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Audit - CPA > A1 - Audit Reports > Flashcards

A1 - Audit Reports Flashcards

1
Q

GAAS

A
  • Measures of the quality of the auditor’s performance

- Guide the auditor in the performance of a properly planned and executed audit

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2
Q

In order to obtain reasonable assurance:

A
  • Plan the work and properly supervise assistants
  • Determine and apply materiality levels
  • Identify and assess risks of material misstatement, whether due to error or fraud
  • Obtain sufficient appropriate audit evidence
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3
Q

Inquiring of prior year engagement personnel regarding their assessment of management’s honesty and integrity:

A

Is NOT an example of the application of professional skepticism

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4
Q

Critical Audit Matter

A
  • A matter that was communicated or is required to be communicated to the audit committee
  • Involves an especially challenging judgement made by an auditor
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5
Q

For issuers, CAMs should be communicated in the CAMs section, which is where?

A
  • Immediately follows the Basis for Opinion section
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6
Q

Auditor will include the following info related to a CAM in the audit report:

A
  • Reference to relevant FS accounts that relate to the CAM
  • Description of the principle considerations that led the auditor to determine that the matter was a CAM
  • Description of how the CAM was addressed in the audit
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7
Q

Which type of audit report has a Scope Paragraph?

A
  • Issuer
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8
Q

Which section of a NONissuer’s audit report communicate the nature of the engagement and the specific FS covered by the audit?

A
  • Opinion
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9
Q

If management refuses to sign the management representation letter:

A
  • Disclaimer of opinion
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10
Q

Inadequate disclosure does not result in:

A
  • A disclaimer of opinion

- It results in a qualified or adverse opinion

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11
Q

Example of an opinion paragraph for a qualified opinion:

A
  • In our opinion, except for the omission of the info described in the basis for qualified opinion section of our report
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12
Q

If an auditor lacks independence with respect to the audited entity:

A
  • The auditor must disclaim an opinion on the FS

- Qualified opinion is not an option

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13
Q

When an auditor qualifies his opinion because of a scope limitation, the wording in the opinion paragraph should indicate:

A
  • That the qualification pertains to the possible effects on the FS and not to the scope limitation itself
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14
Q

An auditor who is unable to form an opinion on a new client’s opening inventory balances may issue an unmodified opinion on the current year’s:

A
  • Balance sheet only
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15
Q

A disclaimer of opinion is issued when:

A
  • There is a significant scope limitation
  • When the auditor is not independent
  • When the FS are not audited
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16
Q

A qualified opinion requires modifications to both:

A
  • The Opinion section and the Basis for Opinion section
17
Q

A change in an accounting estimate (such as achange in the useful life of a depreciable asset) is accounted for prospectively and does not affect the comparability of FS between periods. Therefore:

A
  • No modification to the report is required
18
Q

A change in accounting principle results in:

A
  • The addition of an emphasis-of-matter paragraph
19
Q

An auditor should restrict the use of the auditor’s communication related to the audit of a nonissuer’s FS by including an alert when the written communication:

A
  • Is based on a measurement or disclosure criteria that the auditor determined to be suitable only for a limited number of users who have adequate understanding of the criteria
20
Q

If a contingent liability is probable, but not estimable,and it is disclosed in the footnotes:

A
  • The auditor should issue an unmodified opinion
21
Q

When a group auditor decides to make reference to a component auditor, the division of responsibility is expressed in the:

A
  • Opinion paragraph
22
Q

When a predecessor auditor’s report is not presented, the successor auditor should indicate the following items:

A
  • That the stmts were audited by a predecessor.
  • Type of opinion expressed by the predecessor (if modified opinion, why?)
  • The nature of any EoM, Other Matter or Explanatory paragraph in the predecessor’s report
  • The date of the predecessor report
23
Q

When a CPA firm decides to take responsibility for another firm’s audit work, the CPA firm should:

A
  • Review the other firm’s workpapers and perform a subset of audit tests
  • Not reference the other firm’s work
24
Q

When audited financial statements are presented in a client’s document containing other information, the auditor should:

A
  • Read the other information to determine that it is consistent with the audited financial statements
25
Q

With regard to supplementary information that is required by GAAP, there is no requirement to:

A
  • Restrict the use of the report.
  • Instead an auditor would:
    - Include a statement within a separate section with the heading “Required Supplementary Info” and not express opinion
    - State the auditor has applied the required procedures within that separate section
    - Offer opinion on whether the supplementary info is fairly stated in all material respects to the FS as a whole
26
Q

Types of Special Purpose Frameworks (including OCBOA (Other Comprehensive Basis Of Accounting))

A
  • Cash Basis
  • Tax Basis
  • Regulatory Basis
  • Contractual Basis
  • Other Basis
27
Q

Auditor’s report on FS prepared on the cash receipts and disbursements basis of accounting should include:

A
  • An opinion as to whether the FS are presented fairly in conformity with the basis of accounting used
  • A reference to the note to the FS that describes the basis of accounting
  • A statement that the audited was conducted in accordance with GAAS
28
Q

An auditor’s special report on FS prepared in OCBOA should include an EoM paragraph that:

A
  • Refers to the notes of the FS describing the basis of accounting
29
Q

The reporting accountants written report on the application of an applicable financial reporting framework should include

A
  • Identification of the specific entity involved
  • a brief description of the nature of the engagement;
  • a statement that the engagement was performed in accordance with AICPA standards;
  • a description of the specific transaction(s);
  • a statement of the relevant facts; circumstances, assumptions and source of the information;
  • a statement describing the appropriate application of the requirements of the applicable financial reporting framework to the specific transaction or type of report;
  • a statement that the preparers of the financial statements are responsible for proper accounting treatment;
  • a statement that any difference in facts, circumstances or assumptions presented may change the report;
  • a separate paragraph restricting its use to specified parties;
  • a statement indicating that the reporting accountant is not independent (if appropriate)

Audit - CPA (4 decks)

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