A5 Flashcards
Management representation for integrated audit
Management acknowledges responsibiltiy for implementing and maintaining internal control
Management did not rely on auditor’s procedures as basis for assessment
Management has disclosed all deficiencies in design and operation
Describes any fraud either resulting in material misstatement or involving senior management
States whether there were any significant changes to internal control in the subsequent events period
Entity level controls
Control environment Management override Risk assessment process Centralized processing Monitoring the results of operations Monitoring other controls Period end financial reporting Policies that address significant business control practices
Differences between Attestation standards and GAAS
No reference is made to historical financial statements
No reference is made to generally accepted accounting principles
Examples of Attestation Engagements (SSAE)
Agreed upon procedures
Financial forecasts and projections
Pro forma financial statements
Compliance
Management’s discussion and analysis (MD&A)
Reporting on controls at a service organization
An examination of a financial forecast involves:
Evaluating preparation of prospective financial statements
Evaluating support underlying management’s assumptions
Evaluating presentation of prospective financial statements in conformity with AICPA guidelines
Issuing an examination report
Pro Forma Review purpose
Provides limited assurance about the effect of a hypothetical event by showing how it might have affected the historical financial statements if it had occurred during period covered by those financial statements
Modifications to opinion of examination of prospective financial statements
AICPA presentation guidelines are not followed (Qualified or adverse)
Significant assumption are not disclosed (adverse)
At least one of significant assumptions does not provide a reasonable basis for FS (adverse)
GAAS standards types of engagements
Financial audits
Attest engagements
Performance audits
Reporting requirements under GAGAS include:
GAAS requirements and additionally:
- Reports on compliance with laws, rules, regulations, and violations that may affect financial statements
- Reports on internal control over financial reporting
Conditions for Agreed Upon Procedures engagement
Independence of the Practitioner
Agreement of Parties of procedures to be performed
Subject matter can be reperformed to get same results
Specified parties take responsibility for sufficiency of the procedures.
Use of Report is restricted
Client is responsible for subject matter.
Prospective FS must include a summary of significant assumptions
GAGAS written representation from management should include:
Statement there are no violations or possible violations of laws of regulations with an effect on FS
Management is responsible for entity’s compliance with laws and regulations
Management has identified and disclosed in writing all laws and regulations that have a material effect on FS
Expansions of GAGAS for Federal Financial Assistance recipients
Expanded internal control documentation and testing requirements
Includes formal written reports on internal control and assessment of control risk
Reports whether federal funds are spent in accordance with applicable laws and regulations
Applies single audit standards to entities spending >$750,000
Audit reporting for Federal Financial Assistance recipients
Opinion on financial statements
Opinion on Schedule of Expenditures or Federal Awards
Report on Internal Control and compliance with federal statutes, including scope and testing (Yellow Book)
Report on compliance for each major program (Single Audit Report)
Provide Schedule of Findings and Questioned Costs
