Flashcards in Audit Completion, Audit Report, Quality Assurance Deck (2):
Describe the three purposes of the client letter of representation.
(1) To impress upon management its responsibility for the assertions in the financial statements.
(2) To remind management of potential misstatements or omissions in the financial statements
(3) To document the responses from management to inquiries about various aspects of the audit.
Which are the four categories of Audit Reports?
(1) Standard Unqualified - An unqualified opinion is issued, when the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework
(2) Unqualified with Emphasis-of-matter Explanatory paragraph or Modified wording - meets the criteria of a complete audit with satisfactory results and financial statements that are fairly presented, but the auditor believes it is important or is required to provide additional information
(3) Qualified - A qualified opinion report can result from a limitation on the scopeof the audit or failure to follow generally accepted accounting principles.
A qualified opinion report can be used only when the auditor concludes that the overall financial statements are fairly stated.
Qualification of both the scope and the opinion or of the opinion alone.
A scope and opinion qualification can be issued only when the auditor has been unable to accumulate all of the evidence required by auditing standards.
(4) Adverse or Disclaimer - A disclaimer of opinion is issued when the auditor has been unable to satisfy himself or herself that the overall financial statements are fairly presented.
The disclaimer is distinguished from an adverse opinion in that it can arise only from a lack of knowledgeby the auditor, whereas to express an adverse opinion, the auditor must have knowledge that the financial statements are not fairly stated.