Flashcards in Deck 5 Deck (20):
Failure to provide a written assertion constitutes what?
A scope limitation; therefore withdraw when client is the responsible party
Types of prospective financial statements
Financial forecasts and projections
Reflects the expected financial results of a future period; based on expected conditions and expected courses of action
Based on hypothetical assumptions; "what if" type of scenario
Pro forma financial statements
Show what past financial results of an expired period would have been if something had been different (are not considered to be prospective financial statements)
Uses of prospective financial statements
Financial forecast = general and limited use
Financial projection = limited use only
Three levels of prospective financial statements
1. Compilation engagement (no assurance)
2. Examination engagement (opinion)
3. Agreed-upon procedures engagement (disclaimer)
What opinion is required when significant assumptions are not disclosed?
What must prospective financial statements include?
A summary of significant assumptions
Management's Discussion & Analysis (MD&A)
Required by SEC for "issuers"
Pro forma financial statements do what?
Do not reevaluate Internal control;
Determine math/computations are correct
It is not appropriate to refer a reader of an auditor's report to a financial statement footnote for details concerning:
Details concerning the results of audit procedures (such as the results of confirmation of receivables) generally do not appear in the footnotes.
Statements on Standards for Accounting and Review Services (SSARS) provide standards with respect to:
Preparations, compilations, and reviews of financial statements
The accountant's report on a review of pro forma financial information should include a reference to:
The financial statements from which the historical information is derived and a statement as to whether such financial statements were audited or reviewed
The Public Company Accounting Oversight Board was established by who?
SOX Act of 2002
How is a change in estimate accounted for?
How is a change in accounting principle accounted for?
How are corrections for errors accounted for?
The objective of a review of interim financial information of a public entity is to provide the accountant with a basis for:
Reporting whether material modifications should be made for such information to conform with generally accepted accounting principles