Financial Statements Using another country’s framework

Question 1

When engaged to audit financial statements that are prepared in accordance with a financial reporting framework generally accepted in another country for use solely outside the U.S., how is the Management’s Responsibility section of the auditor’s report affected?

Answer 1

The sentence describing management’s responsibilities would be changed as follows: “Management is responsible for the preparation and fair presentation of these financial statements in accordance with (specify the financial reporting framework generally accepted) in (name of country); . . .”

Question 2

When engaged to audit financial statements that are prepared in accordance with a financial reporting framework generally accepted in another country for use solely outside the U.S., how is the opinion paragraph of the auditor’s report affected?

Answer 2

The opinion would be changed as follows: “In our opinion, the financial statements referred to above present fairly, in all material respects, . . . in accordance with (specify the financial reporting framework generally accepted) in (name of country).”

Question 3

To what extent must the auditor comply with GAAS when auditing financial statements intended for use solely outside of the U.S.,?

Answer 3

The auditor should comply with GAAS, except for requirements related to the form and content of the auditor’s report. (In this case, the auditor may report either using a U.S. form of report or using the report form and content associated with the other country.)

Question 4

When deciding whether to accept an engagement to report on financial statements prepared in accordance with a financial reporting framework generally accepted in another country, what three matters should the auditor consider?

Answer 4

1. )The purpose for which the financial statements are prepared
2. )The intended users of the financial statements
3. )The steps taken by management to determine that the framework is acceptable in the circumstances

Question 5

When financial statements are prepared in accordance with a financial reporting framework generally accepted in another country and are intended for use both outside and inside of the U.S., what effect does that have on the auditor’s report?

Answer 5

The auditor should report using the U.S. form of report, including an emphasis-of-matter paragraph that (1) identifies the financial reporting framework used; (2) refers to the note to the financial statements describing that framework; and (3) indicates that such a framework differs from U.S. GAAP.

Question 6

When engaged to audit financial statements that are prepared in accordance with a financial reporting framework generally accepted in another country for use solely outside the U.S., how is the Auditor’s Responsibility section of the auditor’s report affected?

Answer 6

The second sentence in the section on the auditor’s responsibility would be changed as follows: “We conducted our audit in accordance with auditing standards generally accepted in the United States of America (and [in name of country]).”