SU 17 - Related Reporting Topics

Question 1

Words to avoid in comfort letters:

Answer 1

Made a general review
Limited review
Check
Test

Question 2

An auditor should report on supplementary information when:

Answer 2

SPECIFICALLY ENGAGED to do so

Question 3

Describe comfort letters (letters for underwriters)

Answer 3

Typically give NEGATIVE assurance on UNAUDITED interim financial information

Demonstrates that an underwriter or other requesting party has made a REASONABLE investigation to provide reasonable grounds that NO MATERIAL misstatements existed in a registration statement filed with the SEC

Auditor needs to perform a review in accordance with GAAS to provide negative assurance

Question 4

Form 8-K details

Answer 4

Material events that must be filed within 4 business days

Question 5

When can an auditor report on SUMMARY financial statements that are derived from AUDITED financial statements

Answer 5

If the auditor states that the information is CONSISTENT with the audited statements

Question 6

Form 10-K is the annual report

Answer 6

Large accelerated filer must submit the 10-K within 60 days of the end of the company’s fiscal year

Question 7

Typical activities performed in a REVIEW of interim financial information

Answer 7

Inquiries of management
Analytical procedures

Objective of review of IFI:Are any MATERIAL MODIFICATIONS needed?

Review provides NEGATIVE assurance

DOES NOT involve: testing accounting records and the effectiveness of controls, obtaining corroborating evidence

Review DOES NOT provide a basis for expressing an opinion

Question 8

Comfort letter that contains unaudited information

Answer 8

Negative assurance
Typical comfort letter covers an opinion on whether the audited FS comply in form with the accounting requirements of the SEC

Question 9

Describe other information

Answer 9

Financial and non-financial information other than the audited FS and the auditor’s report Examples: quarterly data, financial summaries, management report on operations