Audit reports Flashcards Preview

AUD > Audit reports > Flashcards

Flashcards in Audit reports Deck (19):
1

Compilation engagement

is basically assisting management to DRAFT the financial statements, without providing ANY level of assurance.. It is an attestation engagement but NOT an assurance engagement

2

A change in accounting principle or departure from GAAP, if accounted for properly or justified, result is

Emphasis-of-matter paragraph after the unmodified opinion .

3

Opinion 程度

Unmodified opinion > modified opinion;
Modified opinion中包括三种情况, qualified opinion > adverse opinion > disclaimer of opinion

4

Scope limitation result in (找不到证据,或者证据不够不合适)

Qualified opinion(NOT PERVASIVE) or disclaim of opinion (PERVASIVE)

5

Unjustified change in accounting principle & departure from GAAP (fail to adequately disclose info required by GAAP such as missing the cash statement or footnote) could result in (财务报表或附表不可靠),

Qualified opinion(NOT PERVASIVE) or adverse opinion (PERVASIVE & MATERIAL )

6

(Substantial doubt) material uncertainty about going concern even disclosed adequtely will result in

Emphasis-of-matter paragraph after the unmodified opinion or disclaim of opinion.

7

Client refusal to disclose related party transaction in the notes to the financial statement GAAS OR GAAP problem??

GAAP, not scope limitation(GASS) problem.

8

" Except for" qualified opinion is expressed when

The exception to GAAP or scope limitation are material but not pervasive. But if the scope limitation number is large or pervasive (such as inventory account for 35% of total asset cannot be observed), then requires a disclaimer of opinion.

9

The auditor concurred(同意) the entity's change of accounting method even it lacks consistency while justified will result in

Unmodified opinion with an emphasis-of-matter paragraph after the opinion paragraph. (Emphasis-of-matter paragraph after the unmodified opinion)

10

The entity's change of accounting method that lacks consistency and not accounted as properly (unjustified) will result in

Qualified opinion and a paragraph titled " basis for qualified opinion" before the opinion paragraph.

11

(Substantial doubt) material uncertainty about going concern if disclosed inadequtely will result in

"Except for" qualified opinion or adverse opinion.

12

Mitigating factors in a going concern situation includes

Plan to disposal of asset, plan to borrow $ and restructure debt, plan to reduce or delay expenditure, and plan to increase ownership equity. Issuing stock option does NOT fall into any of these categories.

13

Under International Standard on Auditing (ISAs), the going concern period

Must be at least, but not limited to, one year from the date of the FS being audited.

14

Under U.S auditing standards, the going concern period

Cannot exceed one year from the date of the FS being audited.

15

The situation of "Qualified opinion results from a limitation on the scope of the audit or an insufficiency of audit evidence" should e described in

"The basis for qualified opinion "paragraph preceding the opinion paragraph and referred to in the opinion paragraph of the auditor's report.

16

A disclaimer of opinion is issued when

There is a significant scope limitation, when the auditor is not independent, or when the FS are not audited.

17

If there has been a change in accounting principles, but the effect of the change on the comparability of the financial statement is NOT material, then

No refer to the change in the auditor's report

18

If there has been a change in accounting principles, but the effect of the change on the comparability of the financial statement is material, then

Refer to the change in an emphasis-of-matter paragraph.

19

Statement of financial position is

Another name for the BS, it reports and entity's assets, liabilities, and the difference in their totals. (e.g Without the info regarding beginning balance of asset and liab, the auditor could still express and opinion on the statement of financial position.)