IV. Forming Conclusions and Reporting

Question 1

Two reasons for qualified opinion

Answer 1

Presentation - Gaap departure
Scope - not able to get sufficient appropriate audit evidence

Auditor has reservations about FS but they are still fairly stated because scope limitation or misstatement is not pervasive

Question 2

One reason for adverse opinion

Answer 2

misstatement is both material and pervasive.
affects most areas of FS
FS are misleading because not fairly presented

Question 3

Reason for disclaimer of opinion

Answer 3

unable to obtain sufficient evidence and the effects could be both material and pervasive

Question 4

Sections of unmodified report

Answer 4

Independent Auditor's Report
Opinion - 2 paragraphs
Basis for Opinion - 1 paragraph
Responsibilities of Management - 2 Paragraphs
Auditor's responsibility para - 3 paragraphs
Signature of Auditor
Auditor Address
Date of Report

Question 5

Auditor report opinion paragraphs

Answer 5

2 paragraphs
First identifies the specific FS that have been audited
Second para contains auditor opinion

Question 6

Basis for opinion paragraph

Answer 6

The audit has been conducted in accordance with GAAS
Reference to the section of auditors report that describes auditor responsibilities under GAAS
Auditor is required to be independent of entity and other ethical responsibilities
Whether sufficient audit evidence has been obtained

Question 7

Responsibilities of management paragraphs

Answer 7

2 paragraphs
Describe the responsibilities of management. preparation and presentation of FS in accordance with financial framework.
Design, implementation and maintenance of internal control

Question 8

Auditor responsibility para 1

Answer 8

-Obtain reasonable assurance about whether the FS are free from MMS
-Issue report that includes auditor opinion
-Reasonable assurance is a high level of assurance, not absolute
Misstatements are material if they could influence decisions of users

Question 9

Auditor responsibility para 2

Answer 9

Responsibilities in accordance with GAAS

• Exercise prof judgement and maintain skepticism
• ID and assess risk of MMS and design procedures to detect
• Obtain understanding of Internal Control
• Evaluate accounting policies
• Evaluate entities ability to continue as a going concern

Question 10

Auditor responsibilities para 3

Answer 10

Auditor is required to communicate with those charged with governance the planned scope and timing of audit, significant audit finding, certain internal control related matter

Question 11

Difference between PCAOB and AICPA auditor report

Answer 11

Title - Report of Independent Registered Public Accounting Firm
Addressed - To the shareholders and board of directors of XXX Company
3 paragraphs - Opinion on the Financial Statements, Basis for Opinion, Critical Audit Matters

Question 12

Reasons to add Emphasis of Matter Para

Answer 12

Material change in accounting principle

FS prepared using special purpose framework

Question 13

Agreed Upon Procedures Report

Answer 13

Independent Accountants Report
Addressee
Para - We have performed the procedures enumerated below
Para - the engaging party has agreed to and acknowledged the procedures performed
Para - Procedures performed and findings
Para - performed in accordance with attestation standards established by AICPA
Accountant is required to be independent
Other matters

Question 14

Unmodified review conclusion

Answer 14

We are not aware of any material modifications that should be made to the accompanying FS in order for them to be in accordance with accounting policies generally accepted in the US

Question 15

Modified review conclusions

Answer 15

Qualified - except for the effects of matters described in basis for qualified conclusion
Adverse - due to the significance of matters described in basis for adverse conclusion

Question 16

Review report sections

Answer 16

Independent Accountant Review Report
Addressee
Introductory Para - no heading
Management Responsibility
Accountant's Responsibility
Accountant's Conclusion
Signature
Date