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Lambers AUD > Use Of Other Auditors/Reissue Reports > Flashcards

Use Of Other Auditors/Reissue Reports Flashcards

0
Q

Management and auditor’s will designate…

A

A principal auditor to sign the report

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1
Q

In large companies it is not uncommon for…

A

One firm to audit a parent and another firm to audit

subsidiary or part of anther company

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2
Q

The principal auditor is generally the auditor who…

A

Does the majority of the work

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3
Q

Principal auditor:

Majority of work, how is it measured?

A

Measured by percentage of total assets and revenues to

The consolidated total

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4
Q

The principal auditor must decide whether to…

A

Accept full responsibility or share responsibility with other auditor

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5
Q

If principal auditor decides to accept full responsibility…

A

There is no division of responsibility

Opinion is normal and there’s no mention of other auditor

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6
Q

If the principal auditor decides to divide the responsibility:

What 5 modifications are stated in the introductory paragraph? (Assume the principal auditor audited the parent)

A

1 we did not audit the subsidiary
2 the size of the sub
3 the statements were audited by other auditors
4 other auditors furnished us with their report
5 our report on sub is based on report of other auditor

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7
Q

If the principal auditor decides to divide the responsibility:

In the intro paragraph when stating the size of the sub, what is mentioned?

A

Present the percentage or total of assets and revenues to

consolidated total

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8
Q

If the principal auditor decides to divide the responsibility:

In the intro paragraph, When stating that the statements were not audited by other auditors…

A

Do not name the auditors due to confidentiality

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9
Q

If the principal auditor decides to divide the responsibility:

The scope paragraph is altered in…

A

The last sentence to indicate the report of the other auditor is used

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10
Q

If the principal auditor decides to divide the responsibility:

The opinion paragraph divides the responsibility by stating that…

A

The opinion is based on our audit and the report of the other auditor

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11
Q

If the principal auditor decides to divide the responsibility:

A qualification by either auditor on the individual company does not necessarily mean a qualification on the consolidation…

A

Materiality is the determining factor

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12
Q

Responsibilities of the principal auditor, 3 things they must do whether assuming responsibility or sharing responsibility

A

1 must verify professional reputation of other Auditor
2 must verify independence of other auditor in relation to the
Consolidation
3 must ascertain other auditor understands GAAP, SEC regulations,
SASs and other matters

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13
Q

Responsibility of the principal auditor:

The principal auditor may want to…

A

Review intercompany accounts

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14
Q

If the principal auditor is going to take all of the responsibility, the auditor must do the following 3 things as well…

A

1 review the audit programs used

2 review the evidence gathered by the other auditor

3 make some tests of the evidence gathered

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15
Q

Report sharing responsibility: intro paragraph alteration

Our responsibility is to express an opinion on the financial statements based on our audit…
What comes after this when the component auditor audited B Company, the wholly owned subsidiary?

A

We did not audit the financial statement of B Company, a

wholly-owned subsidiary,

16
Q

Report sharing responsibility: intro paragraph alteration

We did not audit the financial statement of B Company, a wholly-owned subsidiary,…
(Assets = $700,000 and $650,000 20X2 and 20X1)
(Total Revenues = $250,000 and $200,000 20X2 and 20X1)

A

which statements reflect assets of $700,000 and $650,000 as
of December 31, 20X2 and 20X1 respectively, and total revenues
of $250,000 and $200,000 for the years then ended.

17
Q

Report sharing responsibility: intro paragraph alteration

$250,000 and $200,000 for the years then ended. Those statements were…

A

Audited by other auditors whose report has been furnished to us

18
Q

Report sharing responsibility: intro paragraph alteration

Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it related to the amounts included for B Company, is…

A

Based solely on the report of the other auditor

19
Q

Report sharing responsibility: scope paragraph alteration

Normal scope paragraph except for the last line as follows

A

We believe that our audits and the reports of the other auditors
provide reasonable basis for our opinion

20
Q

There has been a change in auditors. The old auditor is…

2) the new auditor is…

A

The predecessor

2) the successor

21
Q

The successor may present the predecessor auditor’s report…

A

With permission only when there are comparative statements

22
Q

The successor must make certain that the…

2) conditions could make it change (example)

A

Original report is still applicable

2) GAAP change

23
Q

3 things predecessor auditor should do if successor auditor wants to review their report

A

1 auditor should read the current financial statements

2 make sure previous statements have not been changed

3 obtain letter of representation from successor auditor

24
Q

What does the letter of representation from the successor auditor (obtained by the predecessor auditor) state?

A

Nothing has been found to indicate previous statements need

adjustment or have been adjusted

25
Q

The successor auditor may simply decide to present the prior report or refer to the prior report…

A

In the current report

26
Q

The prior report should be dated as of…

Why?

A

The original date since the report belongs to the predecessor

27
Q

If the successor only refers to the report, the introductory paragraph should indicate 3 things

A

1 statements were audited by other auditors (no names)
2 date of previous report
3 type of opinion given and an explanation for any qualification

Ex. The financial statements for the year ended December 31, 20X1 were audited by other auditor whose report dated March 10, 20X2 was an unqualified report.

28
Q

When the principal auditor assumes responsibility they must…

A

Go to component auditor’s location and review their work

29
Q

Component auditor that audited the sub must be independent in relation to…

A

Parent

30
Q

If mention component auditor by name, you need…2

A

1 their permission (confidentiality issue)

2 include their report alongside yours

31
Q

Need permission from predecessor audit to…

A

Reissue their report

32
Q

Predecessor auditor is responsible up…

A

Date they completed fieldwork in reissued statement

Lambers AUD (7 decks)

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