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AUD > Audit Reports > Flashcards

Audit Reports Flashcards

1
Q

when to use disclaimer of opinion?

A

when a scope limitation prevents the auditor from obtaining sufficient audit evidence to support an opinion

auditor issues disclaimer of opinions to reflect the inability to obtain sufficient appropriate audit evidence

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2
Q

On which date should an auditor’s report be dated

A

on and after date when sufficient appropriate audit evidence is obtained.

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3
Q

when to issue disclaimer of opinion

A

When a CPA is associated with the financial statements of a public entity without auditing or reviewing the information

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4
Q

in the opinion paragraph, if there’s scope limitation, how would it be worded?

A

the wording in the opinion paragraph should indicate that the qualification pertains to the possible effects to the financial statements, not the scope limitation itself

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5
Q

Inadequate disclosure of necessary information is a departure from

A

GAAP

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6
Q

when does auditor need to be independent

A

when giving assurance:

examination (audit), reviews, agreed upon procedures, special reports

ERAS

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7
Q

when to access risk of fraud

A

in audit

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8
Q

review report gives:

A

limited assurance, not opinion

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9
Q

A review consists primarily of

A

inquiries and analytical procedures

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10
Q

can accountant do compilation if they’re not independent?

A

Yes as long as the report clearly indicates that the CPA is not independent.

accountant should disclose lack of independence in accountant’s independence report

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11
Q

An auditor’s responsibilities are confined to

A

expressing an opinion on the financial statements

  1. Management, not the auditor is responsible for adopting sound accounting policies
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12
Q

the basic unmodified audit report for a nonissuer consists of 4 paragraphs

A
  1. The introductory or report on the financial statements paragraph
  2. management’s responsibility paragraph
  3. auditor’s responsibility paragraph and
  4. the opinion paragraph
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13
Q

how to report going concern doubt

A

in emphasis of a matter paragraph after opinion paragraph

use the terms “substantial doubt” and “going concern”

It refers to the Note in the financial statements, and also specifically mentions the words “going concern” and “substantial doubt”.

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14
Q

how to report going concern doubt if entity’s financial statements adequately disclose its financial difficulties

A

auditor will provide an unmodified report with an emphasis of matter paragraph, following the opinion paragraph, drawing attention to the disclosure of the going concern issue.

if it was NOT disclosed: qualified or adverse opinion

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15
Q

Where is GAAS and GAAP mentioned on auditor’s report?

A

GAAS: auditor’s responsibilities
GAAP: opinion paragraph

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16
Q

when theres scope limitation what should auditor issue?

A

qualified or disclaimer of opinion, depending on materiality and pervasiveness

material not pervasive: qualified
material AND pervasive: disclaimer of opinion

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17
Q

when to give adverse opinion

A

departure from GAAP
no disclosure
if theres material misstatement

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18
Q

what date to use if there’s reissue of report and there’s no changes and auditor does not reword the report

A

Use the original report date on the reissued report

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19
Q

how to report going concern doubt if entity’s financial statements do NOT disclose it in its financial difficulties

A

qualified opinion or adverse

20
Q

omission of required fs

A

departure from GAAP = qualified opinion

21
Q

when qualifying an opinion because of an insufficiency of audit evidence, an auditor should refer to the reasons in

A

separate paragraph ABOVE opinion paragraph

refers the reader to the preceding “basis-for-modified opinion” paragraph

22
Q

when there’s lack of consistency in accounting principle that WAS properly accounted for and disclosed, auditor should report where:

A

in paragraph AFTER opinion paragraph

23
Q

when there’s lack of consistency in accounting principle that was NOT properly accounted for and disclosed, auditor should report where:

A

in paragraph BEFORE opinion paragraph

“basis for the qualification”

24
Q

order of paragraphs in auditor’s report

A
  1. introductory paragraph
  2. management’s responsibilities
  3. auditor’s responsibilities
  4. basis for _____ opinion
  5. opinion
  6. emphasis of a matter (includes going concern)
25
Q

completed field work on 3/6. then changes to fs before report is issued on april 10. no disclosure.

what date should be used?

A

3/6

26
Q

completed field work on 3/6. then changes to fs before report is issued on april 10. there IS disclosure.

what date should be used?

A

If the event is disclosed or if the auditor qualifies the opinion, the report may be dual dated or may be dated as of the later date

27
Q

On which date should an auditor’s report be dated

A

On or after the date sufficient appropriate audit evidence was obtained

28
Q

comparative form: using predecessor’s f/s without auditor’s report. it was qualified. how to draft current report?

A
  1. add other-matter paragraph to current report
  2. should include info of previous report
  3. should indicate another auditor audited prior fs
  4. indicate date of report
  5. type of opinion issued
  6. reason for opinion (if other than unmodified)
29
Q

other matter paragraph

A

used to provide info that is not required to be reported or disclosed in the financial statements that will enhance users’ understandings of the audit or the audit report

ex: omission of quarterly report to SEC

30
Q

emphasis of a matter

A

material change in accounting principles, if properly disclosed

is for matters appropriately disclosed in the financial statements that the practitioner merely wants to emphasize

31
Q

Management does not provide reasonable justification for a change in accounting principles

A

qualified or adverse opinion

potential departure from GAAP

32
Q

when to dual date

A

Dual dating is only appropriate when there is a subsequent event.

can take responsibility for events up through the original date and only accept responsibility for the specific event by using dual dating

33
Q

when qualified opinion due to scope limitation

A

When an auditor qualifies his or her opinion due to a scope limitation, the wording in the opinion paragraph should indicate that the qualification pertains to the “possible effects to the financial statements”

34
Q

qualified opinion

A

departure from GAAP

but not pervasive such that it resulted in a material misstatement

did not affect the fairness of the financial statements taken as a whole

35
Q

address auditor’s report to who

A

board of directors
shareholders

NOT MGMT

36
Q

opinion of unmodified report paragraph includes

A

indicates that the financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the entity in conformity with the applicable financial reporting framework

37
Q

5 basic types of opinion

A
  1. unmodified report (clean)
  2. unmodified report w emphasis of a matter/other matter
  3. qualified opinion (fs present fairly, except for)
  4. adverse opinion (fs not present fairly)
  5. disclaimer of opinion (we do not express an opinion)
38
Q

unmodified vs unqualified

A

AICPA uses unmodified (international)

PCAOB uses unqualified

39
Q

title of audit report

A

must have word ‘independent’

40
Q

intro paragraph of audit report

first paragraph

A
  1. ID the entity whose fs has been audited
  2. state fs has been audited
  3. name the fs being audited
  4. specify date/periods being audited
41
Q

second paragraph of audit report

A

mgmt’s responsibility for financial statement:

  1. mgmt respon. for preparation of fair presentation of fs
  2. design, implementation, and maintenance of internal control
42
Q

3rd paragraph of audit report

A

auditor’s responsibility

  1. to express opinion based on audited fs
  2. audit was conducted in GAAS
  3. reasonable assurance free of material misstatement
  4. describes an audit: procedures to get audit evidence, about the amounts and disclosure in fs, assessment of RMM, entity’s internal control, appropriateness of accounting policies, reasonableness of estimates, overall presentation of fs
43
Q

4th paragraph of audit report

A

auditor’s opinion (if unmodified)

  1. express opinion
  2. fs fairly presented
  3. cash flow in accordance with ‘applicable financial reporting framework (AFRF): financial position of entity as of bs date,
  4. mention GAAP or OCBOA
44
Q

is internal control mentioned in the auditor’s report of non govt

A

Although the report does indicate that the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements, there is no mention of the entity’s internal control STRUCTURE.

45
Q

The condensed financial statements are a

A

supplementary filing and would not be compared to themselves for determining if they are fairly stated.

Since they are derived from the audited financial statements, the auditor would indicate that they are fairly stated in relation to those financial statements.

Condensed financial statements do not conform to GAAP, but also are not prepared in accordance with an OCBOA

AUD (10 decks)

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