Review Flashcards
(47 cards)
In a report of compliance with a regulatory body or contractual related to auditted financial statements, what kind of confirmation is used
negative confirmation
If you are performing a review and cant do all the procedures that you want to do, what do you do to the report
you dont even issue it, if you cant do everything you wana do, never issue the report
What should a CPA refer to when doing a review of Management Discussion and Analysis
SSAEs
Statements on Statndards for Attestation Engagements
What requires an emphasis of matter paragraph for a nonissuer, whats an example of something which doesnt require one
a justified change in accounting principle
a change in accounting estimate does not require an emphasis of matter
What is a primary difference between an audit and a review provided for a nonissuer
an audit requires an understanding of the clients internal control while a review does not
What is an example of a scope limitation that not allow the rending of an unmodified opinion
Not being allowed to see the BoD Minutes
During the planning stage of an audit, wha does an auditor have to do?
As part of planning, the auditor is required to obtain an understanding of the design of controls and determine whether they have been implemented, as well as to document this understanding.
If there is an inadequate disclosure relating to going-concern, what kind of opinion should be rendered
Improper disclosure of a going concern situation is a GAAP violation, so a qualified or adverse opinion should be issued.
An uncertantiy would/could result in what kid of opinion(s)
An uncertainty may result in an unmodified opinion if management’s analysis is supported and properly recorded or disclosed.
An uncertainty for which the auditor is unable to obtain sufficient audit evidence would result in either a qualified opinion or a disclaimer of opinion.
If the financial statements are materially misstated due to improper accounting for the uncertainty, a qualified or adverse opinion would result.
What must happen before a comfort letter is issued
A review interim financial information is required before a comfort letter may be issued.
What is an example of an engagement that would be conducted in accordance with SSARS
Preparation of financial statements prior to audit or review by another accountant is an engagement that should be conducted in accordance with SSARS.
When planning for an audit, the auditor should consider the materiality for the FS as a whole in terms of
Materiality should be considered in terms of the smallest aggregate level of misstatement that could be material to any one of the financial statements, Because the financial statements are interrelated,
Before reissuing the prior years auditor report on the FS of a former client, the predesessor auditor should do what 4 steps
Before reissuing the prior year’s auditor’s report on the financial statements of a former client, the auditor should
1) read the financial statements of the current period,
2) compare the prior-period information that the auditor reported on with the financial statements to be presented for comparative purposes,
3) obtain a letter of representation from the successor auditor, and
4) obtain a letter of representation from the former client’s management.
What would the auditor not consider when establishing materiality
They would not consider what the materiality is set at by management
IF a company has a bunch of cash transactions, and only a few fixed asset transactions, what timing strategies of testing would be used on these accounts
the cash account would be tested at year end
While the Fixed asset account could be tested throughout the year and not require too much work
What would an auditor do if the client included false facts in their annual report which is presented alongside the auditor report?
the auditor would ask them to remove the false facts, and if they dont, the auditor would remove the audit report
You are doing an audit and find a material departure from GAAP, what is your course of action
you tell management to fix it/conform to GAAP, and if they do, that’s great. If not, consider an adverse opionon or withdrawing
When considering internal controls, what would the auditor do in terms of sequence of events
they could test the IC’s at the same time as gaining an understanding of them as its more efficient
Both incorrect rejection and assessing control risk too high will cause the auditor to perform more procedures than are necessary, which affects what aspect of an audit
audit efficiency.
When an auditor has expressed an adverse opinion or disclaimer of opinion on the financial statements, the auditor should issue a report on compliance only when what instance is identified? and what kind of assurance is given
instances of noncompliance are identified. Positive or limited assurance is given BUT Negative assurance is not provided in this report.
If you are asked to give a report on compiled FS across two years and year 1 goes against GAAP and did not include disclosures, but year 2 is all good, what do you do
Compiled financial statements that omit substantially all GAAP disclosures are not comparable to financial statements including such disclosures. The accountant should not issue a report in this situation.
If you are searching for related party transactions, what is a primary piece of evidence which you would first inspect
The auditor should review the minutes of meetings of the Board of Directors, since material related party transactions may be authorized or discussed during those meetings.
For an issuer how many years do you retain shit and what about a non issuer
issuer is retained 7 years
nonissuer is 5 years
vouching deals with what assertion
existance
