Audit Review Flash Cards
Preparation and Fair presentation of F/S requires: (3 things)
- ) Applicable Framework
- ) Preparation and fair presentation
- ) Inclusion of adequate description of the framework in the F/S
What is GAAS
Generally Accepted Auditing Standards
What is GAGAS
Generally Accepted Government Auditing Standards
PCAOB facts!
Sarbanes Oxley Act of 2002
Issuers must register with PCAOB
What does IASB
International Standards on Auditing
Attestation Engagements
SSAE issued by AICPA
Accounting and Review services
SSARS - For reviews and compilations for non-issuers ONLY
GAAS Heirarchy
SAS – Non issuers
PCAOB – Issuers
Interpretive Publications – Help auditors help professional skepticism, but not audit standards
Other auditing publications – No Authoritative status.
MR DIM – Unmodified Report
Management’s Responsibility: Detection, Implementation and Maintenence of Internal control
REPPORTS – Auditor’s Responsibility paragraph
Responsibility, Express, Plan (Audit), Perform (procedures), Obtain (audit evidence), Risks (of MM), “Test” (I/C), statements,
CRAME – Auditor’s Responsibility Paragraph
(internal) control, (policies/estimates) reasonable, accounting (estimates), made by Management, evaluating (overall presentation).
What is the structure for Unmodified Opinion report
Title Addresse: not to management MR AR Opinion Signature Auditor's address Date of Report
What are the reference to audit standards
Issuers = PCAOB
Non Issuers = GAAP
International = ISA
Reference to GAAS and GAAP are in what paragraphs of a standard report?
GAAS = SCOPE
GAAP = oPinion paragraph
What are the key terms for Auditing Group of F/S
It requires components, Component auditor, Group engagement team etc.
Referencing a Component Auditor only made with what guidelines?
Not restricted, and conducted in PCAOB issuers, GAAS non issuers.
The framework is similar.
If the Group Auditor Assumes responsibility what needs to be done?
No reference should be made. Must audit anything that are risk of MM. Basically takes responsibility but not really. No permission is needed.
When is an Emphasis of Matter required?
4 Requirements
- ) Substantial doubt going concern
- ) Justified Accounting principle change (consistency)
- ) Subsequent discovered facts that change opinion
- ) F/S are prepared in special framework
When is an Emphasis of Matter a Professional judgement?
There are 4
- ) Uncertainty (litigation)
- ) Major Catastrophe
- ) Related party transactions.
4) Subsequent events
When is Other matter paragraph required?
9 Requirements!
- ) Restricts the use
- ) change in audit opinion on subsequently discovered facts
- ) audited by predecessor and not reissued
- ) comparative that is compiled/or reviewed and prior wasn’t audited/reviewed or compiled.
- ) Material inconsistenty in other information
- ) Supplementary information is included
- ) required supplementary information
- ) restrict use of special purpose financials
- ) compliance is included in auditors report
Going Concern Procedures (acronym)
CPA “ADMITS” there’s a going concern problem:
Analytical Procedures Debt compliance - Review Debt/loan Agreements Minutes for meetings Inquire legal council Third parties Subsequent Events review
Going Concern Procedures (acronym)
CPA “ADMITS” there’s a going concern problem:
Analytical Procedures Debt compliance - Review Debt/loan Agreements Minutes for meetings Inquire legal council Third parties Subsequent Events review
An Emphasis of matter paragraph for going concern includes which two phrases?
Substantial doubt – Going concern
Going Concern stuff:
When do you use an unmodified opinion vs adverse/disclaim?
Depending on the disclosure: If adequate Unmodified with emphasis of matter paragraph
Which paragraphs are changed in Qualified/Adverse report?
Intro and MR paragraph is unchanged
Auditor’s responsibility (last sentence/paragraph)
Basis for ____ opinion paragraph is added
Opinion paragraph is changed indicating except for Qualified
Opinion paragraph is changed indicating because of not presented fairly for Adverse
Which paragraphs are changed in Disclaimer?
Intro paragraph is changed: “Auditor was engaged in audit”
MR no change
AR paragraph: Disclaimer: Not able to obtain sufficient appropriate evidence
Basis for Disclaim
Opinion paragraph: Disclaimer of opinion
If not independent: state in seperate paragraph
Which paragraphs are changed in Qualified (Scope?)
Auditor’s responsibility: Audit evidence is sufficent and appropriate to provide qualified opinion
Basis for Qual opinion
Opinion paragraph: Qualified: “except for..” “presented fairly”
Which paragraphs are changed in Qualified (Scope?)
Auditor’s responsibility: Audit evidence is sufficent and appropriate to provide qualified opinion
Basis for Qual opinion
Opinion paragraph: Qualified: “except for..” “presented fairly”
Comparative Financials: When they update the opinion (acronomyn)
Required disclosure: DORCS change their mind in the other matter paragraph
Date of auditors previous report Opinion previously issued Reason for prior opionon Changes that have occured Statement that opinion is different
Predecessor Auditor: What are all the things the successor auditor must understand?
- ) Reissue the Predecessor report
- ) Not reissue the report
- ) Prior period is reviewed/compiled
Predecessor Auditor: What are the requirements to Reissue Predecessor report?
Old CPA should:
- )Read the statement for current period,
- )Compare the statements audited,
- )Obtain a letter of representation from Successor auditor.
- )Inquire of and obtain a letter of representation from management.
report should be dual dated if revised, unrevised = original report
Report of Predecessor auditor is not issued, what must be done?
New CPA should:
- ) Predecessor should not be named
- ) Type of opinion expressed by predecessor and reasons
- ) Any emphasis or other matters
- ) Date of predecessor report
If predecessor auditor compiled/reviewed what must be done?
Include other matter paragraph: Service, Date, description of any modifications. Statement that it was less in scope of an audit and does not provide any basis.
