Examinations & Review Engagements Flashcards
Attest services
Audits (SAS)
Review (SSARS)
Agreed-upon procedures
Examination (SSAEs)
Non-attest services
Consulting (SSCSs)
Tax (SSTSs)
Valuation (SSVSs)
forecasts
expected financial position based on the conditions management anticipates will exist and the course of: general or limited use
projections
“what if” scenarios evaluating hypothetical assumptions and courses of action
based on hypotheticals: report needs to include paragraph restricting use to specified parties: limited use only
four general assertions of a management discussion and analysis (MD&A)
- occurence: disclosed information took place during period
- consistency with F/S: financial and nonfinancial information is aligned with F/S
- completeness: all information needed has been disclosed/included
- presentation and disclosure: information is clearly presented and understandable
review of F/S includes statements:
- that all information included in the F/S are the representations of management
- describing the principal procedures performed (inquires of personnel and analytical procedures applied to financial data
- describing the auditor’s conclusions based upon the results of the review
______ requires management’s discussion and analysis for all public companies
SEC
independence is
impartiality in both fact and appearance and is required for all attest services:
audit
reviews
examinations
agreed-upon procedures
objectivity is
impartiality in fact and is required for all work done by CPAs
in an review engagement, CPA
expresses conclusion on whether entity’s F/S are in accordance with applicable financial reporting framework
issue unmodified report including:
intro paragraph
management’s responsibilities
accountant’s responsibilities
accountant’s conclusion
intro paragraph says a review is
less in scope than an audit
management’s responsibilities section of a review says
responsible for preparation and fair presentation of the F/S
accountant’s conclusion section of a review says
“we believe that the results of our procedures provides a reasonable basis for our conclusion”
“we are not aware of any material modifications that should be made to the accompanying F/S in order for them to be in accordance with…”
reviews may cover a single F/S provided
there are no restrictions limiting the scope of the accountant’s inquiry and analytical procedures
review report date should be
no earlier than the date the accountant obtained evidence needed to reach a conclusion
review procedures
obtain knowledge of client industry
obtain knowledge of client, their business and their acocunting policies and practices
make inquires of management
design and perform analytical procedures
obtain written representation from management in the form of a representation letter
if reporting framework requires management to assess the entity’s ability to continue as a going concern; CPAs should make these 4 inquiries to determine:
- whether the going concern basis of acounting is appropriate
- if management’s assessment indicates substaintial doubt
- what plans exist to mitigate substaintial doubt (if any)
- whether related disclosures are adequate
reviews do not
send letter of inquiry to client’s lawyer
reviews are required to inquire with management about the entity’s ability to continue as a going concern under 2 conditions:
- reporting framework (GAAP) requires that management evaluate the entity’s ability to continue as a going concern
- reporting framework does not require management evaluate the entity’s ability to continue as a going concern but events or conditions indicate possible doubt
