Day 2 Flashcards
What is the primary evidence of year end cash balances?
Bank Reconciliations
FS presented in Comparative form - PY Audit report not available - Qualified Opinion on PY
What does CY Auditor do?
Other-Matter Paragraph
- PY audited - do not name auditor
- State report date
- Opinion issued and reasons why
CY Auditor can only name PY Auditor if MERGER occured
What events occurring after the auditors report would require further inquiries?
Discovery of information regarding contingencies existing before the FS date
GAS: Required to report on compliance with laws and regulations should include what?
The audit should be planned to provide reasonable assurance that noncompliance does not have a material effect on entity’s programs
What should be included in an auditor’s evaluation of uncorrected misstatements?
The PYs and misstatements detected in CY that relate to PY
Testing Methods: Design effectiveness of Controls
- Inquiry
- Observation
- Inspection
Testing Methods/type of procedure: Operating Effectiveness
- Recalculation
- Reperformance
Qualified Opinion due to a scope limitation - where is it located?
Following the Opinion Section
Should have the heading “Basis for Qualified Opinion” and describe reasons for inability to obtain sufficient appropriate evidence
Define: Attribute Sampling
Used to estimate the rate of occurrence, often involves “yes or no” questions.
EX: error rate in posting journal entries
When will a scope limitation always occur?
MGMT fails to provide a MGMT Rep. Letter
Why do most companies have audit committees?
- SEC strongly recommends
- New York Stock Exchange requires
- Large accounting firms support the audit committee function
- Improves public perception
GAS: auditor should prepare a written report on the auditor’s:
Understanding of internal control and Assessment of Control Risk
Preparation engagements are in accordance with what?
Statements on Standards for Accounting and Review Services (SSARS)
