Reports on Audited Financial Statements Flashcards
What should the auditor evaluate based on the applicable financial reporting framework?
Adequately disclose, consistent, accounting estimates are reasonable, information is relevant, reliable, comparable, and understandable, understand the effect of material transactions and events, terminology is appropriate, fairly presented, and represent the underlying transactions and events
What are the sections of the audit report?
Title, Addresse, Introductory paragraph, Management’s responsibility for the financial statements, Auditor’s responsibility, Auditor’s opinion, Other Reporting Responsibilities, Signature of the Auditor, Auditor’s Address, and Date of the Auditor’s Report
The statement of management’s responsibility should include?
Design, Implementation, and Maintenance
Auditor’s responsibility paragraph should include?
Responsibility to express an opinion, Conducted in accordance with auditing standards, Plan and perform the audit to obtain reasonable assurance, Performing procedures to obtain audit evidence, Assessment of the risks of material misstatement, Test internal control, Fair presentation of the financial statements, Control, Reasonableness, Accounting estimates, Management, and Evaluating overall presentation
The statement for the auditor’s opinion should include?
The financial statements present fairly, in all material respects, the financial position of the entity as of the balance sheet date and the results of operations and its cash flows for the period then ended, in accordance with the applicable financial reporting framework.
What should the date of the auditor’s report be?
The date on which the auditor has obtained sufficient appropriate audit evidence.
What standards should be used for audits of issuers?
Standards of the Public Company Accounting Oversight Board
What standards should be used for audits of nonissuers?
auditing standards generally accepted in the United States of America
What paragraph refers to GAAS?
Auditor’s Responsibility Paragraph(Scope)
What paragraph refers to GAAP?
Opinion Paragraph
What is a component?
An entity
What is an auditor who performs work on the financial information?
Component auditor
Who is the partner or other person in the firm who is responsible for the group audit engagement?
Group engagement partner
What includes the group engagement partner, other partners, and staff who establish the overall audit strategyh, communicate with component auditors, and perform work?
Group Engagement Team
What are financial statements that include the financial information of more than one component?
Group Financial Statements
What are the characteristics a group engagement team must understand about each component auditor?
Reputation, independent, professional competence, and program steps
Should the group engagement partner reference the component auditor if the partner decides to assume responsibility for the work?
No
What type of problem should be labeled qualified or adverse?
GAAP
What type of problem should be labeled qualified or disclaimer?
GAAS
What paragraphs are used when additional information is needed without modifying the auditor’s opinion?
Emphasis-of-matter and Other-matter
When should the auditor’s opinion be modified?
Materially misstated or unable to obtain sufficient appropriate audit evidence
What paragraph is used when referring to a matter that is appropriately presented or disclosed in the financial statements and is of such importance that it is fundamental to the users’ understanding of the financial statements?
Emphasis-of-matter
What are the reporting requirements for the Emphasis-of-matter paragraph?
After the opinion paragraph but before the other matter paragraph, heading “Empasis-of-matter”, describe the matter, and indicate that the auditor’s opinion is not modified
When is an emphasis-of-matter paragraph required?
Going concern, consistency, changing prior opinion, and special purpose framework
What paragraph refers to matters other than those presented or disclosed in the financial statements that are relevant to the user’s understanding?
Other-Matter
What are the reporting requirements for the Other-Matter Paragraphs?
After the opinion and emphasis-of-matter paragraph, heading “Other-Matter, and describe the matter being emphasized
What evidence should be examined for the basic principle of going concern?
Analytical procedures, debt compliance, minutes, inquiry, third parties, and subsequent events review
What are conditions and events that may be indicative of substantial doubt?
Financial difficulties, internal matters, negative trends, and external matters
What are mitigating factors for dealing with going concern conditions?
Borrow money, restructure debt, sell assets, delay or reduce expenditures, or increase ownership equity
What terms must be included in the emphasis-of-matter paragraph for a going concern?
Substantial doubt and going concern
What does it mean when the entity’s going concern disclosures are inadequate?
A departure from GAAP exists
When should an auditor restrict the use of the written communication?
measurement or disclosure criteria that are suitable for only a limited number and a by-product report
What are examples of GAAP problems?
Consistency change, inadequate disclosure, Departure/violation of GAAP, and unreasonable accounting estimate
What changes in an audit report when expressing a qualified or adverse opinion?
Change in auditor’s responsibility paragraph, include a “Basis for Modification” paragraph, and opinion paragraph
What are causes of scope limitations?
Circumstances and management
What changes in an audit report when expressing a qualified or disclaimer opinion?
Change in auditor’s responsibility paragraph, include a “Basis for Modification” paragraph, and opinion paragraph
What other paragraph must be amended when a disclaimer of opinion is expressed?
Introductory paragraph
What type of opinion is given when there is no audit work?
No audit opinion
