Audit Reports Flashcards
Audit Reports
What should be included for the Auditor’s address?
The City and State where located
Audit Reports
What is Management Responsible for in regards to the Financial Statements?
Preparation and Fair Presentation of Financial Statements in accordance with the Applicable Financial Reporting Framework
Audit Reports
What is Management Responsible for in regards to Internal Control?
Internal Control Design, Implementation, Maintenance
Audit Reports
What are the headings in the Audit Report for an Unmodified Opinion?
(TIM-AA) Title; Introduction; Management Responsibility; Auditor Responsibility; Audit Opinion
Audit Reports
What are the headings in the Audit Report for an Modified Opinion?
(TIMA-BA) Title; Introduction; Management Responsibility; Auditor Responsibility; Basis for (Modified) Opinion; Audit Opinion
Audit Reports
In an Unmodified Opinion with Emphasis-of-Matter / Other-Matter sections, what is the order of the headings?
(TIM-AA EMO) Title; Introduction; Management Responsibility; Auditor Responsibility; Audit Opinion; Emphasis-of-Matter; Other-Matter
Audit Reports
What are the requirements for referencing a Component Auditor in the Audit Report?
Component Financial Statements must be prepared using same Financial Reporting Framework as the Group Financial Statements; Component Auditor must have performed audit in accordance with GAAS or PCAOB Standards.
Audit Reports
What must the Group Engagement Partner do if they assume responsibility for the Component Auditor’s work?
Perform additional audit procedures; Be involved in Component Auditors work; Perform Risk Assessment procedures; Assess Risk of Material Misstatement
Audit Reports
What standards govern SSARS engagements?
Compilations are governed by SSARS (Statements on Standards for Accounting and Review Services)
Audit Reports
Which clients can have compilation engagements?
Non-SEC (non-public) registrants only.
Audit Reports
What is a Compilation?
Accountant puts together financial statements with information PROVIDED BY MANAGEMENT. No opinion is expressed and no assurances are given. Independence is not required.
Audit Reports
What disclosures are required for Compilation engagements?
Disclosures not necessary must state that they are not included
Audit Reports
What standards govern Review engagements?
SSARS (Statements on Standards for Accounting and Review Services)
Audit Reports
What type of assurance is given in a Review engagement?
Reviews give limited assurance.
Audit Reports
What procedures are required for Review engagements?
Analytical procedures are required for reviews. Compare results to documented predictions.
Audit Reports
What is a Review engagement?
Financial statements are presented with no opinion expressed- and limited assurances are given. Independence is required for a review engagement.
Audit Reports
What is a Forecast?
A prospective financial statement that uses normal circumstances. General and limited use allowed.
Audit Reports
What is a Projection?
A prospective financial statement using hypothetical situations. Only limited use by the client is allowed.
Audit Reports
What are the requirements for Agreed Upon Procedures?
Independence is required; Only limited use by the client is allowed.
Audit Reports
What disclosures are required for remote likelihood of losses?
No disclosure required.
Audit Reports
What disclosure is required for a probable loss contingency?
Accrue if estimable. Emphasis-of-Matter paragraph if not estimable.
Audit Reports
What disclosure is made if a loss contingency is reasonably possible?
Auditor assesses need for Emphasis-of-Matter paragraph based on loss likelihood.
Audit Reports
How is a gain contingency reported?
Gain contingencies are not reported.
Audit Reports
How does an immaterial GAAP issue affect the audit opinion?
It doesn’t. Opinion is Unmodified.
Audit Reports
How does a very material GAAP issue affect the Audit Report?
Modified-Adverse Opinion is issued. Emphasis-of-Matter paragraph is added after Opinion paragraph.
Audit Reports
How do GAS standards compare to GAAS?
GAS is more strict than GAAS.
Audit Reports
What is required under the Single Audit Act?
An audit performed under governmental auditing standards (GAS). A report on internal control is required. GAAS and GAS don’t require the I/C report.
