Other Reports Flashcards
May express an opinion on AR balances, even if auditor disclaimed on the Financial Statements as a whole provided that:
Report on AR is PRESENTED SEPARATELY from the disclaimer of opinion on Financial Statements
Special considerations in the application of US GAAS
An audit of a single financial statement. Can be performed as a separate audit or in conjunction with an audit of the complete set of financial statements
An accountant who is not independent may still be associated with the financial statements. (Can’t perform a review or an audit though)
For example, Compilation services
An accountant expresses no such assurance in a….
compilation engagement
Limited assurance is expressed in…(accountant is not aware of..)
a review engagement
There is no limitation on the use of a …
Reviewed financial statement
No opinion may be given based on a…
review engagement
“substantially less in scope than an audit” and “Is not aware of any material modifications..” is in
The review report (not in the compilation report)
A compilation report should state that:
the objective of a compilation report is to assist management in presenting financial information in the form of financial statements
Audit Procedures not performed in a REVIEW engagement:
1) Tests of the accounting records
2) Tests of management’s assertions regarding continued existence
3) Inquiries of the entity’s attorney concerning contingent liabilities
Management rep letter more likely in review or compilation?
Review
If management does not provide the rep letter for a review report, then
the accountant must withdraw
Difference in objectives between Review and compilation?
Review - Limited Assurance
Compilation - No Assurance
Independence is not required for which engagement?
Compilation but state why there is a lack of independence
Statements of Standards for Accounting and Review Services (SSARS) apply to:
reviews of the financial statements of nonissuers
The objective of a review:
Is to provide the accountant with a reasonable basis for expressing limited assurance that there are no material modifications that should be made to the accompanying financial statements for them to be in conformity with GAAP
Comfort letters are signed by the clients:
Independent auditor and is sent to the underwriter
Comfort Letters:
Negative assurance for: The conformity of the entity’s unaudited condensed interim financial information with GAAP.
Positive Assurance for: The compliance of the audited financial statements and financial statement schedules included in the registration statement with the requirements of the Securities Act of 1933.
An examination of a financial forecast is a professional service that involves:
- Evaluating the preparation of the prospective financial statements
- Evaluating the support underlying the assumptions
- Evaluating the presentation of the prospective financial statements in conformity with AICPA guidelines
- Issuing an examination report
Financial Forecast may be issued for:
General use
Financial Projections (What if prospectives FS) may be issued for:
Hint: The user may need to ask the responsible party questions about the underlying assumption
Restricted use.
An opinion is not issued with a review but
may be modified to disclose departures from GAAP
