Clarity Project

Question 1

What are the significant changes of the Clarity Project?

Answer 1

1. ) Consistant and more readable format.
2. ) Gets rid of the 10 GAAS stds.
3. ) Changes in audit report wording.
4. ) Changes in stds for group auditors.

Question 2

What is the purpose of the Clarity Project?

Answer 2

1. ) To make GAAS easier to understand and apply
2. ) Make GAAS principles based
3. ) Converge with International Stds

Question 3

What is the effective date of SAS’s 122-125?

Answer 3

periods ending after December 15, 2012

Question 4

What are the 5 sections to the new GAAS std format?

Answer 4

1. ) Introduction
2. ) Objective
3. ) Definitions
4. ) Requirements
5. ) Application and other explanatory material

Question 5

What is contained in the Intro section of the new GAAS format?

Answer 5

States purpose, scope and effective date

Question 6

What is contained in the Objective section of the new GAAS format?

Answer 6

1. ) Provides context for requirements

2. ) Provides framework for auditor’s judgement

Question 7

What is contained in the Definitions section of the new GAAS format?

Answer 7

Defines audit terms and introduces new terminology

Question 8

What is contained in the Requirements section of the new GAAS format?

Answer 8

Audit procedures required for GAAS compliance.

Question 9

What is the difference between must and should?

Answer 9

Must - can never depart

Should - can depart if alt. audit procedure achieves the same intent of the requirement and departure is justified.

Question 10

What is contained in the Application and other explanatory material sections of the new GAAS format?

Answer 10

Expands on std requirements and context.

Question 11

What replaces unqualified opinion?

Answer 11

Unmodified report

Question 12

What term replaces GAAP?

Answer 12

Applicable Financial Reporting Framework (AFRF)

Question 13

What does the Emphasis of Matter/Other matters para replace?

Answer 13

Explanatory para.

Question 14

What is the difference between Emphasis of matter/other matter para

Answer 14

• Emphasis of matter involves something in the F/S

- Other matter does not involve something in the F/S

Question 15

What does the term Group Engagement Auditor replace?

Answer 15

Principle Auditor

Question 16

What does the term Component Auditor replace?

Answer 16

Other Auditors

Question 17

What is the new audit report heading?

Answer 17

Management’s Responsibility for the F/S

Question 18

What is mgmt responsible for?

Answer 18

1) Fair presentation of the F/S

2. ) Design, implementation, and maint. of I/C

Question 19

What are the sections of an unmodified report?

Answer 19

1. ) Introduction
2. ) Mgmt’s responsibility for the F/S
3. ) Auditor’s responsibilities
4. ) Opinion

Question 20

What are the sections of a modified report?

Answer 20

1. ) Introduction
2. ) Mgmt’s responsibility for the F/S
3. ) Auditor’s responsibilities
4. ) Basis for modified report
5. ) Modified Opinion

Question 21

What is reflected on the modified report?

Answer 21

1. ) Qualified
2. ) Adverse
3. ) Disclaimer

Question 22

What are the sections of an unmodified report w/ emphasis of matter/other matters?

Answer 22

1. ) Introduction
2. ) Mgmt’s responsibility for the F/S
3. ) Auditor’s responsibilities
4. ) Opinion
5. ) Emphasis of Matter
6. ) Other Matters