Other Services & Reports Flashcards
projections
Projections present future results based on hypothetical assumptions in a “what-if” scenario.
In a projection, management does not necessarily agree with the hypothetical assumptions used in the projection as they may or may not materialize. Hypothetical assumptions may be external, such as projecting the effects of a change in interest rates that may or may not occur, or internal, such as converting to a new technology. Although a projection may be used to show what management believes will occur if current trends continue into the future, that is not necessarily the case
who signs comfort letters
client’s independent auditors
whats a comfort letter. who writes it to who?
auditor writes to underwriter in connection w a public offering.
CPA may provide negative assurance relative to the information being in conformity with GAAP since the auditor is familiar with GAAP and is only indicating that they did not identify any discrepancies, not that there aren’t any
yellow book audit is required to report about the entity’s internal control, where can the auditor report this?
-audit report on fs stmt
OR
-separate report
when is ‘disclaimer of opinion’ appropriate?
if the auditor was unable to obtain sufficient appropriate audit evidence to develop an opinion
scope limitation
nonattest engagement
- does not need to be independent
EX: compilation or consulting services
auditors duty while reviewing pro forma adjustments:
check math
An agreed-upon procedures report will include:
- indicate that the subject matter is the responsibility of the client’s management
- that the procedures performed were those agreed upon with the specified parties.
- Distribution of the report is RESTRICTED to such specified parties knowledgeable about the agreement; thus, the report will include a statement indicating such specified restrictions.
DOES NOT: provide limited assurance in an agreed-upon procedures engagement; only findings will be reported.
SSAE
statement on standards for attestation engagements
agreed-upon procedures engagement is an
attestation engagement, and the accountant is required to be independent
The report is required to be restricted
yellow book audit requires
report on the tests performed to determine compliance with laws and regulations.
GAGAS requires reporting of
Direct reporting of noncompliance (illegal acts) and reporting on internal controls.
agreed-upon procedures engagement report is required to be
restricted
When an agreed-upon procedures engagement is performed in respect to prospective financial statements,
a summary of significant assumptions is required to be presented in the report
when is SSAE applicable
SSAE apply to engagements to in which the accountant expresses a written conclusion about the reliability of a written assertion by another party
This includes examinations, reviews, or agreed-upon procedures engagements
Statements on Auditing Standards (SAS)
SAS are concerned with engagements to audit historical financial statements
Statements on Standards for Accounting and Review Services (SSARS) applies to
compilations, reviews, and engagements to prepare financial statements
Statements on Standards for Consulting Services (SSCS)
apply to consulting engagements that do not require independence or attestation
ethical principles
- Acting with integrity,
- acting with the public interest in mind
- assuring proper use of government information
Generally accepted government auditing standards (GAGAS) use which of the following terms to describe a professional requirement to comply with a standard or provide a special explanation for not doing so
Presumptively mandatory requirement
“should”
Unlike GAAS, reports under GAS require the auditor to report
on the results of tests of controls
report on internal control
noncompliance w laws and reg
Reporting on the examination of prospective financial statements is
is an attestation engagement that requires the CPA to be independent
date of the practitioner’s report would ordinarily be
A practitioner’s report on the results of agreed-upon procedures is dated at completion of the agreed-upon procedures.
The report resulting from an engagement to apply agreed-upon procedures related to the financial statements will include
- accountant’s findings
- disclaimer indicating the procedures applied may not be sufficient for the purpose intended
- statement restricting the distribution of the report only to parties knowledgeable about the agreed-upon procedures
- No assurance is provided.
OMB
Office of Management and Budget Circular A-133
The OMB defines a subrecipient as
a nonfederal entity that expends federal awards received from another entity to carry out a federal program.
If the prescribed Audit Report form of a government agency on behalf of the client differs significantly from GAAS, the auditor may
- reword the prescribed form and sign it,
- attach a separate audit report to the form, or
- choose not to accept the audit engagement.
