Audit Reports

Question 1

What should be included for the Auditor’s address?

Answer 1

City & State location

Question 2

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

Answer 2

PREPARATION & FAIR PRESENTATION of F/S in accordance with the Applicable Financial Reporting Framework

Question 3

What is Management Responsible for in regards to Internal Control?

Answer 3

(IC-DIM) Internal Control

Design, Implementation, Maintenance

Question 4

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

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

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

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

Answer 7

Component F/S 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

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

What standards govern SSARS engagements?

Answer 9

Compilations

Question 10

Which clients can have compilation engagements?

Answer 10

Non-SEC (non-public) registrants only.

Question 11

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

What disclosures are required for Compilation engagements?

Answer 12

None! Disclosures not necessary must state that they are not included

Question 13

What standards govern Review engagements?

Answer 13

SSARS (Statements on Standards for Accounting and Review Services)

Question 14

What type of assurance is given in a Review engagement?

Answer 14

Limited Assurance

Question 15

What procedures are required for Review engagements?

Answer 15

Analytical Procedures

Compare results to documented predictions.

Question 16

What is a Review engagement?

Answer 16

F/S presented w/no opinion & limited assurances.

Independence is required.

Question 17

What is a Forecast?

Answer 17

Prospective f/s using normal circumstances.

General and limited use allowed.

Question 18

What is a Projection?

Answer 18

F/S using hypothetical situations.

limited use by the client is allowed.

Question 19

What are the requirements for Agreed Upon Procedures?

Answer 19

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

Question 20

What disclosures are required for remote likelihood of losses?

Answer 20

No disclosure required.

Question 21

What disclosure is required for a probable loss contingency?

Answer 21

Accrue if estimable.

If not, Emphasis-of-Matter paragraph.

Question 22

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

How is a gain contingency reported?

Answer 23

Gain contingencies are not reported.

Question 24

How does an immaterial GAAP issue affect the audit opinion?

Answer 24

It doesn’t. Opinion is Unmodified.

Question 25

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

How do GAS standards compare to GAAS?

Answer 26

GAS is more strict than GAAS.

Question 27

What is required under the Single Audit Act?

Answer 27

Funding Threshold is $750,000. 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.