Section 6: Audit Reports

Question 1

Reporting Requirements

Framework for Reporting

Answer 1

Explicitly Stated

Question 2

Modified Opinion is Issued…

Basis for Qualified Opinion

Answer 2

Paragraph is be placed before the opinion paragraph

Question 3

Immaterial Disagreement, Scope Limit, or Emphasis of Matter or Other Matter

Answer 3

Unmodified Opinion

Question 4

Material Disagreement

Answer 4

Modified Opinion

“Except For”

Question 5

Very Material Disagreement

Answer 5

Modified

Adverse

Question 6

Material Scope Limit

Answer 6

Modified

(Unable to obtain suffc approp audit evidence, material but not pervasive)

“Except For”

Question 7

Very Material Scope Limit

Answer 7

Modified

(Unable to obtain suffic approp audit evidence, both material and pervasive)

Disclaimer

Question 8

Material (Pervasive or not) Emphasis of Matter

Answer 8

Properly presented and disclosed

Paragraph after Opinion

Question 9

Material (Pervasive or not) Other Matter

Answer 9

Not req’d to be presented or disclosed

Paragraph after Emphasis and Opinion

Question 10

Reporting Requirements

Consistency

Answer 10

Implicitly Stated

• Inconsistencies
  
  • Change in Accting principle
  • Adj to correct material misstatement in PY
• When there is a change, look for
  
  • New principle follows AARF
  • The change is proper
  • Disclosures are approp and adequate
  • Justification for change is preferable
    
    • When you have met all req above, include EOM until new principle is applied to all periods presented

Question 11

Reporting Requirements

Omitted Disclosures

(Inadequate Disclosure)

Answer 11

Implicitly Stated, unless disclosures are determined to be incorrect, incomplete, or otherwise unsatisfactory

Statement of Cash Flow MUST be included whenever a company is presenting results of operation.

Failure to inlcude Cash Flow, results in a qualified opinion and reqs modification to intro and opinion paragraphs

Question 12

Reporting Requirements

Make reference to the work of component auditor

Answer 12

Explicitly Stated

No reference needed if component F/S were preapred with same AARF, Comp Auditor complied with GAAS, Comp Auditor report is not restricted, or main auditor assumes repsonsibilty for Comp. Auditor

Question 13

Introductory Paragraph

Answer 13

• Identify the entity whose F/S have been audited
• State the F/S that have been audited
• Identify the title of each statement that the F/S comprise
• Specify the date or period covered by each F/S

Question 14

Management’s Repsonsibility for the F/S

Answer 14

DIM of IC

• Design
• Implementation
• Maintenance

Question 15

Auditor’s Responsibility

Answer 15

• States the auditor’s repsonsibility to express an opinion of the F/S based on the audit
• Audit was condicted in accordance with GAAS
• Describes an Audit

Question 16

Opinion Paragraph

Answer 16

Should state , when issuing an unmodified opinion, that the F/S present fairly, in all material aspects, in accordance with the AFRF