Audit Reports

Question 1

1

What should be included for the Auditor’s address?

Answer 1

The City and State where located

Question 2

1

What is Management Responsible for in regards to the Financial Statements?

Answer 2

Preparation and Fair Presentation of Financial Statements in accordance with the Applicable Financial Reporting Framework

Question 3

1

What is Management Responsible for in regards to Internal Control?

Answer 3

Internal Control Design, Implementation, Maintenance

Question 4

1

What are the headings in the Audit Report for an Unmodified Opinion?

Answer 4

(TIM-AA) Title; Introduction; Management Responsibility; Auditor Responsibility; Audit Opinion

Question 5

1

What are the headings in the Audit Report for an Modified Opinion?

Answer 5

(TIMA-BA) Title; Introduction; Management Responsibility; Auditor Responsibility; Basis for (Modified) Opinion; Audit Opinion

Question 6

1

In an Unmodified Opinion with Emphasis-of-Matter / Other-Matter sections, what is the order of the headings?

Answer 6

(TIM-AA EMO) Title; Introduction; Management Responsibility; Auditor Responsibility; Audit Opinion; Emphasis-of-Matter; Other-Matter

Question 7

1

What are the requirements for referencing a Component Auditor in the Audit Report?

Answer 7

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.

Question 8

1

What must the Group Engagement Partner do if they assume responsibility for the Component Auditor’s work?

Answer 8

Perform additional audit procedures; Be involved in Component Auditors work; Perform Risk Assessment procedures; Assess Risk of Material Misstatement

Question 9

1

What standards govern SSARS engagements?

Answer 9

Compilations are governed by SSARS (Statements on Standards for Accounting and Review Services)

Question 10

1

Which clients can have compilation engagements?

Answer 10

Non-SEC (non-public) registrants only.

Question 11

1

What is a Compilation?

Answer 11

Accountant puts together financial statements with information PROVIDED BY MANAGEMENT. No opinion is expressed and no assurances are given. Independence is not required.

Question 12

1

What disclosures are required for Compilation engagements?

Answer 12

Disclosures not necessary must state that they are not included

Question 13

1

What standards govern Review engagements?

Answer 13

SSARS (Statements on Standards for Accounting and Review Services)

Question 14

1

What type of assurance is given in a Review engagement?

Answer 14

Reviews give limited assurance.

Question 15

1

What procedures are required for Review engagements?

Answer 15

Analytical procedures are required for reviews. Compare results to documented predictions.

Question 16

1

What is a Review engagement?

Answer 16

Financial statements are presented with no opinion expressed- and limited assurances are given. Independence is required for a review engagement.

Question 17

1

What is a Forecast?

Answer 17

A prospective financial statement that uses normal circumstances. General and limited use allowed.

Question 18

1

What is a Projection?

Answer 18

A prospective financial statement using hypothetical situations. Only limited use by the client is allowed.

Question 19

1

What are the requirements for Agreed Upon Procedures?

Answer 19

Independence is required; Only limited use by the client is allowed.

Question 20

1

What disclosures are required for remote likelihood of losses?

Answer 20

No disclosure required.

Question 21

1

What disclosure is required for a probable loss contingency?

Answer 21

Accrue if estimable. Emphasis-of-Matter paragraph if not estimable.

Question 22

1

What disclosure is made if a loss contingency is reasonably possible?

Answer 22

Auditor assesses need for Emphasis-of-Matter paragraph based on loss likelihood.

Question 23

1

How is a gain contingency reported?

Answer 23

Gain contingencies are not reported.

Question 24

1

How does an immaterial GAAP issue affect the audit opinion?

Answer 24

It doesn’t. Opinion is Unmodified.

Question 25

1

How does a very material GAAP issue affect the Audit Report?

Answer 25

Modified-Adverse Opinion is issued. Emphasis-of-Matter paragraph is added after Opinion paragraph.

Question 26

1

How do GAS standards compare to GAAS?

Answer 26

GAS is more strict than GAAS.

Question 27

1

What is required under the Single Audit Act?

Answer 27

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.