Flashcards in Other info, supplementary info & required supplementary info Deck (21):
An accountant may compile F/S that omit substantially ALL DISCLOSURE required by the applicable financial reporting frame provided that
The omission is NOT intended to mislead the user of the F/S AND is properly disclosed in the accountant's report.
An accountant may compile F/S that omit substantially ALL DISCLOSURE required by GAAP as long as the compilation report
include a separate paragraph which alerts readers about omission of the disclosure and includes notification that the omission may influence the user's conclusion about the F/S.
Reporting on Supplementary info.
1. when opinion NOT required, the audit report on the F/S should include an OTHER-MATTER paragraph to explain the following 六种情况with a disclaimer of opinion
2. Opinion permitted.
then an auditor may be engaged to report on whether required supplementary info is FAIRLY STATED, in all material respects, in relation to the F/S as a whole.
The auditor's report on the supplementary info may either be presented as an OTHER-MATTER PARAGRAPH (the info is farily stated in all material respects in realation to the F/S as a whole) in the auditor's report on the F/S OR(或者）
in a separate report, which include a reference to the report on the F/S, the date of that report, the nature of the opinion on the F/S, and any report modification.
The auditor's opinion on the F/S DOES NOT cover
the required supplementary info.
The auditor should perform LIMITED PROCEDURES on required supplementary info.
1. inquire of management about the method used to prepare the required supplementary info
2. determine if the supplementary info is consistent with management's response, audited F/S and other knowledge.
3. obtain written management representation regarding the required supplementary info.
The document containing the audited F/S may contain other info that is materially inconsistent with the F/S.
If audited F/S required revision and the management refused to make the revision, the auditor should MODIFY the audit opinion.
If the other info required revision and management refuse to make revision, the auditor should communicate this with those charged with governance first and
1. include in the auditor's report an OTHER-MATTER paragraph describing the material inconsistency
2. withhold the use of the report
3.withdraw from the engagement and consult with legal counsel.
Disclaimer of opinion on other info is OPTIONAL, while the disclaimer of opinion on the other -matter paragraph should be included.
on the required supplementary info. the auditor is not required to audit required supplemental info.
In an audit of F/S prepared in accordance with a financial reporting framework generally accepted in ANOTHER COUNTRY, the auditor should obtain an understanding of
1. the purpose for which the F/S are prepared
2. whether the financial reporting framework is a fair presentation framework.
3. the intended users of the F/S
4. the step taken by management determine whether the applicable financial reporting framework is acceptable in the circumstance.
Predecessor accountant's compilation or review report REISSUED UNCHANGED
1. The predecessor accountant should decide if their report is still appropriate.
2.perform the following procedure:
a. read the statement and the report of the current period
b. compare the prior period statement with those issued previously and currently.
3.obtain letter from the successor accountant stating that they are not aware of any relevant info that might have a material effect on the prior period statement.
When the prior period has been audited, the accountant should issue the current period compilation or review report, and any additional paragraph should indicate:
1.That prior period statements were audited;
2.The date of the previous report(s);
3.The opinions expressed, and, if other than unmodified, the reasons for the modification;
4.That no auditing procedures have been performed since the previous report date.
When unaudited F/S (prior period )are presented in comparative form with audited F/S, the unaudited F/S should be clearly marked and the accountant should either
A. reissue the prior period report or
B. include an other-matter paragraph in the current report describe the responsibility assumed for the prior period's statement.
The review of a public entity's interim F.S (PCAOB) DOES requires communication with predecessor auditor
While the review of a nonissuer's unaudited F.S(SSARS) DOES NOT require communication with the predecessor. . However, neither the PCAOB nor SSARS requires inquiry of the client's attorney regarding litigation, claim, and assessment, because the inquiry needs to be made inside the company(management and those charged with governance.)
A review report on the interim F.I of a publicly held company DOES NOT provide an opinion on the F.S
and the review report provides NEGATIVE ASSURANCE, while the audit report provide POSITIVE ASSURANCE.
Content of compilation report 应包括
1. identification of the prospective F.S presented by the responsible party.
2.a statement that the CPA has compiled the prospective F.S in accordance with attestation standard established by the AICPA
3. a statement that a compilation is limited in scope and does not enable the CPA to express an opinion or any other form of assurance on the prospective F.S or the assumptions.
4. a caveat that the prospective results may not be achieved.
5.a statement that the CPA assumes no responsibility to update the report for event and circumstances occurring after the date of the report
5. the signature of the CPA'S firm and the date of the report.
Statement of standards for ATTESTATION engagement(SSAE) addressing the major services:
2. Financial forecasts and projections
3. Pro forma F.S
5. Management's Discussion and Analysis.
Statement of standard for ATTESTATION engagement DO NOT apply to:
2. Compilations and reviews of the F.S of nonissuers under SSARS.
3. Return preparation ( income tax, franchise, other)
4. advocating for the client(litigation service)
5. Consulting/advisory service
6. operational audits, which are normally performed by internal auditors to evaluate the effectiveness and efficiency of various components or processes of a company.
The compilation of prospective F.S is covered under Statement of Standards for Attestation Engagement (SSAE)
While the compilation of nonissuer are covered by Statement on Standards for Accounting and Review Services (SSARS)
Trust services are assurance and advisory services used to address the risks and opportunities related to info tech.
WebTrust engagment provide assurance related to e-commerce. The CPA assess a client's web site for predefined criteria that are designed to measure transaction integrity, info protection and disclosure of business practices.
SysTrust engagement provide assurance with respect to the reliability of any defined electronic system.
1. AICPA presentation guideline are not followed ( qualified "excpet for" or adverse opinion)
2. Significant assumptions are not disclose (adverse opinion)
3.Basis not reasonable: one or more of the significant assumption does not provide a reasonable basis for the F.S (adverse opinion)
4. scope limitation (disclaimer)