A1 Flashcards
DUAL DATING
Used in subsequent events ONLY
NOT on comparative FS (previous YR audit)
Reporting on Supplementary Information by designated acct Standard include a separate report paragraph section called ?
Include a separate report section (“Required Supplementary Information”)
Statements on Auditing Standards & GAAP departure treated the same way in terms of justification.
The auditor is generally required to follow the guidance provided by the standard, and should be able to justify any departures.
What triggers a change previously issued opinion (comparative FS)
When PY FS are restated to conform with GAAP… NOT FOR LACK OF CONSISTENCY.
Do you make reference in the report when a change in accct. principle w/ IMM effect of the change on the comparability of the FS
NOT refer to the change in the auditor report
(no revision to the audit report necessary)
Does an Imm justified departure from GAAP affect the opinion?
NOT affect the unmodified opinion
What kind of opinion?
Material justified departure from GAAP
Qualified or Adverse OP
What kind of opinion?
Material RP properly accounted but NOT adequately disclosed in FS
Qualified or Adverse OP
For issuers… explanatory paragraph is required to be included in the Auditors report when….
Substantial doubt about the entity’s ability to continue as going concern exists.
If there were no other sig audit findings.. an UNQUALIFIED OP w/ explanatory paragraph = Appropriate.
Non-issuer lack of consistency (significant change in acct. principle) should be referenced in what part of the opinion
Emphasis-of-matter paragraph
Inventory can be valued @ what time
BS Date
Disclaimer Op issued due to lack of sugg approp audit evidence… the auditor should disclose it at what paragraph?
Basis for the disclaimer Opinion…
NOT MNGMT NOR NOTES TO THE FS.
Scope limitation like MGNM estimate should be treated like Documents as such Auditor should express
A qualified or disclaimer opinion
FS not in conformity with GAAP rules regarding a capitalization of leases most likely express an?
Adverse Opinion
Should auditor issue an adverse opinion when information comes to his/her attention that raises substantial doubt about the entity’s ability to continue as going concearn?
NO
This should be disclosed in an “emphasis-of-matter” or a separate section of the report (doubt remains) appended to an unmodified/unqualified OP.
If acct change has no material effect on the FS (CY), but material future effect… the auditor should issue a ?
Unmodified Opinion.
Change is disclosed in the FN whenever the FS of the change period are presented , but does not have to recognize the change in CY.
What OP should be expressed for a GAAP departure due to unusual circumstances, the statements would otherwise be misleading…
Unmodified
b/c the FS are not materially misstated.
What kind of opinion should be issued when a CPA is “associated” w/FS of PUBLIC co, but has NOT audited or (interim) rvwd such FS?
Disclaimer Opinion
treat the statements as Docs.
Compilation reports are related to PUBLIC or NON-PUBLIC entities?
NON-PUBLIC
In which paragraphs in the auditor’s report reference to USGAAP?
Opinion (auditor’s opinion in conformity with GAAP) & MNGMT’s Responsibility paragraph( responsible of preparation of FS in accordance w/GAAP)
Would auditor’s modify the same paragraph when rendering either a qualified OP due to a departure from GAAP or a qualified OP due to scope limitation?
YES, they both require modification on the Opinion section & Basis of the Opinion.
Treat scope limitation like managements estimate effects are reasonable as DOCUMENTS which will trigger a …?
Qualified or disclaimer OP
OJO** Material/Significant lack of consistency (change in acct principle) should be reported on what part of the OPINION
Emphasis -of -Matter
justified lack of consistency caused by material change & unmodified
If FS prepared in accordance with Financial reporting framework generally accepted in other country non us parent auditor must obtain>?
Written representation from MNGMT of the US. ENTITY regarding the uses of the FS.
Does the Auditor’s responsibility section changes when a qualified opinion is changed?
NO, auditor would modify Auditor’s responsibility when issuing a disclaimer of opinion but not qualified opinion
Auditor would modify the Opinion section by adding an “except for” statement when…
Auditor Qualifies the opinion because of inadequate disclosure.
Reporting Accountant
May accept the engagement but should consult with continuing CPA to ascertain all available facts relevant to forming a professional judgment
Considerations in planning an audit engagement’s personnel requirements
1) engagement size & complexity
2) personnel availability
3) special expertise required
4) timing of the work to be performed
5) continuity and periodic rotation
6) opportunity on-the-job training
If auditor decides not to Dual Date the report and sufficient appropriate audit evidence was prior to the completeness of the the subsequent events you always use…..
Use a later date… the date on which sufficient appropriate evidence was obtained including the procedures for subsequent events.
Auditor exercising professional skepticism
Consider the reliability of the information to be used as audit evidence.
NOT AUTHENTICATE
emphasis-of-matter paragraph required while not affecting the auditor’s unmodified opinion
To describe a material but justified change in accounting principle.
Material & Pervasive =
Adverse OP
Departure from GAAP (inadequate disclosure of material info) = What kind of OP?
Adverse OP
An emphasis-of-matter paragraph is required when the financial statements are prepared in accordance with….
an applicable special purpose framework, such as the cash basis of accounting.
Note that an emphasis of matter paragraph may use the heading of “Emphasis of Matter” or any other appropriate heading.
Before reissuing the prior year’s auditor’s report on the financial statements of a former client, the predecessor auditor should obtain letters of representation from the:
Successor auditor and the former client’s management.
If an accounting change has no material effect on the financial statements in the current year, but a material future effect…
the auditor must ensure that the change is disclosed in the footnotes whenever the financial statements of the change period are presented, but does not have to recognize the change in the current year’s audit report.
UNMODIFIED OP
