M6 Reporting on Compliance Flashcards
(10 cards)
When can an auditor report on compliance and internal control over compliance as part of a single engagement
when auditing a recipient of federal financial assistance
Conditions for a compliance reports negative assurance
-There are no instances of noncompliance
-Auditor issued an unmodified or qualified opinion
-Covenants or regulatory requirements have been subjected to audit procedures
What is included when a report on compliance is separate from the auditor’s report on F/S
When separate, the report should indicate that the auditor expressed an opinion on the F/S (reports should be in writing)
Agreed upon procedures for compliance include
-Testing the entity’s compliance with specified requirements
-Test the internal control over compliance with specified requirements
-Both
Conditions for accepting engagement
-Responsible party accepts responsibility for compliance and internal control
-Responsible party evaluates the entity’s compliance or internal control
-Mgmt is responsible for both compliance and evaluation of compliance
Conditions for accepting an examination engagement
-Responsible party accepts responsibility for compliance and internal control and effectiveness of internal control
-Responsible party evaluates the entity’s compliance or internal control
-Sufficient evidential matter exists or could be developed to support management’s evaluation.
Steps in a compliance examination
Perform a risk assessment
Design responses to the assessed risk
Determine if supplementary audit requirements exist
Obtain written representation from mgmt
Prepare the reports
Prepare required documentation
What type of assurance do agreed upon procedures provide?
None
What type of assurance do examinations provide?
Reasonable assurance
What type of assurance does compliance reporting in connection with audited F/S provide?
Negative assurance
