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17 Cards in this Set
- Front
- Back
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8 parts of unqualified opinion |
1. report title - must include word independent 2. addressed to board of directors/stockholders usually 3. intro paragraph - performed audit, list which F/S 4. mgmt responsibility - F/S resp. of mgmt 5. auditor's responsibility - 3 paragraphs (gaap & reasonable ass, scope, suff. evidence) 6. opinion 7. name/address CPA firm 8. report date (completion field work)
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unqualified (unmodified) opinion when... |
1. all F/S included 2. suff. approp. evidence and audit in accord w/ standards 3. F/S including notes in accord w/ GAAP 4. no need for additional explanatory paragraph or modification of wording |
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3 types report modifications away from unqualified opinion |
1. qualified opinion 2. disclaimer of opinion 3. adverse opinion |
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SOX 404A |
public companies must assess and report effectiveness internal controls |
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SOX 404B and PCAOB audit standard #5 |
public companies over $75M market cap, auditor must audit effectiveness of internal controls, can't audit internal controls alone, must also audit F/S |
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emphasis of matter required if... |
1. change in accting princ. or change in reporting entity 2. substantial doubt ability to continue going concern 3. opinion on F/S differs from opinion prev. expressed on same statements 4. F/S prepared in accord. w/ special purpose framework 5. corrections errors involving principles |
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changes effect comparability but not consistency, do not require explanatory paragraph |
- change in estimate, life of asset - error corrections not involve principles - variations format - changes because of substant. diff. transactions |
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3 conditions requiring departure from unqualified opinion |
1. restricted scope 2. F/S not in accordance w/ GAAP 3. Auditor not independent |
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qualified opinion, adverse opinion, disclaimer of opinion |
1. qualified - scope, failure GAAP, only when auditor decides F/S fairly stated, least severe 2. adverse - only when F/S so materially misstated not fairly. rarely used. 3. disclaimer - auditor unable to satisfy self that F/S fairly presented - scope, independence, option if going concern. can arise from lack of knowledge |
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Reports involving other auditors |
principal may choose to... - divide responsibility (make reference in report) - take responsibility (make no reference) public company, other report filed w/ SEC |
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misstatements must be compared w/ some measurement base before decision of materiality of failure to follow GAAP or scope restriction |
true |
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levels of materiality |
immaterial- user's decisions unlikely to be affected - unqualified material- user's decisions likely to be affected only if info is relevant to specific decisions. F/S presented fairly - qualified highly material- most/all user's decisions based on F/S likely to be significantly affected. - disclaimer or adverse |
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F/S not prepared in accordance w/ GAAP |
immaterial- unqualified material- addit'l paragraph and qualified opinion (except for) highly material- adverse |
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Scope restriction by client or other condition |
immaterial- unqualified material- addit'l paragraph and qualified opinion (except for) highly material- disclaimer |
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Other matters paragraph required when |
-comparative period F/S not audited -inconsistencies in info accompanies F/S -to report of supplementary info -restrict use of audit report -report on compliance w/ contractual/regulatory requirements
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other matters vs. emphasis of matter |
info not disclosed in F/S vs. info disclosed in F/S |
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Type of report required
material departures from GAAP scope limitations lack of independence |
material departures from GAAP -qualified or -adverse
scope limitations -qualified or -disclaimer
lack of independence -disclaimer |
