
- insufficient evidence
- inadequate records
- timing of the work"


Scope limitation

"1. Disclaimer; or
2. Qualified"


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"


Disclaimer of Opinion

"1. Significant scope limitation
2. auditor not independent
3. FS not audited"