AUD 1.3 - FS Flashcards

(12 cards)

1
Q

Going concern (how to alleviate)

A
  • Increase ownership equity
  • borrow money
  • restructure debt
  • sell assets
  • reduce/delay expenditures”
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2
Q

Going concern (auditor’s report)

A
  • "”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”
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3
Q

Going concern (comparative FS)

A

“If going concern in PY but removed in CY:

remove PY’s emphasis of matter and NO description why going concern removed”

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4
Q

Accounting principle change

A

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

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5
Q

Inventory (insufficient evidence @ beginning year)

A

“Impact to BS and Income Statement:
BS: no impact as long as YE BS amount has sufficient evidence
IS: disclaimer since insufficient for COGS”

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6
Q

Contingent liability

A

“Only accrue if probable AND estimable

If either or neither, then simply disclose”

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7
Q

Insufficient audit evidence

A

Basis of Qualified Opinion preceding the Opinion Paragraph

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8
Q

Accounting principle change

A

Makes reference to the FS in the emphasis of matter paragraph

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9
Q

Restrictions on scope of audit

A

“Qualified or Disclaimer:

  • insufficient evidence
  • inadequate records
  • timing of the work”
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10
Q

Scope limitation

A

“1. Disclaimer; or

2. Qualified”

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11
Q

Going concern (ISA vs GAAS)

A

“ISA - at least 12 months from date of audited FS

US GAAS - no more than 12 months of audited FS”

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12
Q

Disclaimer of Opinion

A

“1. Significant scope limitation

  1. auditor not independent
  2. FS not audited”
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