Reporting Flashcards
When an accountant issues to an underwriter a comfort letter containing comments on data that have not been audited, the underwriter most likely will receive
Negative assurance on capsule information
FIFO for international & LIFO for domestic results in what type of opinion?
Unmodified Opinion
Concerning Engagement to Apply agreed upon procedures
Use of the report is restricted to the specified users.
If auditor wishes to point out in report that the entity has sufficient transactions with related parties should disclose this fact in
An emphasis-of-matter paragraph to the auditor’s report.
An auditor’s report on financial statements that are prepared in accordance with a special purpose financial reporting framework should preferably include
An opinion as to whether the use of the disclosed method is appropriate.
When qualifying an opinion because of an insufficiency of audit evidence, an auditor should refer to the situation in the
Scope paragraph
When there has been a change in accounting principles, but the effect of the change on the comparability of the financial statements is not material, the auditor should
Not refer to consistency in the auditor’s report.
This would result in an unmodified opinion
When the auditor is unable to determine the amounts associated with the illegal acts of client personnel because of an inability to obtain sufficient appropriate audit evidence, the auditor should issue a(n
Disclaimer of opinion.
When performing an audit of a city that is subject to the requirements of the Uniform Single Audit Act of 1984, an auditor should adhere to
General Accounting Office Standards for Audit of Governmental Organizations, Programs, Activities, and Functions
An auditor concludes that there is substantial doubt about an entity’s ability to continue as a going concern for a reasonable period of time. If the entity’s disclosures concerning this matter are adequate, the audit report may include a(n)
Disclaimer of Opinion
What is an auditor’s responsibility for supplementary information, such as disclosure of pension information, which is outside the basic financial statements but required by the GASB?
an auditor applies limited procedures and reports deficiencies or omission of such information; note that while deficiencies are reported in the audit report, the opinion is not modified since the information is considered unaudited.
What is the objective of interim financial information?
To provide the CPA with a basis of reporting whether material modifications should be made to the info to make it conform to GAAP.
If an auditor’s examination reveals a misstatement in segment info that is material in relation to the F/S taken as whole. (Segment 50%) & client refuses to make the modification
like other departures from GAAP, This matter leads to either a qualified opinion or an adverse opinion
An auditor may report on summary financial statements that are derived from a complete set of audited financial statements only if the auditor
Only if the auditor indicates that the information is fairly stated in all material respects in relation to the complete F/S
If client has material weaknesses, and auditor issues an adverse opinion. Client may include their reasons for why they can’t correct the material weaknesses and the Auditor should
Not express any opinion as to management’s statement.
If Auditor restates prior period F/S that were issued a qualified opinion . When issuing the report the auditor should
express an unmodified opinion on the restated F/S
When included with historic F/S this info is considered unaudited
Interim Information
What is the job of a continuing auditor when it comes to comparative bases for prior period F/S to current period’s F/S?
Update the report on the previous F/S regardless of the opinion previously issued.
When performing an audit of a city that us subject to the reqs of the Uniform Single Audit Act of 1984, an auditor should adhere to
General Accounting Office Standards for Audit of Governmental Organizations, Programs, Activities, and Functions.
GAS differs from GAAS in that GAS requires the Auditor to:
Present the results of the auditor’s tests of controls
When the report of a group auditor makes reference to the examination made by another auditor, the other auditor may be named if express permission to do so is given and
If the report is presented together with the group auditor
Which of the following will result in an emphasis-of-matter paragraph as to consistency in the auditor’s report, when that the item is fully disclosed in the financial statements?
A change from an unacceptable accounting principle to a generally accepted one.
A material change in accounting estimate affects comparability
This requires disclosure in the F/S but does not require a consistency modification in the auditor’s report
In an Audit accordance with GAS when it comes to assurrance
The audit must be designed to provide reasonable assurance that
-the F/S are free from material misstatements
resulting from violation of laws & regs that have a direct material effect on the determination of F/S amounts.
When it comes to reissuing a prior period report due to a departure from GAAP, 3 things must be be disclosed in the other matter paragraph to the
1) Date of the audiotr’s previous report
2) the type of opinion previously expressed
3) the circumstances or events that caused the auditor to express a different opinion, and
4) that the updated opinion differs from the previousl opinion.
What is the Auditor’s responsibility when it comes to other information?
the Professional Standards require that an auditor read the “other information” to determine whether it is inconsistent with the financial statements.
An Auditor may report on summary F/S that are derived from a complete set of financial statements only if the auditor
Indicates whether or not the information is fairly stated in all material respects in relation to the complete F/S
When the entity has sufficient related party transactions the auditor should mention this fact in what portion of the report
Emphasis of matter paragraph
Which of the following items should be included in prospective financial statements issued in an attestation engagement performed in accordance with Statements on Standards for Attestation Engagements?
All significant assumptions used to prepare the F/S
To exercise due professional care an auditor should
Critically review the judgment exercised by those assisting in the audit.
Before reissuing the prior year’s auditor’s report on the financial statements of a former client, the predecessor auditor should obtain letters of representation from the
Successor Auditor & the client
‘s management.
When a predecessor auditor’s report is not presented, the successor auditor should indicate the following items:
That the statements were audited by a predecessor auditor. The predecessor auditors should not be named unless the practice of the predecessors was acquired by or merged with that of the successor.
The type of opinion expressed by the predecessor auditor and, if the opinion was modified, the reason for the modification. The nature of any emphasis-of-matter or other-matter paragraph included in the predecessor auditor's report. The date of the predecessor auditor's report.
When an auditor expresses an adverse opinion, the opinion paragraph should include
The substantive reasons for the financial statements being misleading.
Which of the following circumstances would permit an independent auditor to accept an engagement after the close of the fiscal year?
Remedy of limitations resulting from accepting the engagement after the close of the end of the year, such as those relating to the existence of physical inventory.
What procedure would an auditor least likely perform before the balance sheet date?
Confirmation of A/P
you do not have the entire balance, only a portion
financial projections are appropriate for what type of use?
Limited Use
financial forecasts are appropriate for what type of use?
General use
A scope limitation sufficient to preclude an unmodified opinion always will result when management:
Refuses to acknowledge its responsibility for the fair presentation of the financial statements in conformity with GAAP.
An auditor should disclose the substantive reasons for expressing an adverse opinion in a basis for modification paragraph:
Preceding the opinion paragraph., In basis for adverse opinion
Financial Projection is appropriate and can be used for
Limited Use Only
Financial Forecasts are appropriate for both
General use & limited use
Documentation Completion date for PCAOB following the report
45 Days following the report
Documentation Completion date for AICPA, non-issuer following the report
60 days following the report
