AUD 1.8 - Reporting With Differnt Opinions & Other Auditors

Question 1

What should an auditor do if during the current engagement becomes aware of evidence that affects the prior year statements and opinion that was expressed (example, a previous report was qualified due to departure from reporting framework, but I corrected):

Answer 1

The auditor should update the opinion in the current year’s report

Question 2

If an updated opinion differs from a previous opinion the auditor should disclose the reasons where?

Answer 2

In an emphasis of matter or other matters paragraph (private) or explanatory paragraph (public) and include:
1. Date of previous report
2. Opinion type previously issued
3. Reason for prior opinion
4. Changes that occurred
5. Statement that the opinion is different

Question 3

In deciding whether to reissue their report, the predecessor auditor should do what?

Answer 3

1. Read the current year statements
2. Compare the statements audited with the current period statements
3. Obtain a letter of representation from the successor auditor
4. Inquire of and obtain a letter of representation from management at or near the date of reissuance that stated whether management believes that any of the previous management representations need modified
5. Date the report appropriately (either original report date (unrevised) or dual date (revised)

Question 4

When the successor auditor does not present the predecessor auditor’s report, the successor auditor should:

Answer 4

Express an opinion on the current year financials only and indicate in an other matter paragraph (private) or an explanatory paragraph (issuer) that:
1. The prior period was audited by a predecessor
2. Opinion expressed in the prior period and if modified, the reason for modification
3. Nature of any emphasis of matter, other matter, or explanatory paragraph included in the predecessor’s report
4. Date of predecessor auditors report

Question 5

When unaudited financial statements are presented in comparative form with audited financials what should happen?

Answer 5

The unaudited financial should be clearly marked to indicate they are not audited

Question 6

When current period financials are audited and presented in comparative form with prior period financials that were reviewed or compiled, what should happen?

Answer 6

The auditor should include an other matter paragraph (private) or an explanatory paragraph (public) that includes:
1. The service (review or compilation) performed in prior period
2. Date of prior period report
3. Description of any material modifications described in report
4. Statement that the service was less in scope than an audit and does not provide a basis for expressing an opinion

Question 7

If the prior period statements were not audited, reviewed, or compiled, what should an auditor do in the current period if performing an audit?

Answer 7

Include an other matter paragraph (private) or explanatory paragraph (public) to indicate that the auditor did not audit, review, or compile the prior period financials and the auditor assumes no responsibility for them. AND clearly mark “unaudited” on the prior period financials

Question 8

When the group engagement team relies on a component auditor to perform a portion of the audit, the group engagement team has two options in the auditors report:

Answer 8

1. Make no reference in the report (assume responsibility)
2. Make reference in the report (divide the responsibility)

Question 9

Making reference (dividing responsibility) t a component auditor should only be made if what two criteria are met:

Answer 9

1. Component auditor has performed an audit in accordance with the relevant GAAS requirements or if required, PCAOB
2. The component auditors report is not restricted use

Question 10

When making reference to the component auditor, the auditors report should indicate it where?

Answer 10

In the opinion section and should include the following:
1. Component was not audited by the auditor but by the component auditor
2. Magnitude of the portion of the financials audited by the component auditor
3. Financial reporting framework used by the component auditor

Question 11

If the opinion of the component auditor is modified or the report includes and emphasis of matter or other mater paragraph, the groups auditor should:

Answer 11

Determine the effect on the auditors report and modify the opinion if necessary or include an emphasis of matter paragraph