Audit Reports - Pre-Clarity

Question 1

Must conform to GAAP Consistency with prior period reporting is implied (must state if inconsistent) Adequacy of disclosure is implied (must state if disclosures are lacking) Opinion is provided - provides assurance Must be signed by the auditor and dated.

Answer 1

Audit Reports - Pre-Clarity Project

Question 2

If inconsistent- an Unqualified Opinion is OK Explanatory paragraph after Opinion is added Otherwise - Qualified Opinion issued

Answer 2

Audit Reports - Pre-Clarity Project

Question 3

Accounting Errors Reclassifications Prospective treatment of a new principle Accounting Estimate Change

Answer 3

Audit Reports - Pre-Clarity Project

Question 4

The opinion states that the financial statements are fairly presented in all material respects The opinion states if the financials are in conformity with GAAP.

Answer 4

Audit Reports - Pre-Clarity Project

Question 5

Title - States that the auditor is independent Address - whomever hired the auditor Introduction Paragraph Scope Paragraph Opinion Paragraph Signed and Dated by Author

Answer 5

Audit Reports - Pre-Clarity Project

Question 6

GAAS was followed (IF SEC company- uses the standard of the PCAOB) Reasonable assurance about material misstatements was obtained. Financial statements and disclosures are supported by evidence. Management estimates evaluated Accounting principles evaluated Financial Statement presentation evaluated Reasonable basis exists for an opinion If any scope limitations exist- the auditor tries to work around them and still issue an unqualified opinion if possible.

Answer 6

Audit Reports - Pre-Clarity Project

Question 7

A prior year’s Financial Statement used for comparative purposes must also meet criteria for an Unqualified Opinion If an exception arises- the Explanatory and Opinion paragraphs will address the issue If a prior year’s issue has been corrected - issue an Unqualified opinion and ignore the past issue

Answer 7

Audit Reports - Pre-Clarity Project

Question 8

Includes: Immaterial GAAP issues Going Concern worries Auditor shares responsibility Emphasizing a particular aspect of Financial Statements Unqualified Opinion/Assurances not affected Explanatory paragraph added after opinion

Answer 8

Audit Reports - Pre-Clarity Project

Question 9

A qualified opinion creates reduced assurances. It results from scope limitations or major inconsistencies. It includes material problems with GAAP- disclosures- or segment reporting. If there is an issue that causes a Qualified Opinion- the explanatory paragraph goes after the Scope and before the Opinion paragraphs and the Opinion paragraph refers to the issue as well.

Answer 9

Audit Reports - Pre-Clarity Project

Question 10

Qualified opinion is issued. Scope paragraph modified Explanatory paragraph between Scope and Opinion paragraphs Opinion paragraph points out scope limitation

Answer 10

Audit Reports - Pre-Clarity Project

Question 11

Qualified opinion is issued. Scope paragraph remains unchanged Explanatory paragraph between Scope and Opinion paragraphs Opinion paragraph points out inconsistency

Answer 11

Audit Reports - Pre-Clarity Project

Question 12

States that an opinion cannot be issued. Includes severe Scope limitation

Answer 12

Audit Reports - Pre-Clarity Project

Question 13

Very material GAAP and Disclosure issues would cause an Adverse Opinion. If there is an issue that causes an Adverse Opinion- the explanatory paragraph goes after the Scope and Before the Opinion paragraphs and the Opinion paragraph refers to the issue as well

Answer 13

Audit Reports - Pre-Clarity Project

Question 14

Disclosed in Introductory Paragraph. Doesn’t name the other auditor without permission. Referenced in Opinion paragraph and division of responsibility indicated If other auditor is not referenced- then you take responsibility for their conclusions- so consideration of independence- experience- credentials- etc required

Answer 14

Audit Reports - Pre-Clarity Project

Question 15

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

Answer 15

Audit Reports - Pre-Clarity Project

Question 16

Non-SEC (non-public) registrants only.

Answer 16

Audit Reports - Pre-Clarity Project

Question 17

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

Answer 17

Audit Reports - Pre-Clarity Project

Question 18

Disclosures not necessary must state that they are not included

Answer 18

Audit Reports - Pre-Clarity Project

Question 19

SSARS (Statements on Standards for Accounting and Review Services)

Answer 19

Audit Reports - Pre-Clarity Project

Question 20

Reviews give limited assurance.

Answer 20

Audit Reports - Pre-Clarity Project

Question 21

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

Answer 21

Audit Reports - Pre-Clarity Project

Question 22

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

Answer 22

Audit Reports - Pre-Clarity Project

Question 23

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

Answer 23

Audit Reports - Pre-Clarity Project

Question 24

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

Answer 24

Audit Reports - Pre-Clarity Project

Question 25

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

Answer 25

Audit Reports - Pre-Clarity Project

Question 26

No disclosure required.

Answer 26

Audit Reports - Pre-Clarity Project

Question 27

Accrue if estimable. Explanatory paragraph if not estimable.

Answer 27

Audit Reports - Pre-Clarity Project

Question 28

Auditor assesses need for explanatory paragraph based on loss likelihood.

Answer 28

Audit Reports - Pre-Clarity Project

Question 29

Gain contingencies are not reported.

Answer 29

Audit Reports - Pre-Clarity Project

Question 30

It doesn’t. Opinion is Unqualifed.

Answer 30

Audit Reports - Pre-Clarity Project

Question 31

Qualified Opinion is issued. Similar to Scope Limitation. Explanatory paragraph after Scope Paragraph. Opinion refers to GAAP issue.

Answer 31

Audit Reports - Pre-Clarity Project

Question 32

Adverse opinion is issued. Same paragraph structure as a Qualified opinion.

Answer 32

Audit Reports - Pre-Clarity Project

Question 33

Unqualified opinion with an Emphasis is OK Explanatory paragraph is added after Opinion paragraph.

Answer 33

Audit Reports - Pre-Clarity Project

Question 34

An audit performed under governmental auditing standards (GAS).

Answer 34

Audit Reports - Pre-Clarity Project

Question 35

GAS is more strict that GAAS.

Answer 35

Audit Reports - Pre-Clarity Project

Question 36

A report on internal control is required. GAAS and GAS don’t require the I/C report.

Answer 36

Audit Reports - Pre-Clarity Project