Reporting

Question 0

Going concern

Answer 0

Unmodifies + emphasis on matter paragraph or disclaimer

Question 1

PCAOB

Answer 1

Report

• Title including “Report of Independent Registered Public Accounting Firm”
• refer to standards of the PCAOB
• contain city, state, and country if office that issued report
• should refer to auditor’s report on internal control

Audit of internal control
-an account is significant if there is remote likelihood that it could contain material misstatement

Significant deficiencies communicated with management in written form

Question 2

Material Inconsistency

Answer 2

Unmodified with emphasis of matter paragraph

Question 3

Uncertainty

Answer 3

GAAS
Unmodified with emphasis on matter or disclaimer

GAAP (causes material misstatement)
material: qualified
very material: adverse

Question 4

Comparative form

Answer 4

Prior year qualified

→corrected→ unmodified on restated F/S with Current year F/S

Question 5

Modification of the CPA’s report on a review of the interim f/s of publicly held company required by

Answer 5

Inadequate disclosure

Question 6

Comfort letter

Answer 6

Signed by auditor,
addressed to underwriters

Comfort Letters for underwriters typically give negative assurance on unaudited interim F/S

An opinion as to wether the audited financial statements comply in form with the accounting requirements of the SEC

Question 7

Report on Application of accounting principles to a specific transaction

Answer 7

Include statement that

• responsibility for the proper accounting treatment rest with the preparer of the F/S
• any difference in facts, circumstances, or assumptions presented may change report
• the engagement is performed following standards established by AICPA
• intended solely for the information and use of specified parties

Should consult with continuing CPA to obtain info relevant to transaction

Question 8

Opinion on Internal control

Answer 8

Control deficiency material weakness (more than significant deficiency) →adverse opinion
＊not qualified opinion when material weakness exists

In reporting on an entity’s internal control, practitioner should include a paragraph that describe inherent limitation if any internal control

Audit of internal control

Provisions of the Sarbanes-Oxley act of 2002 apply to SEC registrants

Question 9

Management Discussion & Analysis

Answer 9

-Assertion
Consistency
Occurrence
Completeness
Disclosure 
Presentation

-Review report
Negative assurance
consideration of relevant portion of Internal control
Review report of Public entity should be restricted to use

Question 10

Government auditing standards

Answer 10

Auditor requires to report on the scope of the auditor’s testing of

• internal control
• compliance with laws and regulations

Question 11

Inadequate disclosure

Answer 11

GAAP departure