Related Reporting Topics Flashcards
What may an auditor provide negative assurance about for a Comfort Letter?
Whether the entity’s unaudited interim financial information complies as to form with the accounting requirements of the Securities Act of 1933
i.e. A typical comfort letter includes this type of negative assurance
What is the objective of a review of interim financial information of an issuer?
To provide an auditor with a basis for reporting whether Material modifications should be made to conform with generally accepted accounting principles
i.e. TO provide negative assurance
Under what circumstance can a CPA accept an engagement to audit only one of an entity’s Financial Statements?
If the CPA can audit interrelated items
Where would a description of how an entity’s basis for reporting its financial statements differs from GAAP be included?
In the notes to the financial statements
What type of opinion would an auditor express when management declines to present required supplementary information?
An “Unmodified” opinion with an other-matter paragraph
i.e. Omission of RSI does not affect the auditor’s opinion (E.g. Unmodified Opinion) because such information is not part of the basic financial statements
What is negative assurance provided by a CPA based on?
An absence of nullifying evidence
i.e. nothing came to the auditor’s attention that caused the auditor to believe that specified matters do not meet specified criteria
What does the auditor’s work primarily consist of when making a review of interim financial information?
Making inquiries and performing analytical procedures concerning significant accounting matters
What is required supplementary information?
Information that the designated accounting standards setter has determined must accompany the basic financial statements
NOTE: It is not; however a part of the basic statements and therefore is not required by the applicable reporting framework to be included in the basic statements
What responsibility does the predecessor auditor have when registration statements are filed with the Securities and Exchange Commission?
They have the responsibility for events up to the effective date of the registration statement
What statement should be included in a prospectus for a review of interim financial information is presented in a registration statement?
That the Auditor’s review report is not a part of the registration statement within the meaning of the Securities Act of 1933
What is an example of “supplementary information?”
Statistical Data
i.e. A report on such data should be limited to data derived from the entity’s audited financial statements
TO whom are comfort letters ordinarily are addressed t?
The party who negotiated the agreement with the client
i.e. the requesting party
What are some items covered in a Comfort Letter?
(1) the form of audit statements and schedules in the registration statement
(2) other items in the filing (e.g., pro forma information, MD&A, and capsule information); and
(3) the provision of negative assurance
WHEN may the auditor report on summary financial statements that are derived from audited financial statements?
If the auditor states whether the information is consistent with the audited financial statements
What word should the auditor avoid using to describe the work performed for a comfort letter?
That they “Made a general review”
Why? - Because these are terms of uncertain meaning
