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CPA - Auditing > Audit 1 - Audit Reports > Flashcards

Audit 1 - Audit Reports Flashcards

1
Q

Conditions that indicate possible fraud

A

Pressure
Opportunity
Rationalization

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2
Q

Management’s Responsibility Paragraph

MR DIM

A 
Management's
Responsibility
Design
Implementation
Maintenance
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3
Q

Auditor’s Responsibility Paragraph

REPPORTS CRAME

A 
Responsibility
Express an opinion
Plan & perform audit
Performing procedures
Obtain audit evidence
Risks of material misstatement
Test internal control
Statements (financial)
Control (effectiveness of IC)
Reasonableness of
Accounting estimates
Made by management &
Evaluating presentation of FS
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4
Q

Qualified “Except For” Opinion (GAAP) - Material

A
  1. Accounting Policy
  2. Presentation
  3. Disclosures
  4. Estimates
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5
Q

Adverse Opinion (GAAP) - Very Material (Pervasive)

A
  1. Accounting Policy
  2. Presentation
  3. Disclosures
  4. Estimates
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6
Q

Qualified “Except For” Opinion (GAAS) - Material

A
  1. Insufficient Evidence
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7
Q

Disclaimer (GAAS) - Very Material (Pervasive/Significant)

A
  1. Insufficient Evidence
  2. Significant Going Concern Uncertainty
  3. Lack of Independence
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8
Q

Withdraw

A
  1. False
  2. Fraudulent
  3. Deceptive
  4. Misleading
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8
Q

Emphasis of Matter Paragraph

A

Placed immediately after the opinion paragraph.

Required in these situations:

  • Going concern
  • Justified chg in acct principle
  • Change in audit opinion
  • Special purpose framework
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9
Q

Other Matter Paragraph

A

After opinion & emphasis of matter paragraph

Required:

  • Restricted use
  • Change in audit opinion
  • Audited by predecessor & report not reissued
  • Current F/S presented in comparative form w/ compiled or reviewed statements for prior period or w/ prior period F/S not audited, reviewed or compiled.
  • Material inconsistency in other info
  • Auditor chooses to report on supplementary info in the audit report instead of a separate report
  • To refer to required supplementary info
  • To restrict use of audit report
  • A report on compliance is included
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10
Q

Going Concern Examination Procedures

ADMITS

A 
Analytical procedures
Debt compliance
Minutes
Inquiry of client's legal council
Third parties
Subsequent events review
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11
Q

Conditions and events indicative of substantial doubt

FINE

A

Financial difficulties
Internal matters
Negative trends
External matters

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12
Q

Updating/changing opinions in an emphasis of matter or other mater paragraph - Format

DORCS

A 
Date of auditor's previous report
Opinion type previously issued
Reason for the prior opinion
Changes that have occurred
Statement that the "opinion...is different"
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13
Q

Auditor’s responsibility for subsequent events

PRIME

A

Post balance sheet transactions
Representation letter
Inquiry of management & those w/ governance
Minutes of stockholders, directors, other meetings
Examine latest available interim F/S

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14
Q

Discovery of facts after report release - if client refuses to follow corrective procedures

DAR

A

Disassociate
Alert regulatory agencies &
Relying parties

“DARe them to fix it”

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15
Q

Generally Accepted Auditing Standards (GAAS)

TIP PIE ACDO

A

General:
Training
Independence
Professional Care

Fieldwork:
Planning & Supervision
Internal Control, Entity, and Environment
Evidence

Reporting:
Accounting = GAAP
Consistency
Disclosure
Opinion (Express)
16
Q

Standard Report Contents - Intro & Scope Paragraph

RAPMEAM-RAPMEAM

A 
Responsibility of  (financial statements)
Responsibility of auditor (express an opinion)

Audit conducted in
Accordance with U.S. GAAS

Planned &
Performed to obtain reasonable assurance

Material
Misstatement (free from)

Examining
Evidence (audit included)

Assessing
Accounting principles used

Made by
Management (significant estimates)

17
Q

Report of Predecessor Auditor Presented

A

Prior CPA should:

  1. Read current statements
  2. Compare audited statements w/ current statements
  3. Obtain a rep letter from new auditor
  4. Inquire of & obtain a rep letter from mgmt
18
Q

Report of Predecessor Auditor Not Reissued

A

Express an opinion on current statements only & indicate in other matter paragraph:

  1. F/S of prior period were audited by predecessor auditor.
  2. Type of opinion expressed by predecessor & reasons for modification, if applicable.
  3. Nature of any emphasis of matter or other matter paragraph in predecessor report.
  4. Date of predecessor report.
19
Q

Prior Period Statements Reviewed or Compiled

A

Indicate in other matter paragraph:

  1. Service performed in prior period
  2. Date of prior period report
  3. Description of material modifications in prior report
  4. Statement that service was less in scope than an audit
20
Q

Prior Period Statements Not Audited, Reviewed, or Compiled

A

Include other matter paragraph indicating auditor did not audit, review or compile prior statements & assumes no responsibility.

CPA - Auditing (5 decks)

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