Audit 1 Flashcards
If accounting principal has no material change on Financials what do you do?
Nothing. When there is material change add emphasis of matter
When there is a change in accounting estimates, does that affect consistency?
No, because these are prospective changes, like dep. exp. Only by MATERIAL changes in Acct Principals does it require an explicit mention of lack of consistency and an emphasis of matter
When there is a scope limitation, how do you reference it in the opinion paragraph?
No mention of scope or lack of evidence, just simply that it can affect FS
When departure from GAAP is justified what do you do?
Unmodified with emphasis of matter explaining situation
When there’s qualified report, what gets modified?
AR par, and Opinion Paragraph (and Basis gets added)
Should you trust management based on past years?
No- Professional Skepticism!
What should be done with supplementary information?
Apply limited procedures
When discovering new info that existed at report date what should you do?
Figure out if people attach importance to it
An Unjustified accounting change results in:
A qualified or adverse, not emphasis of matter
If accounting system other than GAAP are not properly titled:
Issue a qualified opinion
For audits of issuers, do you mention GAAS?
No. Just PCAOB and GAAP
When reporting for a foreign country, what do you need?
Written rep from mngmnt regarding intended use
Who do you address Audit Report to?
The client that engaged you
Recognized Events requires:
Adjustment to FS
Unrecognized Events requires:
Optional Disclosure but no adjustment
