You can do it! Flashcards
What is the purpose of an audit review of interim statements?
to provide the accountant with a basis for reporting whether material modification should be made for such info to conform to the applicable financial reporting framework.
Positive assurance
whether audited FS comply as to form with SEC requirements
Negative assurance
whether unaudited condensed or capsule interim info complies as to form with SEC requirements. And whether modifications are needed for the unaudited condensed consolidated FS. About any changes in amounts of capital stock, LT debt, or any decrease in other specified FS elements during a specified period since the last audit or review
How is materiality calculated for Single Audits?
Determined separately for each major program
SSARS
Statements on Standards for Accounting and Review Services
Application and other explanatory material, identified by which words
May, might, could
Presumptively mandatory requirement, identified by which words
should
The SSARS are not applicable when:
Preparing a working TB.
Assisting in adjusting the books of an account.
consulting on accounting, tax, and similar matters.
Preparing tax returns.
Providing bookkeeping or data processing services.
Processing financial data for clients of other acct firms. preparing standard monthly JEs
Unconditional requirements, word
Must
What is an example of a preparation engagement?
preparing the FS whether the FS were based on a special purpose framework or not
The clarified SSARS applicable to preparing the FS apply to:
Preparing a FS forecast
Preparing a BS with substantially all disclosures omitted.
Preparing FS for the review by another accountant (diff firm).
SSARS do not apply to:
preparing FS in connection with business valuation services
Does an A have to be independent to prepare FSs in accordance with SSARS?
Nein. but need to state that fact in a paragraph at the end of the compilation report
What should be added to a report of FS that have been presented using a special purpose framework
An EOM paragraph
when engaged to compile an entitys FS,
a compilation report must be issued
If an acct is not independent, what services can they provide?
Compilations, but not reviews.
What statement is included in a report of a compilation
The acct did not perform any procedures to verify the accuracy or completeness of the info provided by mgmt.
The A who was initially engaged to audit, at the clients request, may change the engagement to a compilation if the following are considered:
The reason for the client request.
The additional effort required to complete the audit.
The estimated additional cost to complete the audit.
(the acct should consider carefully whether the new scope restriction will result in info that is incorrect, incomplete, or otherwise unsatisfactory.
In a single audit, the general requirements apply to
all federal financial assistance programs
Specific requirements apply to
particular federal program and usually arise from statutory requirements
GAS require
a report on the entitys compliance with applicable laws and regulations
The auditors documentation should contain sufficient info so that…
supplementary oral explanations are not required.
What is a subrecipient in A133
a nonfederal entity that expends federal awards received from another entity to carry out a federal program. Received from a passthrough entity
An A is required to communicate mgmt’s misappropriation of assets directly to an external party when
the entity fails to make the necessary reports regarding fraud or illegal acts to such parties.
An A is resp for assuring that mgmt communicates significant deficiencies to specific legislative and regulatory bodies when
reporting under GAS
Auditors are rewuired to report known or likely fraud directly to outside parties when
- mgmt fails to report such info as required by law
- when mgmt fails to take timely and appropriate action to respond to fraud, illegal acts, violations, or abuse that is likely to be material to the FS and involved gov agency funding.
the A should focus on
violations of law and regulations with a direct and material effect on the FS (bc the A is resp for planning the audit to detect MM in the FS)
FS in accordance with GAS require:
An audit report
A report on Internal control.
A report on compliance with laws, reg, and the provision of contracts or grant agreements
in an audit of a gov entity an A should
obtain written mgmt representation acknowledging that mgmt has identified and disclosed all laws and regs that have a direct and material effect on its FS
GAS do not require a concurrent opinion on the FS taken as a whole
when a performance audit is being conducted
What type of assurance does a review provide?
Negative. “Based on our reviews, we are not aware of any material modifications that should be made to the accompanying FS in order for them to be in accordance with acct principles generally accepted in the US.
Review - presented on the basis of a special purpose framework
report should include an EOM that identifies the basis of presentation and references a note where the framework is described.
If a client asks to change from an audit to a review, the report should state
A review is substantially less in scope than an audit
If a client changes from an audit to a review, the report should not ref:
the original agreement.
the scope limitation that caused the changed engagment
What kind of opinion would be reported for an entitys FS that contain a material GAAP dept but taken as a whole, the FS are deemed fairly stated
Qualified report for a GAAP departure.
at the end of fieldwork, a clients CFO refused to sign the MRL
Disclaimer of opinion
Fairly stated, but auditor wishes to draw attention to the doubt of cont as a going concern.
unmodified with an EOM
