Reporting on compliance with requirement in a F/S audit

Question 1

Identify the three paragraphs normally associated with a report on compliance with specified aspects of a contractual agreement or regulatory requirements in connection with a financial statement audit (when no instances of noncompliance were identified).

Answer 1

1. )Refer to the audit of the financial statements and identify the date of the auditor’s report.
2. )Provide negative assurance about relevant compliance.
3. )Restrict the distribution to appropriate specified parties, including management and those charged with governance.

Question 2

Identify the three requirements before the auditor can provide negative assurance about an entity’s compliance with specified aspects of a contractual agreement or regulatory requirements in connection with a financial statement audit.

Answer 2

1. )The auditor did not identify any instances of noncompliance.
2. )The auditor expressed an unmodified or qualified opinion on the financial statements.
3. )The covenants or regulatory requirements involved were subject to audit procedures.

Question 3

Is an auditor permitted to comment on an entity’s compliance with specified aspects of a contractual agreement or regulatory requirements in connection with a financial statement audit, if the auditor expressed an adverse opinion or disclaimer of opinion on the financial statements?

Answer 3

If the auditor expressed an adverse opinion or disclaimer of opinion on the financial statements, the auditor is permitted to issue a report on compliance only when instances of noncompliance were identified.

Question 4

How is the auditor’s report on compliance affected when there are instances of noncompliance, but the entity has obtained a waiver for such noncompliance?

Answer 4

The auditor’s report on compliance may include a statement that a waiver has been obtained, but all instances of noncompliance should be described in the report, including those for which a waiver has been obtained.