Flashcards in Special Reports and Other Reports Deck (18):
Is a report on internal control a requirement of GAAS?
if the CPA uncovers material weaknesses and/or significant deficiencies in internal controls that should be communicated to those charged with governance
What are some examples of special reports?
report on financial statements prepared in OCBOA
report on specified elements, accounts, or items in a an audited F/S presentation
Compliance with aspects of contractual agreements or regulatory agreements
reports on printed forms or schedules
How does a report on OCBOA differ from a standard unqualified opinion audit report?
state the basis of accounting and reference the footnote
statement on how this OCBOA differs from GAAP
opinion or disclaimer of opinion to fair presentation of F/S in conformity with OCBOA
If a CPA audits the revenue account of a company must the distribution of the report be limited?
if the assertion is GAAP conformity then public distribution OK
if criteria other than GAAP limited distribution
What must be satisfied before a CPA can accept an engagement to perform agreed-upon procedures?
clear understanding of the procedures to be performed
requester is responsible for subject matter
specified parties take responsibility for sufficiency of the procedures
subject matter involved is capable of reasonably consistent measurement
procedures applied expected to result in reasonably consistent findings
audit evidence is expected to provide a reasonable basis for expressing findings
the practitioner and the other specified party agree on materiality limits
distribution limited to named parties
What is the difference when an accountant is engaged to audit internal control and the examination an auditor does over internal control during a financial statement audit?
the accountant is obligated to perform procedures to search for deficiencies and express an opinion on the effectiveness of an entities internal control
What are some of the elements to be found in an agreed-upon procedures report?
independent in the title
ID of appropriate parties involved
ID of the subject matter and character of engagement
indication that the subject matter is the responsibility of one party
indication that the procedures performed were agreed to by the specified parties
statement that the engagement was conducted in accordance with SSAE
indication that the sufficiency of the procedures performed is the responsibility of the specified parties
list of the procedures performed and the associated findings
description of the agreed-upon materialtiy limits
disclaimer of opinion with respect to the subject matter
statement restricting the use of the report only to the specified parties
signature of the practitioner and the completion dated of the agreed-upon procedures
What are the two types of prospective F/S?
In connection with financial forecasts and financial projections, what services can a CPA perform?
compilation of the prospective statements based on the assumptions being made by the responsible parties
apply agreed-upon procedures to the prospective F/S
examination of the prospective F/S
In applying agreed-upon procedures, what is the practitioner going to report on?
one or more agreed-upon subject matters
If a CPA compiles an entity's financial forecast or financial projection, what information should be included in the accountant's report?
a report title that clearly indicates that it is the accountant's compilation of prospective financial statements and whether he is independent of entity
the report should be addressed appropriately
ID of the entity
a statement that the F/S have been compiled
ID of the prospective F/S
ID of the future time period or date that the prospective F/S cover
an explanation of compiled F/S
a statement that the accountant has not examined the forecast and accordingly does not express an opinion or provide any assurance on the F/S or assumptions
statement that actual entity Financial results may be materially different that the performance that is shown in the prospective F/S
statement that the compilation was performed under SSAE
statement that accountant has no responsibility to update the report for events and circumstances that occur after the date of the report
What actions should be taken by the CPA in an examination of a financial forecast and financial projection?
prepare an engagement letter that confirms mutual understanding concerning the services to be provided
accumulate sufficient evidence to limit attestation risk to a level appropriate for the level of assurance that is being provided in the report
evaluate the preparation and presentation of the prospective F/S and examine the support for the assumptions underlying the creation of the statements
written representation letter
What is pro forma financial info?
the depiction, in F/S form, of the effects that a certain proposed financial transaction might have had on historical financial results and/or performance had the financial transaction actually taken place at an earlier date
If a practitioner is asked to examine pro forma financial info, what should be the objectives of the work?
provide reasonable assurance to:
management's assumptions provide a reasonable basis for presenting the significant effects directly attributable to the underlying transaction or event
the related pro forma adjustments give appropriate effect to those assumptions
the pro forma column in the F/S presentation reflects the proper application of those adjustments to the historical F/S and related info
If a practitioner has been asked to examine pro forma financial info, what are some of the procedures performed as part of this examination?
obtain an understanding of the proposed underlying transaction, if any, that is the basis for the pro forma info by reading all relevant contracts and minutes of meetings of the board of directors and by making inquiries of appropriate entity officials and officials of the entity either acquired or to be acquired, if appropriate
obtain an level of knowledge of each constituent part of the combined entity in a business combination that will enable the practitioner to perform the required procedures
discuss with management its assumptions regarding the effect of the transaction and evaluate whether all assumptions are disclosed and consistent with one another
evaluate whether all pro forma adjustments in the info have been include for all significant effects directly attributable to the transaction and have been carried out mathematically correct. obtain sufficient evidence in support of such adjustments
read the pro forma statements to make certain that the underlying transaction, the pro forma adjustments, the significant assumptions, the significant uncertainties about the assumptions, and the source of the historical financial info on which the pro forma info is based have all been appropriately described an ID'd, and that all necessary and appropriate disclosures are present
obtain a written rep letter from management
what is the principal difference between a financial forecast and a financial projection?
forecast - based on management's expectation of future financial events
projection - based on one or more hypothetical assumptions taking place at some time in the future
Can a financial forecast or financial projection be issued to the general public?
financial forecast - yes general use
financial projections - no limited use