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Flashcards in AUD CH 8 - Other Services & Reports Deck (80)
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What is the Auditor responsible for in regards to Supplementary Information that is provided voluntarily by the client ?

(auditor is not "engaged to report")

Only read the information to determine that is consistent with the F/S


Obtain written representations from management


Communicate with Governance regarding the auditor's responsibility with respect to other information & any procedures relating to other information

(this is a reactionary basis for inconsistency)

***NOT "engaged to report"


If voluntary Supp. Info is not consistent, how should the auditor respond?

If it is not consistent: ADD explanatory paragraph to ID the inconsistency (OPINION IS NOT AFFECTED)

- may also withhold the use of the report or withdraw (rare)

**if consistent, no reference in report (reactionary basis)


What are the conditions for accepting an engagement to report on whether supplementary information is fairly stated, in all material respects, in relation to F/S as a whole?

1. The SI & F/S are derived from the same records

2. Same Period

3. F/S were audited & a report was issued that was neither adverse nor contained a disclaimer of opinion

4. Either the SI will accompany the F/S or they will be readily available


When engaged to report on whether supplementary information is fairly stated, what should an auditor do?

1. Make sure all 4 conditions are met

2. Perform normal audit procedures

3. Perform additional procedures including:

- Inquiry of management (SI Purpose, preparations, & significant assumptions)

- Evaluate whether form and content comply with criteria & consistent application of criteria. Compare & reconcile the SI to underlying Accounting records

- Obtain written representations from management (responsibility of SI, belief of fair pres, consistency, significant assumptions, & availability of audited F/S (if not included with SI)


Which procedures should the auditor apply to RSI?

Limited review procedures to evaluate adequacy & accuracy of information

- Inquiry of management about methods of preparing the information

- Compare information for consistency

- Obtain written representations from management (responsibility)

*** NOT AN AUDIT (No opinion)


When is RSI not referenced in the auditor's report?

When required information is provided & free of obvious deficiencies

*** must mark pages as "unaudited"


Why would an explanatory paragraph be added to an auditor's report in regards to RSI?

when the information is incomplete or incorrect


- RSI is omitted, not in compliance with AFRF, auditor is unable to complete required procedures, substantial doubt about conformity of RSI

*** Explanatory Paragraph will ID the deficiencies, but OPINION WILL NOT BE AFFECTED


What should an Auditor do when unable to complete required procedures in regards to RSI?

add an explanatory paragraph to auditor's report



What is the requirement when an auditor is asked to report on selected financial data?

- must be accompanied by audited F/S

- information is derived entirely from those statements


How is an auditor submitted document treated by the auditor?

- Auditor must report on ALL the information included in the document

- Audit report is expanded to cover the information

- Auditor has choice of expressing an opinion on the SI or disclaiming one

** Audit (full audit procedures) unless disclaiming on info


When would an auditor express an opinion on supplementary information?

When the SI is an Auditor Submitted Document (or could choose to disclaim opinion)

- express opinion on whether the information is fairly stated in all material respects in relation to the basic F/S taken as a whole


What will never affect an auditor's opinion on the basic F/S?

the accuracy or inaccuracy of supplementary


What precludes expressing an opinion on supplementary information?

an adverse or disclaimer of opinion on the basic F/S


Which engagements prepare a special report?

- Reporting on F/S in accordance with special purpose framework, aka OCBOA

- Reporting on specified elements, accounts, or items on a F/S

- Completing prescribed report forms of govt agency

- Reporting on client compliance with contract or government requirements


What is required for basis to be considered “a special purpose framework”?

there must be a definite set of criteria that would enable the auditor to determine conformity with the approach

** "based on GAAP" is not a special report (actually a GAAP-Departure, therefore... qualified or adverse opinion)


An audit report of F/S in accordance OCBOA

- GAAS accordance

- Opinion

- Same Report with few modifications (Intro, Management, Auditor, Opinion)

*** ADD sentence to Management's Responsibilities: " that the X basis of accounting is an acceptable basis for prep"

*** ADD Explanatory Paragraph: "Refer to NOTE X which describes the basis of accounts"

--- Indicate that it is different from GAAP USA

*** F/S must be identified by NON-GAAP titles (if client fails to, it is considered an inadequate disclosure which requires qualified opinion)


A compilation or review in accordance with OCBOA

- Apply SSARS

- Failure to title the F/S (non-GAAP names) will require the ACCOUNTANT to modify the report in order to ID the basis used


What is the condition for accepting an engagement to examine or compile specified elements, accounts, or items of a F/S?

No client-imposed scope limitation

* can be a separate engagement or in conjunction with an audit of F/S (depends on opinion of FS)


What is the condition to express an opinion on the specified elements, accounts, or items in conjunction with an audit of the F/S?

F/S opinion is either unmodified or qualified (not adverse or disclaimed)

*** if adverse or disclaimed, then must present report separately


What are the conditions for the prescribed audit report to only refer to GAAS?

Report must include

- Title

- Addressee

- Intro (ID F/S audited)

- Management Responsibility (P&FP, acceptableness of AFRF)

** if accordance with regulatory or contractual basis, DESCRIBE purpose

- Auditor's responsibility (GAAS, law/reg, audit description)

- Opinion

- Emphasis oF matter (Only if RESTRICED USE)

- Other Matter (restricted use explained, if any)


What is included from an agreed upon procedure will include?

(client's compliance with contract or government requirements)

- Report the findings

- Indicated procedures applied my not be sufficient for purpose intended

- Restrict distribution

- Disclaimer: NO OPINION / NO ASSURANCE (scope limited by agreement)


What type of engagement is a prospective F/S?

Attestation engagements


What are the types of engagements that can be performed in connection with prospective F/S?

- Examination : Opinion (prep, assumptions, & pres in conformity with AT AICPA guidelines ( NO GAAP) … if not reasonable, partial presentation... limited use report)

- Compilation: assembling (no assurance)

- Agreed Upon Procedures: limited use ONLY (even if forecast)



Which engagement is not allowed in connection with prospective F/S?



What is required for an examination, compilation, & agreed upon procedure engagement of projections?

- Caveat: results may not be achieved

- Statement indicating no responsibility to update reports for events occurring after the report date

*** Add an explanatory paragraph: INDICATES limitations on the usefulness of the presentation (AUP is limited use report)


What is particularly required for agreed upon procedures report in regards to prospective F/S?

- Summary of significant assumptions is required.

- Add a middle paragraph (hypothetical, may or may not occur)


What is the examination report of a financial forecast outline?

1. Intro: forecasted BS, mgmt responsibility, & auditor responsibility for opinion

2. Scope: accordance with AT by AICPA to eval assumptions & p&fp, "we believe"

3. Opinion: "conformity with AICPA" & reasonable assumptions, caveat, no responsibility to update

Account Signature



What is the compilation report of a financial forecast outline?

1. Intro: forecasted F/S, accordance with AT by AICPA

2. Explanation: compilation limitations, no evaluation of assumptions, not examined, no opinion/no assurance, caveat, no responsibility to update




Which engagement excluded from the attestation standards?

Compilations (except for prospective F/S, which happens to exclude reviews)

Attestation: ERA


Attestation (AICPA Definition)

any engagement in which the accountant expresses a written conclusion about the reliability of a written assertion by another party (independence, engagement letter, & rep letter are required)

- ERA (Examination, Review, AUP)