All Audit Flashcards
What date should be used if the audit report has been reissued, but no changes have been made to the FS
The prior date should be used as the CPA would only have knowledge of the contents of the report that they created.
What should the current auditor speak to the predecessor auditor about? (5)
GAAS list that the following should be discussed,
One, Integrity of Management
Two, Disagreements with Management
Three, Communication with management regarding non compliance
Four, Discussion about internal control weaknesses
Five, Reason for the change in the auditors
If management refuses the predecessor auditor, auditor should re evaluate accepting the engagement.
What is included in the list of services that an auditor can perform alongside an audit without impacting independence?
Other specific audits on account balances, schedules etc.
A Scope limitation imposed by management can lead to what types of audit opinion?
A scope limitation that is enforced by management, will become a GAAS issue, thus potential audit opinion will be unmodified, modified, or disclaimer of opinion dependent on the materiality of the issue. Adverse opinion cannot be given as that implies a GAAP issue.
Special purpose frame work reports, restricted use?
Reports on special purpose frame works, like Contractual Basis, will need to have an additional paragraph stating that the use of the report is restricted.
AUP and report use
For AUP the auditor has to be independent the report also has to be restricted use.
How can an auditor find information regarding litigation issues?
An auditor’s primary source of information will be through management, remember even though the companies counsel should have the information, the auditor will have to first get management’s permission to contact their lawyer.
What are the predecessor’s responsibilities before reissuing an audit report?
A predecessor should at minimum,
One, review prior report to ensure that they have not been changed,
Two, review new report to ensure that they are consistent with each other,
Three get new rep letter from management that their are no new information that is relevant to prior audit report
Four, discuss with new auditor if their are any new information about misstatements
Five, The old auditor is not required to review and new evidence from the new auditor.
What date should an auditor use on a reissued report?
If the audit report had not changed, the auditor should use the original report date, if the auditor changes the report it should be dual dated. Remember the date on the report implies that the auditor has taken some action in examine the F S for that period.
Other matter and a successor auditor
If the new auditor did not perform the prior years audit, the auditor should include
One, an other matters paragraph that prior period F S audit was done by someone else. .
Two, The opinion as well as other matter should also be mentioned,
Three, as well as the date of the report, the name of the prior auditor is not given, unless the audit firm has merged with successor auditor.
Emphasis of matter VS other Matter?
Emphasis of matter is used to draw readers attention to somehting that is in the FS. Other matter is used to make the user aware of something that is not in the FS for the period that is under audit.
How do you determine sample size when testing controls?
Not sure yet, but according to Ninja Expected deviation rate and tolerable deviation rate are taken into consideration.
Incorrect rejection VS accessing control risk too high?
Incorrect rejection occurs when the sample results suggest that the sample is misstated when the actual population is not. Accessing control risk occurs when a test of controls say that the control is not operating effectively, but in reality it is operating just fine.
Who is the rep letter to be addressed to?
The Rep letter should be addressed to the auditor that is conducting the audit.
When does a review result in a negative assurance VS a limited assurance?
The only time review should give limited assurance is given is review of a non issuer.
