Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

AUD > A2: Other Reports > Flashcards

A2: Other Reports Flashcards

1
Q

Elements of Quality Control?

A 
H – Human Resources
E – Engagement/client acceptance
L – Leadership responsibilities
P – Performance of the engagement
M – Monitoring 
E – Ethical requirements
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Peer Review requirement?

A

Every 3 years, AICPA-member firm reviewed by another firm

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Internal engagement review?

A

Required under SOX for issuer audits. Review of audit documentation by partner not associated with audit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Sarbanes-Oxley independence requirements?

A
  • auditor may not do most non-audit services for audit client
  • can do tax services for corporate client, get approval in writing
  • one-year cool-off period: auditor moving to client officer position
  • lead and reviewing partner rotate every 5 years
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Considerations in determining quality control system?

A
  • firm size
  • organizational structure
  • cost-benefit considerations
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Quality Control vs. Audit Standards/GAAS

A
  • GAAS concerns conduct of audit engagement, quality control relates to all firm professional activities
  • failed quality control ≠ failed GAAS
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Audit of F/S prepared under Special Purpose Frameworks (tax/cash/regulatory/contractual)

A
  • obtain understanding of purpose of F/S, intended users, determination that framework is acceptable
  • management responsibility for all relevant disclosures
  • F/S should not use GAAP titles
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Other Comprehensive Bases of Accounting

A

Cash, Tax, Regulatory

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Report on Special Purpose Framework F/S

A
  • intro: description of framework
  • M/R: prep and fair presentation of F/S, determination that framework is acceptable
  • regulatory/contractual: describe purpose of F/S
  • opinion on special framework basis
  • other than regulatory basis for general use: emphasis paragraph referring to framework, noting difference from GAAP
  • contractual/regulatory: other matter paragraph restricting use
  • regulatory basis for general use: (typically adverse) opinion on GAAP, and opinion on special framework
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Prescribed report form under law/regulation

A

If prescribed form unacceptable, reword or attach appropriately worded separate report

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Audit of Single Statement/Element/Account

A

Either as: separate engagement or with audit of complete set of F/S

  • obtain understanding of purpose, users, determination that framework is acceptable
  • perform procedures on related items as needed
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Report on Complete F/S and Single Statement/Element

A
  • separate reports and separate opinion for each engagement
  • report on statement/element includes date of report on full F/S and nature that opinion, includes any relevant emphasis or other matter paragraph from full F/S opinion
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Modified Opinion on Complete F/S

A
  • modification relevant to single element: Adverse opinion when due to material misstatement, Disclaimer of opinion when due to scope limitation
  • if adverse/disclaimer on full F/S: unmodified opinion only if not published w/ or accompany report on complete F/S, and element not major portion of full F/S and not based on equity or net income
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Report on Incomplete Presentation otherwise in accordance with GAAP

A

Include emphasis paragraph, state purpose for presentation and note presentation not intended to be complete presentation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Compliance with Contractual/Regulatory Requirements

A
  • must have audited F/S (no adverse opinion or disclaimer of opinion)
  • only negative assurance on compliance (no identified noncompliance), any identified noncompliance must be disclosed in report
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Report on Contractual/Regulatory Compliance

A

-either separate report or other matter paragraph in audit report (negative assurance, report restricted – full audit report restricted if in audit report)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Report on Summary Financial Statements

A
  • must audit complete F/S
  • if summaries not accompanied by complete F/S, should describe where available and be readily available
  • may only issue unmodified or adverse opinion
  • if adverse/disclaimer on F/S, withdraw
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Professional Standards for Compilations and Reviews

A
  • Statements on Standards for Accounting and Review Services (SSARS)
  • applies to the preparation/creation of unaudited F/S on nonissuers
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Compilation Engagement

A
  • no need to be independent (disclose if not)
  • understanding with client (engagement letter presumptively required)
  • knowledge of industry accounting principles/practices
  • understanding of client’s business
  • read financial statements
  • no audit work
  • if discovery info wrong and client refuses additional/revised info, withdraw
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Report on Compilation

A

C – f/s have been Compiled
A – not been Audited or
R – Reviewed
M – Management’s
R – Responsibility for preparation and fair presentation of f/s and d/i/m of internal controls
A – Accountant’s
R – Responsibility
S – in accordance with SSARS issued by AICPA
O – Objective of compilation is to assist
M – Management in presenting financial info

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Compilation where statements omit all disclosures

A
  • okay if: statements otherwise in accordance w/ GAAP, omission not to deceive users, and report discloses the omission
  • restricted use not required
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Compilation where departures from GAAP

A

-either: disclose in report or withdrawn

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Compilation of Personal Financial Statements

A

-SSARS not required if statements not used to obtain credit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

No Compilation Report

A

-report not required if not expected to be used by third parties, use engagement letter, note restriction of use on each page of statements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Review Engagement

A 
U – Understanding with client
L – Learn about client’s business
I – Inquiries 
A – Analytical Procedures
R – Review – other procedures
C – Client rep letter
P – Professional judgment to evaluate results
A – Accountant communicates results
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Review Procedures

A
  • no testing internal controls, no audit tests, no assessment of fraud risks
  • may (not required to) communicate w/ prior accountant
  • must make inquiries w/in client, analytical procedures, read F/S
27
Q

Review – Client Rep Letter

A
  • required, failure to receive results in incomplete review (can’t issue report)
  • management responsibility for preparation of statements and d/i/m of internal controls, truthful responses to all inquiries, reps about completeness of info, subsequent events, responsibility to prevent/detect fraud, any known or suspected fraud
28
Q

Report on Review

A 
A – primarily Analytical procedures to
M – Management’s financial data and
I – Inquiries of management
S – Substantially less in scope that
A – Audit
D – Does not express an opinion
M – Management’s
R – Responsibility 
F – fair presentation of Financial statements
I – d/i/m of Internal control
R – accountant’s Responsibility
S – SSARS issued by
A - AICPA
L – Limited 
A – Assurance 
-opinion: not aware of any material modifications
29
Q

Compilation/Review – Departures from GAAP

A
  • disclose in report or withdraw

- no qualified or adverse opinion, not an audit

30
Q

Compilation/Review – Fraud/Criminal Acts

A
  • report any such knowledge to management

- immaterial matters need not be reported

31
Q

Compilation/Review – Subsequent Discovery of Facts Existing at Date of Report

A
  • advise client to revise/update info or notify that statements can’t be relied upon
  • if client does not: disassociate report from statements, alert regulatory agencies, notify relying parties that report should not be relied upon
32
Q

Compilation/Review – Supplemental Info

A

-report should indicate responsibility taken over supplemental info (none if no analysis, or limited assurance if inquiry/analytics performed on it in review)

33
Q

Engagement Change – from Audit to Compilation or Review

A
  • change must be justified
  • produce report for new engagement, don’t refer to original engagement/prior procedures/or scope limitations imposed
  • if not justified, consider withdrawing
34
Q

Comparative F/S – Continuing Accountant

A
  • service upgrade (compilation to review): prior compilation report updated and included as last paragraph in current review report
  • service downgrade (review to compilation): issue compilation report with paragraph about prior review (w/ date of prior report and no add’l review procedures after that date) OR reissue prior review report combined w/ (stating no add’l procedures after date of review report) or separate from current compilation report
  • f/s omitting substantially all required disclosures are not comparable to f/s w/ such disclosures
35
Q

Comparative F/S – Different Accountants

A
  • prior report reissued unchanged: old CPA reads new F/S and gets rep letter from new CPA on any info that might change prior F/S
  • prior report not reissued: new CPA should refer to old CPA’s report in new report, or perform that level of service themselves
36
Q

Comparative F/S – One Period Audited

A
  • unaudited F/S clearly marked as such, and old report should be reissued OR add’l paragraph in new report noting prior report and describing responsibility for prior F/S
  • if downgrade, note no auditing procedures since old report date
  • if upgrade, note service was less in scope than audit and no opinion was issued (if in SEC filed document, report should not refer to unaudited F/S)
37
Q

Professional Standards for Review of Interim F/S

A
  • issuers: PCAOB

- nonissuers: SAS

38
Q

Interim Review Engagement

A 
U – Understanding with client
L – Learn about entity
I – Inquiries of management
A – Analytical procedures
R – Review – other procedures
C – Client rep letter
P – Professional judgment to evaluate results
A – Auditor communicates results
39
Q

Interim Review Procedures

A
  • client engagement letter: objective & scope of engagement, M/R for F/S and internal control, A/R for review report (SAS or PCAOB), limits of engagement (less that audit, no opinion, no assurance over internal control)
  • inquiries of management, not required of client’s lawyer
  • analytical procedures: trends, ratios, budgets, may not to compare to industry standard
  • other: read minutes, reports, etc.
  • required client rep letter: financial info, completeness of info, disclosures, subsequent events
  • if no rep letter or unable to do needed procedures: no review report/withdraw
  • if problems: go to management, then Board/ Audit Committee, withdraw if unresolved
40
Q

Report on Review of Interim F/S

A
  • F/S clearly marked unaudited
  • M/R for F/S and DIM of internal control
  • A/R: PCAOB (or SAS), Analytics and Inquiries, Substantially less in scope than Audit, No opinion expressed
  • Conclusion: not aware of any material modifications
  • if department from reporting framework: modify report or withdraw
  • no modification if F/S discloses going concern or consistency issue, may include emphasis paragraph
41
Q

Interim Info Not Marked Unaudited in Audited F/S

A

Disclaim opinion on interim financial info

42
Q

Interim Info in Registration Statement

A

Review report not “part” of the registration statement

43
Q

Comfort Letter on Unaudited Interim F/S

A
  • letter to underwriters from CPA
  • CPA must review interim F/S
  • restrict use to underwriters
44
Q

Comfort Letter Assurances

A

Positive assurance on: CPA independence, audited F/S form compliance with SEC Act
Negative assurance on: unaudited (but reviewed) F/S, changes in certain financial info since F/S included in registration statement (if recent audit or review)
No comment/assurance on: market risk sensitive instruments, qualitative disclosures

45
Q

Attestation Engagements

A

Auditing/examining something other than historical F/S

46
Q

Professional Standards for Attestations

A

Statements on Standards for Attestation Engagements (SSAE)

-provide levels of assurance less than GAAS audit

47
Q

11 Attestation Standards – 5 general standards

A

T – Training and proficiency
I – Independence
P – due care in Planning and Performance
P – Professional knowledge of subject matter
Y – Your belief that subject matter is evaluable against suitable criteria

48
Q

11 Attestation Standards -2 fieldwork standards

A

P – Planning and supervision

A – Appropriate sufficient evidence

49
Q

11 Attestation Standards -4 reporting standards

A

S – identify Subject matter or assertion being reported on and character of engagement
S – disclose Significant reservations about engagement
E – Express conclusions
R – Restrict use of report if: criteria appropriate to limited parties, report on subject matter and no written assertion provided, or reporting on agreed upon procedures

50
Q

Reporting on Assertion or Subject Matter

A
  • may report on assertion or subject matter
  • material misstatements or deviations from criteria, report modified and conclusion on subject matter (or withdraw)
  • if report on assertion, if should accompany report or be clearly stated in report
  • if scope restriction: qualified opinion (examination), disclaimer (examination) or withdraw (examination or review)
  • restrict use if no written assertion obtained (constitutes scope limitation)
51
Q

Examination

A

-positive opinion, high assurance, based on wide variety or procedures

52
Q

Agreed Upon Procedures

A

I – Independence
A –Agreement of parties on procedures
M – Measurability and Consistency
S – Sufficiency of procedures responsibility of client (not accountant)
U – Use of report restricted
R – Responsibility for subject matter (client or third party)
E – Engagement on prospective financials (include summary of significant assumptions)

53
Q

Report on Agreed Upon Procedures

A
  • subject matter responsibility of specified parties
  • procedures were agreed by parties
  • sufficiency of procedures responsibility of client and not the accountant
  • list of procedures and findings
  • not an examination, disclaimer of opinion, additional procedures may have brought to light other matters
  • restrictions on report
  • assumptions in prospective financials
54
Q

Forecasts and Projections

A
  • forecast: expected outcome, general or limited use

- projection: hypothetical, what if situation; limited use only

55
Q

Types of Prospective Financial Statement Engagements

A

-compilation, examination, agreed-upon procedures (no review)

56
Q

Compilation of Prospective F/S

A
  • proper assembly of info based on client’s assumptions
  • no assurance
  • client must disclose significant assumptions
57
Q

Report on Compilation of Prospective F/S

A
  • compiled in accordance w/ attestation standards
  • limited scope, no evaluation of support for assumptions
  • not an examination and no opinion/assurance on statements or assumptions
  • results may not be achieved
  • no responsibility to update for future events
  • no statement info in conformity with AICPA guidelines
  • restriction of use (if projection)
58
Q

Examination of Prospective F/S

A
  • opinion whether statement in accordance w/ AICPA guidelines and assumptions reasonable basis for statements
  • must be independent
59
Q

Report on Examination of Prospective F/S

A
  • examined in accordance w/ attestation standards
  • reasonable basis for opinion
  • opinion re accordance w/ guideline and reasonableness of assumptions
  • results may not be achieved
  • no responsibility to update for future events
  • restriction of use (if projection)

-modifications: presentation guidelines not followed (qualified or adverse), assumption not disclosed or not a reasonable basis (adverse), scope limitation (disclaimer)

60
Q

Agreed-Upon Procedures on Prospective F/S

A
  • P/F/S include summary of assumptions

- report disclaims opinion on conformity w/ AICPA guidelines or reasonableness of assumptions

61
Q

Partial Presentation Prospective F/S

A

-exclude essential elements: not appropriate for general use

62
Q

Pro Forma Financial Statements

A
  • effect of hypothetical event on historical financial info
  • examination or review (no evaluation of internal control, check accuracy of computations)
  • written reps from management
  • report refers to F/S info derived from and whether were audited or reviewed
63
Q

Compliance Attestation

A
  • report on compliance w/ laws/regulations/ contracts
  • agreed-upon procedure or examination (not a review)
  • agreed upon procedure: report notes done to assist parties in evaluating compliance
  • examination: report notes examination doesn’t provide legal determination on compliance
64
Q

Management’s Discussion and Analysis (MD&A)

A
  • required by SEC for issuers
  • examination or review
  • CPA must understand SEC requirements for MD&A

AUD (6 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions