7 Flashcards
Management refuses to revise information with material inconsistencies
Include other-matter paragraph
Withhold audit report
Withdraw from engagement
KAM by report type
Key Audit Matter
Adverse opinion-should not be included
Disclaimer of opinion-should not be included
Qualified opinion - refers to basis of opinion section
Unmodified opinion with going concern section - refers to going concern section rather than describing the going concern issue
If certain information is excluded from GAGAS Report?
Disclose information and reasons in the report
Can CPA provide its working paper without the client’s consent or a lawful subpoena to IRS or FASB?
NO
Exceptions allow its release to comply with a subpoena or peer review or in connection with lawsuits or AICPA ethics complaints.
AICPA Code of profession Conduct
Discusses safeguards to ensure quality auditor performance
GAAS and PCAOB
Gather evidence on which to base an opinion
Audit engagement letter
Required
-Objective and scope
-Statement that some material misstatements may not be detected
-Applicable FR framework
-Expected form and content of audit report
-Including
Additional services to be performed
In written communication with nonissuer company, is Statement included if no material weakness or significant deficiencies identified?
No, only no material weakness. Not indicate a lack of significant deficiencies
Role of risk assessment in integrated audits
-Select controls to test
-Determine testing and evidence necessary for each control
-Identify significant accounts, disclosures, and assertions
If the management explanations of significant related party transactions are inconsistent with audit evidence, what do the auditor need to do?
Consider the reliability of managements explanation and representations on other significant matters.
What does the auditor obtain first when considering IT controls?
General controls (change management controls)
Nonissuer’s financial statement audit
Implementation of internal controls over financial reporting
Not required to assess the operating effectiveness of IC
OM when predecessor’s report is not reissued
-Statement prior period was audited by another auditor
-Opinion of the predecessor auditor and basis for that opinion
-Summary for any OM or EOM in predecessor’s report
-Date of predecessor’s report
Explanatory paragraph in report on issues FS when IC is reported on separately
-Date of IC audit
-PCAOB and COSO used
-Date of the report
-Opinion expressed
Internal control deficiencies
Control deficiency -remote -inconsequential -unmodified
Significant deficiency -reasonable possibility - Not material but more than inconsequential - unmodified
Material weakness - reasonable possibility - material
Audit of ICFR PCAOB report requirements
Title “Report of Independent Registered Public Accounting Firm”
Company name and auditor’s opinion
Basis for opinion
Definition and limitations of internal control over FR
Audit firm’s signature
City and state where audit report is issued
EOM (nonissue)
-The auditor’s opinion on revised FS differs from opinion previously expressed
-Change in accounting principle
-FS prepared using a special purpose framework
-FS prepared using a regulatory basis intended for general use
KAM
Most significant in an audit of nonissue
-Significant risks or areas with a higher risk of material misstatement
-Significant events or transactions that occurred during the year under audit
-Areas requiring a particularly high degree of professional judgment
Adverse opinion-KAM should not be included
Disclaimer of opinion-KAM should not be included
Qualified opinion - KAM refers to basis of opinion section rather than describing the issue causing the modification
Unmodified opinion with going concern section - KAM refers to going concern section rather than describing the going concern issue
Critical audit matters (CAM)
Qualified or unqualified audit opinion issued - CAM section always required
Adverse or disclaimer opinion issued-CAM section not allowed
Which section of nonissues audit report includes that the evidence obtained is sufficient and appropriate?
Basis of opinion
Which opinion when the entity’s ability to continue as a going concern?
Qualified or adverse opinion
