Flashcards in Becker AUD 1.4 - Reports on Comparative Financial Statements Deck (11):
(1) If the auditor was unable to gather sufficient evidence on the beginning balances of assets or liabilities at beginning of the current year,
what kind of opinion the auditor will express on which type of F/S?
(2) If this situation happens, can the auditor withdraw from the engagement and refuse to be associated with the F/S?
(1) Disclaimer of opinion on Income statement and cash flow statement.
Express any kind of statement (unmodified, qualified, adverse, or even disclaimer of opinion) on Year-end Statement of Financial position a.k.a. balance sheet.
(2) No, the auditor does not need to.
If auditors previously qualified their opinion or express adverse opinion on F/S of PRIOR period because of departure from GAAP and the PRIOR periods were restated in current period to conform with GAAP,
what does the auditor do on the Auditor report on the prior F/S?
The auditor updates the Auditor report on Prior period's F/S.
This updated Auditor report will say:
(1) F/S is restated to conform w/ GAAP
(2) Express an unmodified opinion
True or false:
(1) The predecessor auditor generally would change the opinion when asked to reissue a prior year's audit report.
(2) If there are different opinions in Prior Audit report and current audit report, the prior audit report should change its opinion.
(3) If there was a restatement of F/S after a change in reporting entity, this will affect comparability of F/S and will not result in change in opinion on Previously-issued audit report.
(4) The predecessor auditor, not client, may reissue the previous year's audit report.
(5) An updated comparative audit would indicate a division of responsibility when the principle's auditor opinion (the main auditor) is based in part on the report of another auditor.
(6) If prior year's F/S are issued, the previous year's audit opinion must also be disclosed.
(7) Original auditor report on prior period should also be presented when prior period's F/S is restated and a new auditor report is restated.
(8) Dual dating is required on re-issuing the prior auditor report.
When predecessor re-issues a prior-period's audit report, there is NO change to the audit opinion.
If there is a different opinion in prior year audit report and current year audit report, there is no need to change opinion on prior year audit report. Only change prior yaer audit report when there was a change / "restatement" on the prior year F/S.
Only the predecessor can reissue the prior year's audit report.
Do not present the original auditor report when F/S is restated to conform with GAAP and the auditor report is updated to reflect a now unmodified opinion with substantive reasons for change in opinion in EOM or OM paragraph.
Dual Dating is not used on re-issuing the prior auditor report. The prior auditor report is re-issued on its original report date.
If the F/S of prior period were audited by predecessor auditor and the report on this prior period F/S was not presented,
the successor auditor should indicate in Other-matter of current auditor report on what 5 things?
(1) F/S in prior period was audited by ANOTHER AUDITOR.
(2) Date of Previous Auditor report (of prior period)
(3) Type of Report (opinion: unmodified, qualified, adverse, or disclaimer of opinion) issued by Predecessor Auditor
(4) If report was not "unmodified" report (it's a qualified opinion, adverse, disclaimer of opinion), state the reasons for this MODIFIED opinion.
(5) The Nature of any EOM paragraph or OM paragraph included in predecessor's auditor report.
NOTE: Do not name the Prior Auditor.
Only name the prior auditor only if the predecessor auditor's practice was acquired by or merged with the Successor auditor.
Before reissuing the prior year's audit report on F/S of a former client,
the Predecessor audit should do what 3 things?
(1) Read current period's F/S.
(2) compare prior period info that the predecessor auditor has reported on F/S to be presented for comparative purposes
(3) Obtain two letters:
(a) A MGT Rep letter of previous client management
(b) A Rep letter from successor auditor
In re-issuing the previous period's auditor report, the predecessor auditor gets two rep letters:
One from prior client's management (not B.O.D.)
One from successor auditor
What does the MGT rep letter and Successor rep letter say in regards to previous F/S?
(1) MGT rep letter says: whether any MGT's previous representation is still accurate or should be modified and whether
there have been ANY SUBSEQUENT EVENTS that would affect previous F/S.
(2) Successor auditor rep letter says: whether successor auditor's audit disclosed any issues of a material nature that might affect PREVIOUS F/S.
Yes or No:
Predecessor gets Rep letter from each type of group:
(1) Former client's board of directors
(3) Former cleint's attorney
(4) Former client's management
(5) Successor auditor
(6) Principal underwriter
(7) Former Client's audit committee
(1) No - former client's board of directors
(2) No - SEC
(3) No - former client's attorney
(4) Yes - Former client management
(5) Yes - successor auditor
(6) No - principle underwriter
(7) No - Former client's audit comittee
If the auditor just re-issues the auditor report at client's request (like no work was done to prior audit report), the auditor should use what report date on reissued report?
Hint: You really got to be original instead of copying around.
Original report date on reissued report.
If the reissued report used a "dual date," current period's auditor report date, release date of reissued report,
what does this imply?
Hint: later date and more work.
It implies that the auditor has done work subsequent to that date.
If the previous audit report date is not the ORIGINAL report date and it uses a different (later date), it means that more work was done on the prior F/S beyond designated original report date.
If an auditor previously qualified his or her opinion on F/S of prior period, and prior period F/S are restated to conform with GAAP,
Auditor should express what kind of opinion on the restated F/S on the prior period's auditor report?
Also, Auditor use what kind of paragraph for this change in opinion after the opinion paragraph?
(1) Unmodified opinion
(2) Use Emphasis-of-matter (or Other-matter) paragraph after opinion paragraph to state the
Substantive reasons for change in opinion.