Audit Reports Flashcards

1
Q

What are the 4 paragraphs of a standard audit report?

A

Intro
Management Responsibility
Auditor Responsibility
Opinion

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is included in Intro paragraph?

A

Identifies entity whose F/S are being audited
State that F/S have been audited
Identify title of each F/S
Specify date covered by each F/S

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is included in Management Responsibility paragraph?

A

Preparation and fair presentation of F/S

Design, Implementation, and Maintenance (DIM) of I/C

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is included in Auditor Responsibility paragraph?

A

Auditor responsibility to express opinion
States audit conducted in accordance with GAAS
Describes an audit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is included in Opinion paragraph?

A

Opinion

In accordance with AFRF

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is an emphasis of matter paragraph?

A

When auditor wants to emphasize matter that is properly disclosed but include matters that are of such importance that they are fundamental to the users understanding of the F/S
Goes after opinion paragraph

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

When would an emphasis of matter paragraph be used as an option?

A

Significant related party transactions
Material uncertainties
Important subsequent events
Lack of consistency in accounting principles

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

When is an emphasis of matter paragraph mandatory?

A

Auditor’s opinion on revised F/s is different from before
Substantial going concern doubt
Justified change in accounting principles affecting consistency
F/S prepared with special purpose framework
F/S prepared with regulatory basis for general use

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is an other matter paragraph?

A

When auditor wants to communicate matters that are appropriately disclosed but would enhance users ability to understand audit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are factors that can produce substantial doubt for going concern status?

A
Several years of operating losses
Negative working capital
Defaults or restructuring of debts
Losses of key customers
Denial or losses of licenses or patents
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What are mitigating factors that can reduce going concern issue?

A

Increase ownership equity through stock issuance for cash
Dispose of marketable assets
Delay or reduce optional expenditures

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What tests would auditor apply for going concern issue?

A

Review of debt agreements and 3rd party commitments
Read minutes of board of directors
Inquiries of legal counsel
Analytical procedure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly