Flashcards in Becker AUD 2.1: Special Purpose Frameworks (???) Deck (21):
Special purpose frameworks are defined as?
Positive Assurance is used in some types of OCBOA reports (special framework reports a.k.a. special reports) and what else in relating to OCBOA?
Positive assurance IS provided in OCBOA reports, reports on specified elements, accounts, or items, and reports on special-purpose financial presentations to comply with contractual agreements or regulatory provisions.
Where applicable, the Emphasis-of-matter paragraph (EOM paragraph) in report indicates that the F/S (elements, accounts, iems) were prepared in accordance with the applicable SPECIAL PURPOSE FRAMEWORK (Positive assurance)
A report on the OCBOA financial statement should include emphasis-of-matter paragraph stating what 3 items?
State the basis of the OCBOA (cash basis, regulatory, income tax basis, or regulatlry basis)
Also state to refer to Financial statements' disclosure notes that describes this OCBOA type of accounting
And indicate the at the F/S is done in a NON-GAAP basis.
Negative assurance service can be used on what type of OCBOA?
Negative assurance is provided in reports on compliance with aspects of CONTRACTUAL agreements OR
REGULATORY requirements related to audited F/S.
An auditor's report and/or its emphasis-of-matter opinion in handling an OCBOA F/S does not state what?
It does not state about an evaluation of usefulness of the OCBOA basis of accounting
OCBOA states about referring to F/S footnote where the footnote does not talk about management's responsible. MGT responsibility on handling a OCBOA F/S goes on the Auditor's report in the MGT responsibility paragraph.
EOM paragraph does not discus about the company's justification for using a Non-GAAP basis of accounting (OCBOA) nor does it say CPA indicate concurrence.
Auditing summary F/S - what are these?
* Less detailed version of the complete F/S
* Does not have all Disclosures require by GAAP therefore it is NOT in CONFORMITY with GAAP (accounting principles generally accepted in the United States of America).
* These do not have to be presented in comparative form with prior yer's F/S.
* These do NOT have to be distributed only to MGT and B.o.D. or shareholders (no requirements on restricted distribution/use).
* They do not follow OCBOA basis of accounting
* No additional procedures is required to perform on summary F/S
When the auditor is assigned to only audit the Balance sheet and not the other basic F/S, what is the auditor required to do?
The auditor is required to:
1) Determine materiality of the single financial statement assigned to audit. Not the entire set of F/S
2) May preform the audit as a separate engagement or in conjunction with an audit of an entity's complete set of F/S
3) Auditor may perform audit as separate engagement or in conjunction with an audit of an entity's complete F/S set.
The auditor's report on SUMMARY F/S derived from Audited financial statements (F/S) should indicate what 4 items?
1) indicate that the CPA audited and expressed an opinion COMPLETE F/S
2) State the Date of auditor' report on complete F/S (the date where the auditor is responsible for any work up to that date)
3) Type of opinion expressed i.e. unmodified, qualified, adverse, or disclaimer of opinion
4) whether in auditor's opinion that the information set forth in the summary financial statements is CONSISTENT (is fairly presented in relation to the complete financial statements) from which it was derived.
When the auditor is to report on selected financial data included in client-prepare document containing auditing financial statements, the report on the selected data should?
Be limited to the data derived from the audited financial statements and the report can be distributed to any party that requests it (it's not necessary to limit distribution to only a specific party like company management or board of directors).
Auditor's report would be designated a "report on compliance" when it is issued in connection with compliance with aspects of what?
Regulatory requiremtns releated to AUDITED F/S.
Auditor report on compliance in connection with audited F/S provides only negative assurance on compliance? Or positive assurance on compliance?
When auditing a F/S to be submitted only to a regulatory agency and that's it, a report using the special purpose framework required by the agency would be issued and???
Include opinion paragraph that includes an opinion on the the special purpose F/S and reference to the special purpose framework that was used to prepare the F/S.
The report would contain an Other-Matter paragraph restricting the use of the auditor's report since the auditor's report is assigned to an audited F/S that is given only to the regulatory agency and no one else.
When an auditor is auditing an OCBOA F/S or a special framework F/S (cash-basis, income tax basis, contractual, or regulatory) and discovers that the F/S is not using an appropriate OCOA title, what does the auditor do?
Auditor disclose a qualified opinion in the Opinion paragraph and include a Basis for Qualified opinion pargarph
When a CPA (auditor) accepted a separate engagement not in conjunction with audit of complete set of F/S, the CPA (auditor) audits what and give opinion on what?
Auditor audits in a separate engagement:
Audit specified elements or accounts or items of F/S and give an opinion on these specified elements, accounts, or specific F/S items.
When the auditor is auditing an OCBOA F/S, the emphasis of matter paragraph states that/
Emphasis-of-matter paragraph states that the special purpose framework is a basis of accounting other than GAAP.
Piecemeal opinions (opinions on parts of F/S, whose parts are a major portion of F/S) are not appropriate if the auditor has??
Disclaimed an opinion or issued an adverse opinion.
This because these piecemeal opinions may overshadow the auditor's opinion on the F/S taken as a whole.
An opinion on a specified elements that are NOT a major part of a piecemeal opinion may be expressed, BUT NOT accompany the disclaim er of opinion or he adverse opinion.
Auditor may express opinion on one F/S even if the auditor must issue disclaimer on the entire F/S taken as whole. True or false.
Auditor is preparign an auditor report on F/S that uses cash receipts and disbursements basis of accounting. Auditor should include what in auditor report?
Auditor report includes:
(a) a statement that the cash reciepts/disbursements basis is a comprehensive basis of accounting.
(b) statement that audit was conducted in accordance with GAAS in the United States of America
(c) state an opinion whether the F/S presented fairly in conformity with he cash receipts and disbursement basis of accounting.
(d) state to refer to Note to F/S that describes the cash receipts and disbursements basis of accounting.
If the auditor has disclaimed an opinion on the F/S taken as a whole, the auditor express an opinion n an entity's specific balance only what?
Only if the Special report on this specific accounts balance is presented SEPARATELY from Disclaimer Opinion report on F/S
the specific account item is NOT a major portion of the company's complete set of F/S.
Piecemail opinion is not allowed for audit reorts. What are piecemeal opinions?
Piecemeal opinions involves issuing different opinions on enough different elements in a same financial statement as that is considered as a "major portion" of the F/S.