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AUD > Final Review > Flashcards

Final Review Flashcards

Reports

1
Q

Unmodified Audit Opinions (Nonissuers)

What are the 4 required sections?

OBRA

A
  1. Opinion
  2. Basis for Opinions
  3. Responsibilities of Management for the Financial Statements
  4. Auditor’s Responsibilities for the Audit of the Financial Statements
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2
Q

Unmodified Audit Opinions (Nonissuers)

What section(s) is/are the financial reporting framework referenced (i.e. GAAP)?

A
  1. Opinion
  2. Responisibilites of Management for the Financial Statements
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3
Q

Unmodified Audit Opinions (Nonissuers)

What section(s) is/are Generally Accepted Auditing Standards (GAAS) referenced?

A
  1. Basis for Opinion
  2. Auditor’s Responsibility for the Audit of the Financial Statements
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4
Q

Unmodified Audit Opinions (Nonissuers)

Key Audit Matters (KAMs) are optional to add the nonissuer report, unless the client engages the auditor to communicate KAMs. Where are KAMs located with respect to the auditor’s report?

A

Anywhere after the Basis for Opinion section (2nd paragraph)

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5
Q

Uqualified Audit Opinions (Issuer)

What are the 3 required sections?

A
  1. Opinion
  2. Basis for Opinion
  3. Critical Audit Matters
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6
Q

Uqualified Audit Opinions (Issuer)

What section(s) is/are the financial reporting framework referenced (i.e. GAAP)?

A
  1. Opinion
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7
Q

Uqualified Audit Opinions (Issuer)

What section(s) is/are Generally Accepted Auditing Standards (GAAS) referenced?

A
  1. Basis for Opinion section
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8
Q

Uqualified Audit Opinions (Issuer)

Critical Audit Matters CAMs) are required to add to the issuers report when they meet all three of the criteria. Where are CAMs located with respect to the auditor’s report?

A

Anywhere after the Basis for Opinion section (2nd paragraph)

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9
Q

True or False?

The Opinion and Basis for Opinion headings change on the report of a nonissuer when the auditor’s report is modified?

A

True

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10
Q

True or False?

The Opinion and Basis for Opinion headings change on the report of an issuer when the auditor’s report is modified?

A

False; headings are consistent with the standard unqualified report with the exception of a disclaimer of opinion

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11
Q

Unmodified Audit Opinions (Nonissuers)

Complete Opinion statement:
In our opinion, the accompanying financial statements present…

A

fairly, in all material respects, the financial position of ABC Company as of this date…in accordance with accounting principles generally accepted in the United States of America.

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12
Q

Unmodified Audit Opinions (Nonissuers)

Complete Basis for Opinion statement:
We conducted our audits in accordance with….

A

auditing standards generally accepted in the United States of America… We are required to be independent…meet our ethical responsibilities, in accordance with the relevant ethical requirements related to audits. We believe that the audit eveidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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13
Q

Unmodified Audit Opinions (Nonissuers)

Complete Responsibilities of Management for the Financial Statements statement:
Management is responsible for the….

A

preparation and fair presentation of the financial statements in accourdance with accounting principles generally accepted in the United States of America, and for the design , implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

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14
Q

Unmodified Audit Opinions (Nonissuers)

Complete Auditor’s Responsibilities for the Audit of the Financial Statements statement:
Our objectives are to obtain….

A

reasonable assurance about whether the financial statements as whole are free from material misstatements, whether due to fraud or error, and to issue an auditor’s report that includes an opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists.

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15
Q

Uqualified Audit Opinions (Issuer)

Complete Opinion statement:
We have audited the accompanying balance sheets of X company as of this date, the related statements….

A

income, comprehensive income, stockholder’s equity, and cash flows, stockholder’s equity, and cash flows for each of the years then ended, and the related notes and schedules. In our opinion, the financial statements present fairly, in all material respects, the financial position of the company as of this date, and the results of its operations and its cash flows for the years then ended, in conformity with the accounting principles generally accepted in the United States of America.

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16
Q

Uqualified Audit Opinions (Issuer)

Complete Basis for Opinion Statement:
These financial statements are the responsbility of the company’s management. Our responsibility is to express an….

A

Opinion on the company;s financial statments based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United Stated of America) (PCAOB) are required to be independent with respect to the company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Comissions and the PCAOB.

17
Q

Uqualified Audit Opinions (Issuer)

Complete Basis for Opinion Statement:
We conducted our audits in accordance with the standards of….

A

PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

18
Q

Uqualified Audit Opinions (Issuer)

Complete Critical Audit Matters (CAMs) Statement:
The critical audit matters communicated below are matters arising from the…

A

current period audit of the financial statements that were communicated or required to be communicated to the audit committeeand that: (1.) relate to accounts or disclosures that are material to the financial statements and (2.) involved our especially challenging, subjective, or complex judgements.

19
Q

Uqualified Audit Opinions (Issuer)

Complete Critical Audit Matters (CAMs) Statement:
The communication of critical audit matters does not alter in any way our…

A

opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or the accounts or disclosures to which they relate.

20
Q

Which reports and opinions do you need to amend to describe the matter?

A

Auditor’s report of a nonissuer for the following opinions
1. Qualified
2. Adverse
3. Disclaimer

21
Q

Which reports and opinions do you need an additional paragraph?

A

Auditor’s report of a issuer for the following opinions:
1. Qualified
2. Adverse
3. Disclaimer

22
Q

Qualified Audit Opinions (Nonissuers)

Complete Opinion statement:
We have audited the financial statements of ABC Company, which comprise the…

Due to inadequate disclosure

A

balance sheets as of this date, and the related statements of income, changes in stockholders’ equity, and cash flows for the yeats then ended, and the related notes to financial statements.

23
Q

Qualified Audit Opinions (Nonissuers)

Complete Opinion statement:
In our opinion…

Due to inadequate disclosure

A

except for the omission of the informstion described in the Basis for Qaulified Opinion section of our report, the accompanying financial statements present fairly, in all material respects, the financial position of ABC Company as of this date…. in accordance with accounting principles generally accepted in the United States of America.

24
Q

Qualified Audit Opinions (Nonissuers)

Complete the first half of the Basis for Qualified Opinion statement:
ABC Company’s financial statements do not disclose [describe the nature of the ommitted information that is not practicable to present in the auditor’s report]. In our opinion….

Due to inadequate disclosure

A

disclosure of this information is required by accounting principles generally accepted in the United States of America.

25
Q

Qualified Audit Opinions (Nonissuers)

Complete the second half of the Basis for Qualified Opinion statement:
We conducted our audits in accordance with…..

Due to inadequate disclosure

A

auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of ABC Company and to meet our ethical responsbilities, in accordance with relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.

26
Q

Qualified Audit Opinions (Nonissuers)

Complete first half of Opinion statement:
We have audited the financial statements of ABC Company which comprise the…

Due to a material misstatement of the financial statements

A

balance sheets as of this date…and the related statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes to the financial statements.

27
Q

Qualified Audit Opinions (Nonissuers)

Complete second half of Opinion statement:
In our opinion…..

Due to a material misstatement of the financial statements

A

except for the effects of the matter described in the Basis for Qualified Opinion section of our report, the accompanying financial statements present fairly, in all material respects, the financial position of ABC Company as of this date, and the results of its operations and its cash flows for the yeats then ended in accordance with accounting principles generally accepted in the United States of America.

28
Q

Qualified Audit Opinions (Nonissuers)

Complete the Basis for Qualified Opinion statement:
[describe misstatement] We conducted our audits in accordance with….

Due to a material misstatement of the financial statements

A

auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilites for the Audit of the Financial Statements section of our report. We are required to be independent of ABC Company and to meet our ethical responsibilities, in accordance with relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.

29
Q

Qualified Audit Opinion (Issuer)

Complete first half of Opinion statement:
We have audited the accompanying…

Due to a material misstatement of the financial statements

A

balance sheets of X Company as of this date, the related statements of income, comprehensive income, stockholders equity, and cash flows for each of the years then ended, and the related notes and schedules (collectively referred to as the “financial statements”)

30
Q

Qualified Audit Opinion (Issuer)

Complete second half of Opinion statement:
In our opinion, except for the effects of [include appropritate qualifying language] the financial statements referred to above present…

A

fairly, in all material respects, the financial position of the company as of this date, and the results of its operations and its cash flows for the years ended in conformity with accounting principles generally accepted in the United States of America.

31
Q

Adverse Audit Opinion (Nonissuer)

Complete first half of Opinion statement:
We have audited the financial statements of ABC Company which comprise the…

Due to a material misstatement of the financial statements

A

balance sheets as of this date…and the related statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes to the financial statements.

32
Q

Adverse Audit Opinion (Nonissuer)

Complete second half of Opinion statement:
In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion section of our report the accompanying consolidated…

Due to a material misstatement of the financial statements

A

financial statements do not present fairly the financial position of ABC Company and its subsidiairies as of this date, or the results of their operations or their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

33
Q

Adverse Audit Opinion (Nonissuer)

Complete the Basis for Adverse Opinion statement:
[describe misstatement] We conducted our audits in accordance with….

Due to a material misstatement of the financial statements

A

auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilites for the Audit of the Financial Statements section of our report. We are required to be independent of ABC Company and to meet our ethical responsibilities, in accordance with relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our adverse audit opinion

34
Q

Adverse Audit Opinion (Issuer)

Complete first half of Opinion statement:
We have audited the financial statements of ABC Company which comprise the…

Due to a material misstatement of the financial statements

A
35
Q

Complete second half of Opinion statement:
In our opinion, because of the effects of the matters discussed in the following paragraphs, the financial statements do not….

A

present fairly, in conformity with accounting principles generally accepted in the United States of America, the financial position of the company as of this date, or the results of its operations or its cash flows for the years then ended.

AUD (8 decks)

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