AUD 1.3 - FS Flashcards Preview

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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

Disclaimer of Opinion

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