Audit Deck 6 Flashcards
In an audit of F/S according to Gov Aud. Stand (GAS) - what is included in the report
The report should include:
- that compliance with laws and reg is the responsibility of mgmt
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Under what circumstances can you accept an engagement to compile pro forma financial information
- ## Can do it if the historical financial statements have been compiled, reviewed or audited
What is the auditors responsibility for supplementary information that is outside the basic F/S but is required (like by GASB)
These are RSI - the auditor must do limited procedures to see if the required info has been provided, and whether or not it appears correct.
When F/S are prepared under an OCBOA - how do you title the financial statements
They would include the financial reporting basis: example “Statement of Income” - regulatory basis” or titles that clearly describe what would be included in the statement.
What would the report on internal controls and compliance with laws and regulations associated with a Government Auditing Standard (yellow Book) include:
A description of the scope of testing of Internal Controls
What kind of programs do a GAGAS standard apply to
These standards apply to audits involving federal government programs or activities, or other entities that receive federal funds
Why is the scope of the GAGAS audit larger than non-government audit ( what else do they require)
They require:
- Separate reporting on internal control
- Adherence to applicable laws and regulations
- This is why the scope is larger
What is included in the separate report on I/C in a GAGAS audit
They include a
- Description of the scope of the auditors work obtaining an understanding of I/C
- They also include any significant deficiencies or material weaknesses notes
can the regular GAGAs audit report and the report on Internal controls be combined?
Yes
What is included in the government report on compliance
It reports on the compliance with laws, regulations, and the provisions of any grant agreement
What are the three standard reports in a yellow book audit
1 - the audit report
2 - a report on Internal control which includes a description of the scope of the auditor’s testing of I/C
3- a report on any applicable compliance with laws or regulations
They are also required to report on fraud or illegal acts
Under what circumstances is an auditor required to report fraud or illegal acts to outside authorities
- Management fails to report the information as required by law
- Management fails to take timely action to respond to the fraud or illegal act.
When must a state or local government get a “Single Audit”
When they spend at least $750K in federal funding they need to do a single audit. The point is to verify that federal funds have been spent according to the programs they were received for
What do you need to have in place when you do an agreed upon procedures engagement
- The procedures to be performed and the finds are agreed upon by client, CPA and a third party
- The report is restricted
- if it is for prospective financial statements in accordance with GAAP - you also need a “summary of significant assumption” presented the report don’t need this if SSAE
What report can you issue if you are doing a GAS compliance audit and detect serious noncompliance
Noncompliance is considered as serious as a departure from GAAP and therefore you will issue:
- Qualified - if material and not pervasive
- Adverse - if material and pervasive
Examination on a Financial Forecast is what types of engagement
It is an attest and assurance engagement.
Need to be Independent
When you are reporting on Compliance what kinds of reports can you issue
Either an examination or agreed upon procedure
What are the requirements / steps in a compliance examination or agreed upon procedure
- The CPA should obtain an understanding of the specified requirements
- Mgmt must accept responsibility for compliance with specified requirements
- If Examination - the end result is a report where ether CPA expresses an opinion on whether management complied with specified requirements
- If Agreed upon Procedures - The CPA will perform the procedures set by partied to evaluate compliance with specified requirement. The report will list 1) the requirements and 2) the procedures performed and 3) The results of the procedures
What do you do if the quarterly data required by the SEC Regulation S-K has been omitted
The report must contain a statement that the co. has not presented the quarterly financial data
What is the difference between a forecast and a projection
They are both prospective F/S
- Projections are future results based on hypothetical assumption in a “what-if” scenario - limited use
- Forecasts are what you expect the future to be based on what is actually happening - general use
What types of engagements can you perform with prospective F/S
You can perform examinations, Compilations, and Agreed -upon Procedures
NOT A Review - isn’t allowed
