A1 - Reports on Audited Financial Statements Flashcards
MR DIM REPPORTS CRAME
Management's Responsibility for the Design Implementation Maintenance of internal controls Responsibility Express an opinion Plan audit Perform procedures Obtain sufficient evidence Risks Test internal controls Statements, fair presentation of financial Control, no opinion of internal Reasonableness of Accounting estimates made by Management Evaluate overall presentation
Which type of opinion is required if there is a pervasive problem with GAAP?
Adverse opinion (disclaimer opinion if GAAS)
If the auditor is not independent, what opinion should be given?
A disclaimer of opinion
T/F: Whether substantial doubt remains or is alleviated is a judgment call made by the auditor, and there is no requirement to document management’s opinion on the matter under U.S. auditing standards
True; under International Standards on Auditing, management must assess the entity’s ability to continue as a going concern and the auditor must evaluate this assessment
T/F: If substantial doubt about the entity’s ability to continue as a going concern has been removed in the current period, the emphasis-of-matter paragraph included in the prior period auditor’s report should be repeated
False; the emphasis-of-matter paragraph need NOT be repeated and also, no description of the reasons or plans for recovery need be included
What is being indicated by a group engagement partner’s report that discloses that part of the audit was performed by another auditor?
Division of responsibility
Which paragraphs of an auditor’s report on financial statements under U.S. auditing standards should refer to generally accepted auditing standards (GAAS) and generally accepted accounting principles (GAAP)?
GAAS - Auditor’s Responsibility
GAAP - Opinion
If a publicly held company does not include a statement of cash flows in their financial statements, what opinion should be given?
A qualified opinion
T/F: A material weakness must be reported to management and those charged with governance, but would not be disclosed in an emphasis-of-matter paragraph added to an otherwise unmodified opinion
True
When a change in accounting principle is made, where should the change be described?
In an emphasis-of-matter paragraph
Which two phrases must be included in an emphasis-of-matter paragraph which references going concern?
“Substantial doubt” and “going concern”
If a group engagement partner’s report is assuming responsibility for work performed by another auditor, should the other auditors’ work be referenced?
No, it should be omitted
In which two paragraphs of an auditor’s report is U.S. GAAP mentioned?
Management’s Responsibility and Opinion paragraphs
In which of the paragraph of an auditor’s report does an auditor communicate the nature of the engagement and the specific financial statements covered by the audit?
Introductory paragraph
Which two paragraphs must (at a minimum) be modified if audit work is performed by another auditor and the reporting auditor chooses not to take responsibility for that auditors work?
Introductory and Auditor’s Responsibility paragraphs
