AUD 1 - Reporting on a Single Statement Flashcards
How do you determine materiality for auditing specific elements of financial statements?
When auditing specific elements of financial statements, the auditor MUST determine materiality separately for each element
What three understandings must an auditor have when auditing single financial statement (e.g. balance sheet or income statement) or specific element?
1) The purpose for which the single financial statement or specific element is prepared
2) The intended users
3) The steps taken by management to determine the applicable reporting framework
What is the only difference between a standard audit and an audit report on a single financial statement or on a specific element account?
Instead of referring to the financial statements as a whole, the audit report refers only to the single financial statement
What should an auditor do when auditing a complete set of financial statements AND a single financial statement or a specific element
1) Issue a separate auditor’s report
2) Indicate in the report on a specific element the date of the auditor’s report on the complete set of financial statements (even in the audit report of the specific element, you are going to mention that you did a complete audit report)
When may an auditor have a piecemeal opinion (auditor expresses adverse opinion/disclaimer of opinion on complete set of financial statements AND an unmodified opinion on a single specific element?
ONLY if:
1) The opinion on the specific element is NOT published with and does not accompany the auditor’s report of financial statements (which have an adverse opinion/ disclaimer of opinion)
2) The specific element does not constitute a major portion of the complete set of financial statements
What do you when reporting on an incomplete presentation?
Include an emphasis-of-matter paragraph (private company) OR explanatory paragraph (public company)
AND:
1) Stating the purpose
2) Indicating that the presentation is not intended to be a complete presentation
