SU 15 Opinions And disclaimers Flashcards
Qualified or Adverse opinion
FS as a whole are materially misstated.
Qualified or disclaimer
Unable to obtain sufficient appropriate evidence
Q: material and not pervasive
D: material and pervasive
When are misstatements considered material?
If they influence the judgement of a reasonable user.
Does the auditor express an opinion on the effectiveness of internal control?
No.
What are auditors required to communicate to those charged with governance?
Planned scope and timing of the audit
Significant audit findings
Certain internal control matters
Auditors report
Signature: manual or printed
Date: no earlier than date sufficient appropriate audit evidence was obtained
Nonissuer audit report is in accordance with?
In accordance with GAAS (AICPA)
Issuer Audit report is in accordance with?
In accordance with PCAOB
Issuer audit report has a CAM section (critical audit matters)
CAM: had to be communicated to the audit committee, related to material items, challenged auditor judgment
Issuer audit report
Requires auditors tenure
Financials are materially misstated
Qualified: Material but not pervasive
Adverse: material and pervasive
Inability to obtain sufficient appropriate evidence
Qualified: material but not pervasive
Disclaimer of Opinion: material and pervasive
Qualified opinion
“Except for the matter described in the report the FS are presented fairly.” Represents a misstatement or omission that is not pervasive.
Adverse opinion
The auditor has obtained sufficient appropriate evidence but the misstatements are material and pervasive.
Who should the report be addressed to?
Aicpa: addressed to those for whom the report is prepared
PCAOB: shareholders and board of directors and others
What’s dual dating?
When a subsequent event in the FS occurs after the date of the auditors report but before the report release date, the auditor may dual date the report.
Use Original date: for matters prior to the subsequent event
Use Later date: matters affected by the subsequent event.
OR:
The auditor may accept responsibility for all events after the original report date and use the later date for the entire report. This is called a reissued report.
What’s a scope limitation?
The inability to obtain sufficient appropriate evidence
Examples of material but not pervasive misstatements
Inappropriate selection and/or application of accounting principles
Unjustified change in accounting principles
Inadequate disclosure
Failure to provide a basic statement like stmt of cash flows
T or F. In addition to limitations imposed by mgmt, an auditor may express a qualified opinion for circumstances related to work.
True. Ex: destruction or govt seized acct records, not being able to observe inventory due to late auditor appointment, can’t get investee financials, or ineffective controls.
When an auditor qualifies an opinion due to a scope limitation…
The words in the opinion section, state the qualification pertains to the possible effects on the FS, not the scope limitation itself.
