Audit 2: Other Reports Flashcards
OCBOA stands for…
Other Comprehensive Bases of Accounting
Some Special Purpose Frameworks
Cash Basis
Tax Basis
Regulatory
OCBOA
Additional Requirements for Auditor when preparing in accordance with special purpose framework?
Know
- Purpose prepared for
- Intended users
- mgmt knows disclosures needed
Get mgmt to agree
In Auditor’s report what titles to use for Fin Stmts prepared by special purpose framework?
Dont Use GAAP titles
Balance Sheet Titles for Special Purpose Frameworks
cash basis
income tax basis
Stmt of assets and liabilities arising from cash transactions-cash basis
Stmt of assets, liabilities, and stockholders equity-income tax basis
What does Mgmt Responsibility paragraph need to say when prepared under Special Purpose Framework
That the reporting framework is acceptable in these circumstances
When and how to restrict use of report on special purpose framework
Restrict always unless prepared on regulatory basis and intended for general use
And if not regulatory use need Emphasis of Matter paragraph
Restrict Use in Other Matter Paragraph
When Regulatory basis report for general use what needs to go in Auditors Report
Fairly Presented in accordance to GAAP
Prepared with Special Purpose Framework
Can you report on single Fin Stmt or Specific Element in Special Purpose Framework?
Yes but need to report on it separately
What to do when Incomplete Presentation but otherwise GAAP in special purpose framework?
Add Emphasis of Matter Paragraph
Negative Assurance is
phrase used
Stmt saying nothing came to the Auditor’s Attention that led them to believe entity was non compliant
“nothing came to our attention”
What sort of Opinions can you give on Summary Financial Stmts?
Unmodified or Adverse or Disclaimer
Not Qualified due to the Summary nature
If Summary Fin Stmts are to get Adverse or Disclaimer what to do?
You should withdraw if you can
Unless forced by law to stay
Levels of Service Below Audit
Assurance
Attestation
Independence
Preparation= No No No
Compilation= No Yes Independence not needed but need to disclose status
Review= Yes Yes Yes
Who is authoritative body on unaudited non issuer stmts and what do they issue
Acct and Review Services Committee AICPA
Statements on Standards for Accounting and Review Services (SSARS)
When does SSARS apply
Preparation of Full Financial Stmts
For Levels of Service Below Audit which need an Engagement Letter?
All do including Preparation
During a compilation an Auditor must understand the parts of the clients business.
What are these parts?
“STAFF”
Staff Qualifications
Transaction Types and Frequency
Accounting Basis used
Form of acct records
Form of Fin Stmts
The Performance Requirements for a Review are
U LIAR CPA Understanding with client Learn Business Inquiries Analytical Procedures Review Client Rep letter from Mgmt Professional Judgement CPA should communicate results
Who should inquires be made of during a review
Inquire of Internal people
Not External people
this is a frequent trick question on Exam
What activities do not have to be performed for Review?
Test of Internal Controls
Audit Test Work
What opinions can be issued for Review?
A2-52
Only Unmodified
cannot do qualified or Adverse
Needs to be modified until it is GAAP or need to withdraw
When performing a higher level of service in the current period what needs to happen to prior period?
Needs to be updated and issued as last paragraph of current report
Other accountant involved in prior period non-audit report should do what if reissuing?
Read the stmts and report
Compare prior and current stmts
Obtain letter from successor CPA saying unaware of any material misstatements
