AUD 1 - Reporting with Different Opinions and Other Auditors

Question 1

What type of limitation is an audit of comparative financial statements, when you did not do the audit last year?

Answer 1

When PY financial statements have not been audited, it is a scope limitation (you can’t obtain appropriate evidence).

• Therefore a disclaimer of opinion on the statements of income, retained earnings, and cash flows may be required.

Question 2

Define what is the format if updating (changing) prior year’s opinion?

only DORCS change their minds

Answer 2

The paragraph should disclose the following:

D - Date of the auditor’s previous report
O - Opinion type previously issued
R - Reason fro the prior opinon
C - Changes that have occured
S - Statement that “opinion…is different”

Question 3

What to do when issuing comparative financial statements, and an old auditor issued an opinion for PY financial statements.

There was no reissue of financial statements

Answer 3

The current auditor should express an opinion on the current year ONLY and indicate in the other-matter paragraph (nonissuer) or introductory paragraph (issuer)

Question 4

Define what to do if PY FS have not been audited when issuing comparative financial statements?

Answer 4

The auditor should include an other-matter paragraph (nonissuer) or explanatory paragraph (issuer)

• The unaudited financial statements should be clearly marked unaudited?

Question 5

Define what to do if PY FS have been reviewed or compiled when issuing comparative financial statements?

Answer 5

The auditor should include an other-matter paragraph (nonissuer) or explanatory paragraph (issuer)

Question 6

Define component?

Answer 6

An entity or business activity that prepares financial information that is included in the group financial statmeents

Question 7

Define component auditor?

Answer 7

An auditor who performs work on a component. An outsourced accountant.

Question 8

What are the two options of making reference to the audit report for component auditors?

Answer 8

Option 1) Make NO reference in the audit report and assume responsibility

Option 2) Make reference in the audit report

Question 9

Where do you reference the component auditor for nonissuer (private company)?

Answer 9

In the:

1) Auditor’s responsibility paragraph

AND

2) Opinion paragraph

Question 10

Where do you reference the component auditor for issuer (public company)?

Answer 10

In the:

1) Introductory paragraph

AND

2) Opinion paragraph