A8 Reporting With Different Opinions Flashcards
Using the Work of Others
Using the work of the internal audit function requires the auditor to evaluate objectivity & competence
Group Auditor References
If A group auditor decides not to make reference to the audit of a component auditor, they assume responsibility for the work of the component auditor
Restated Financial Statements
When prior financial statements are restated in the current period to conform with GAAP, the auditor’s updated report on prior period financials should express an unmodified opinion concerning the restated financials.
Predecessor Auditor
The predecessor auditor must obtain the current comparative financials, obtain a successor auditor representation letter, and also compare the current period comparative statement with those of the prior year. This is all done before they reissue the prior year’s audit report on the financials of the former client.
Group Engagement Partner
When the GEP decides not to reference the component auditor under US GAAS, it is revealed in the opinion section of the auditor’s report.
Dates of Comparative Reports
When reporting on comparative financial statements, the auditor should update the dates for the comparative financials, & they update the audit report to the most recent date.
Updating/Changing Prior Periods
Should be done in the current year’s report. If the updated opinion differs from the previous one the auditor should disclose the reasons in an EOM (nonissuer) or explanatory (issuer) paragraph.
DORCS
Mnemonic used to detail the parts of the audit report. DATE of previous report, OPINION expressed, REASONS for that opinion, CHANGES that occurred, & STATEMENT that the opinion is different.
Reissued Audit Report
When the report is not reissued, the successor auditor should only express an opinion on the current period financials only, and indicate in an other matter paragraph (nonissuer) or explanatory paragraph (issuer) that the financials of the prior period were audited by a predecessor, the type of opinion expressed, reasons, nature of any paragraphs (EOM,OM, etc) and lastly finally date the predecessor audit report.
Change in Accounting Principle
Occurs when an entity adopts a generally accepted accounting principle different from the one it used previously. This can significantly impact the comparability of the FS across periods. The nature and reasons for the change should be disclosed.
Reporting on Other Information
Allows the auditor to revise the auditor’s report in a separate paragraph. If mgmt refuses to correct the other information, the auditor can withdraw or snitch.
Reporting on Comparative FS
An auditor ordinarily should change the previously issued opinion on the prior year’s FS if the prior year’s FS are restated to conform with GAAP.
Comparative FS
An entity’s comparative FS include FS from the prior period audited by the predecessor auditor whose report is not presented. If that report was qualified, the successor should indicate the substantive reasons for the qualification in the predecessor auditor report.
Before Reissuing Prior Year Reports
Before reissuing PY report, the previous auditor should read the FS for the current period, compare prior period info to current period info, obtain a letter of representation from the new auditor, obtain a letter of representation from mgmt.
