Reports On Unaudited Statements Flashcards
2 ways auditor is associated with statements
1 auditor consented to use his or her name in report, document
Or communication containing statements
Or
2 submits to client statements that auditor prepared or assisted
In preparing even though auditor’s name not used with statements
When an auditor is associated with statements…
A report must be issued
Accountant must comply with SSARS whenever accountant…
Presents to client or third parties financial statements that
Accountant prepared
Third parties are everyone except for…
Members of management who are knowledgeable about nature
Of the procedures applied
And basis of accounting and assumptions used in preparation
Of financial statements
Submission of financial statements does not occur when:
Accountant reads…
Client prepared statements
Submission of financial statements does not occur when:
Accountant proposes…
Adjusting journal entries or standard monthly entries to the client
Submission of financial statements does not occur when:
The accountant merely…
Updates a file by making adjusting entires but does not print
A financial statement
Non public companies:
Auditor may issue a compilation that gives…
No assurance
Non public companies:
You must know…
GAAP for the industry
Non public companies:
General knowledge of company’s…
Transactions, records, knowledge of bookkeeping
Non public companies:
Basic responsibility is to read the statements to determine that they are…
Free of obvious material errors or GAAP problems, an auditor is
Not verifying anything
Non public companies:
If an auditor becomes aware in the compilation of a material problem and it is not corrected, the auditor must…
Disclose that fact in the report or withdraw from the engagement
Non public companies:
An auditor may lack…
Independence with a compilation as long as the report states
That fact
Non public companies:
Every report of the financials should say…
“See Accountant’s Compilation Report”
Non public companies:
SSARS 8 requires if an accountant is engaged to report on compiled financial statements or submits statements to a client that are or might be reasonably expected to be used by third party, the accountant must…
Attach a compilation report
Non public companies:
If the accountant submits statements to a client that are not expected to be used by third parties the accountant may either…2
1 issue compilation report
2 get client to sign an engagement letter stating the limitations on
Use of the statements
Nonpublic companies:
If the accountant submits statements to a client that are not expected to be used by third parties and gets client to sign an engagement letter stating the limitations on Use of the statements, each page would say…
“Restricted for Management’s Use Only”
Nonpublic companies: Auditor may issue review report that gives…
Negative assurance
Nonpublic companies: In a review auditor states that no material…
Modifications need to be made to the statements to conform to
GAAP
Nonpublic companies: Procedures to be carried out in a review:
Knowledge of the…
Company, it’s systems and GAAP for the industry
Nonpublic companies: Procedures to be carried out in a review:
Inquiry as to…
How statements were prepared
Nonpublic companies: Procedures to be carried out in a review:
Inquiry as to changes in…
Internal controls
Nonpublic companies: Procedures to be carried out in a review:
Read…
Minutes of directors meetings
Nonpublic companies: Procedures to be carried out in a review:
Inquiry about the use of…3
1 GAAP
2 subsequent events
3 changes in the company
Nonpublic companies: Procedures to be carried out in a review:
Consider prior…
Year’s problems if any
Nonpublic companies: Procedures to be carried out in a review:
Analytical procedures looking for…
Unusual variations
Nonpublic companies: Procedures to be carried out in a review:
Get a…
Representation letter
With reviews an auditor must be…
Independent since there is some assurance
For public companies review reports are issued for…
Interim reporting only
Public companies:
Auditor may issue unaudited report. It is similar to a compilation, 2 conditions
1 there must be clear disclaimer (no ambiguity)
2 if auditor is aware of problems, must be stated in report
Limited review report (public companies)
Same as review
May be issued by auditor
Comparative statements can be issued as long as financial statements are…
Comparative at every level
For comparative statements level of service can…
Change from year to year (compilation or review)
For reports, the current year is always…
Reported first
In comparative statements, if there is a reduction in level of reporting from a review to a compilation, you need to add a sentence that states…
“We performed no review procedures after the date of the prior
Report”
Public company reports are dated as of…
Completion of the work (there’s no field work in unaudited report)
An accounted is exempt from SSARS reporting if he or she prepares…
Personal financial statements to be used as part of financial plan
If client agrees that is the purpose and they won’t use the
statements to obtain credit
Accountants compilation report: 1st paragraph
We have…
Compiled the accompanying balance sheet
Public companies: 1st paragraph
And related statements of income, retained earnings, and cash flows for the year then ended, in accordance with…
Statements on Standards for Accounting and Review Services
Issued by the American Institute of Certified Public Accountants
Accountants Compilation Report:
Recite the whole first paragraph for X Company for 20X1
We have compiled the accompanying balance sheet of X Company
As of December 31, 20X1, and the related statements of income, retained earnings, and cash flows for the year then ended, in accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of Certified
Public Accountants.
Accountants Compilation Report: 2nd paragraph modification
A compilation is limited to presenting in the form of financial
statements information that is the representation of management.
…
We have not audited or reviewed
Accountants Compilation Report:
Recite the second paragraph
A compilation is limited to presenting in the form of financial
Statements information that is the representation of management.
We have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or
any form of assurance on them.
Accountants compilation report:
Recite modifying language added as third paragraph
Management has elected to omit substantially all of the disclosures
Required by generally accepted accounting principles. If omitted
disclosures were included in the financial statements, they
might influence the user’s conclusions about the company’s
financial position, results of operations and cashflows. Accordingly
financial statements are not designed for those who are not
Informed about such matters.
Accountants Review Report: 1st paragraph
We have…
Reviewed the accompanying balance sheet
Accountants Review Report: 1st paragraph
and the related statements of income, retained earnings, and
cash flows for the year then ended, in accordance with…
Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants.
Accountants Review Report:
Recite the first paragraph for X Company for 20X1
We have reviewed the accompanying balance sheet of X Company
as of December 31, 20X1, and the related statements of income,
retained earnings, and cash flows for the year then ended, in accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of Certified
Public Accountants. All information included in these financial statements is the representation of the management of X
Company.
Accountants Review Report: second paragraph
A review consists principally of…
Inquiries if company personnel and analytical procedures applied to
financial data.
Accountants Review Report:
Last sentence of second paragraph
Accordingly, we do not express such an opinion.
Accountants Review Report:
Recite the second paragraph
A review consists principally of inquiries of company personnel
and analytical procedures applied to financial data. It is substantially
less in scope than an examination in accordance with US
generally accepted auditing standards, the objective of which
Is the expression of an opinion regarding the financial statements
Taken as a whole. Accordingly we do not express such an opinion.
Accountants Review Report: third paragraph
Based on our review,…
we are not aware of
Accountants Review Report:
Recite third paragraph
Based on our review, we are not aware of any material
modifications that should be made to the accompanying
financial statements in order for them to be in conformity
with US generally accepted accounting principles.
Accountants Review Report:
What should be added to the third and final paragraph when there is modifying language for a GAAP Problem
“Based on our review, with the exception of the matter discussed
In the following paragraph.”
