Attest (鉴证）Engagement Flashcards
In an attest engagement, Restrict use of the report to specified parties when:
- the criteria are appropriate for or available to only limited number of parties
- Reporting on subject matter and a written assertion has not been provided.
- Reporting on an agree-upon procedures engagement.
An EXAMINATION of a financial forecast is a professional service that involves:
- Evaluating the preparation of the prospective F.S
- Evaluating the support underlying the assumptions
- Evaluating the presentation of the prospective F.S in conformity with AICPA guidelines
- Issuing an examination report.
Attestation standards provide a framework for the attest function beyond historical F.S. (Attest engagement is examine, compile, review and perform an agreed-upon procedures OTHER THAN historical F.S)
Attestation standards are issued by AICPA
PRO FORMA financial statement
- Pro forma F.S may be examined or reviewed.
- The CPA should obtain an understanding of the event and evaluate the pro forma adjustment, and also obtain written representations from management.
- A CPA’s report should make reference to the F.S from which the historical financial info is derived, and state whether such financial statement were audited or reviewed.
SSARS (statement of standards of accounting and review service) DOES NOT apply to
- other services provided by accountant, such as preparing one or a few adjusting or correcting entries, consulting on financial matters, preparing tax return, rendering manual or automatic bookkeeping or date processing services, and processing financial date for clients of other accounting firms. (if the account prepares MANY adjusting or correcting entries, this could be considered preparation of F.S, and SSARS apply).
- reviews of interim financial info of nonissuers whose annual F.S are audtied.
Before agreeing to a change in engagement, an accountant should consider the
- reason for the request, especially if there are scope limitation
- effort required to complete the engagement
- estimated additional cost to complete the engagement.
Comfort letter provide POSITIVE assurance to
- A CPA’s independence
- Compliance as to form of the F.S with the SEC act, assuming the F.S are audited.
Comfort letter provide NEGATIVE assurance to
- Unaudited F.S, unaudited interim F.S, and capsule financial info, assuming a review of such info has been performed.
- Changes in selected F.S
- Whether certain non-financial statement info included in the registration statement complies as to form in all material respects with regulation S-K
If, in the auditor’s judgment, the entity’s going concern disclosure are INADEQUATE, a departure from GAAP exists, this may result in either a QUALIFIED or ADVERSE opinion.
If the auditor’s doubt about the entity’s ability to continue as a going concern are REMOVED in a subsequent period, the emphasis-of-matter paragraph of the prior period need NOT be repeated.
When auditor wish to emphasize an accounting matter affecting the COMPARABILITY of the F.S with those of the prior year
An unmodified opinion with an emphasis-of-matter paragraph added after the opinion will be result.
If an accounting change has NO MATERIAL EFFECT on the comparability of the F.S,
The auditor does NOT need to recognize the change in the CURRENT years’s audit report.
When the management ( CFO & CEO) REFUSE to sign the management representation letter
This is a client-impose SCOPE LIMITATION
Omission of info that is required to be presented ( the company issue F.S that purport to present financial position and results of operations, but refuses to include the related statement of cash flow)
is considered a MATERIAL MISSTATEMENT of F.S, result in qualified or adverse opinion.
When a predecessor auditor’s report is not presented, the successor auditor should indicated the following item
- That the statements were audited by a predecessor auditor. The predecessor auditors should NOT be named unless the practice of the predecessors was acquired by or merged with that of the successor.
- the type of opinion expressed by the predecessor auditor and, if the opinion was MODIFIED, the reason for the modification.
- the nature of any emphasis-of-matter or other-matter paragraph included in the predecessor’s report
- the date of the predecessor’s report.
Comments concerning the unaudited interim financial info provide NEGATIVE ASSURANCE as to whether any material modifications should be made to the unaudited interim financial info in order for it to be in conformity with GAAP
Negative assurance is provided in reports on COMPLIANCE with respects of contractual agreement or regulatory requirements related to audited F.S
Modifications are made to the standard review report ONLY when there is a departure from generally accepted accounting principles
assessing the risk of material misstatement due to fraud is a requirement of an audit, not a review
If the auditor has disclaimed an opinion on the F.S taken as a whole, the auditor may express an opinion on an entity’s accounts receivable balance only if the special report on A.R is presented SEPARATELY from the disclaimer of opinion on the F.S and the A.R balance DOES NOT constitute a major portion of the entity’s complete set of financial statements.
NOT a piecemeal opinion.
When audited F.S are presented in comparative form with unaudited F.S(前后情况分别两种), the unaudited F.S should be clearly marked and the auditor should EITHER (二选一）reissue the prior period report OR include a separate other-matter paragraph in the current year report describing the responsibility assumed for the prior period’s statement
情况A： current period Unaudited and prior period audited (downgrade in service)
The auditor should indicate
1. the prior period statement were audited
2.the date of the previous report
3. the opinion expressed, if other than unmodified, the reasons for the modification
4. that no auditing procedures have been performed since the previous report date.
情况B： current period audited and prior period unaudited (downgrade in service)
1. The service (review or compilation) performed in the prior period
2.the date of the prior period report
3. a description of any material modification described in the report
4. a statement that a service was less in scope than an audit and did not provide the basis of opinion.
A review report on the interim financial information of a publicly held company DOES NOT
provide an opinion on the financial statements. The review report provides NEGATIVE assurance.
When an entity changes its method of accounting for income taxes, which has a material effect on comparability, the auditor should
- refer to the change in an emphasis-of-matter paragraph to the auditor’s report
- identify the nature of the change and refer to the F.S note that discusses the change in detail.
The objective of a review of interim financial information of a public entity is to provide an accountant with a basis for reporting whether
Material modifications should be made to conform with GAAP
