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12 Cards in this Set

  • Front
  • Back
Standard Unqualified Report parts (7)
1. Report title (indi auditor's report)
2. Audit report address (shareholders of U-Line)
3. Intro paragraph (a. cpa firm did audit b. what financials were audited c. mgmt is responsible for fs)
4. Scope paragraph (factual stmt, in comp w/ GAAP, reasonable assurance on MMS)
5. Opinion paragraph (complied w/ GAAP, no material misstatements)
6. Name of CPA firm
7. Date audit procedures completed in field
Conditions for Standard Unqualified Report (5)
1. all stmts included
2. three general standards met (competent, proficient, due care, independent)
3. Sufficient and appropriate evidence gathered
4. fs are GAAP
5. no need for extra paragraph
Categories of Audit Reports (4)
1. Standard unqualified
2. Unqualified w/ explanatory pp or modified wording
3. Qualified
4. Adverse or Disclaimer
Causes for Explanatory PP or Modified Wording (5)
1. lack of GAAP
2. doubt about going concern
3. auditor agrees to go around GAAP
4. emphasis on a particular matter
5. reports involving other auditors
Qualified Opinion
report issued when the auditor believes that the overall FS are fairly stated but that either the scope of the audit was limited or the financial data indicated failure to follow GAAP
Adverse Opinion
FS are so materially misstated or misleading they do no present fairly the entity's financial position etc.
Disclaimer of Opinion
Auditor isn't able to become satisfied that overall FS are fairly presented or auditor isn't independent
a misstatement in te FS can be considered material if knowledge of the misstatement will affect a decision of a reasonable user of the statements
Relationship of Materiality to Type of Opinion
-Highly Material
Immaterial - user's decisions are not likely to be affected - issue Unqualified Opinion
Material - user's decisions are likely to be affected only if the info in question is important to the specific decisions being made. The overall FS are presented fairly - issue a Qualified Opinion
Highly Material - most or all user's decision based on the FS are likely to be significantly affected - issue Disclaimer or Adverse Opinion
Materiality Decisions - Non-GAAP Condition
1. Dollar amts compared w/ base (combine all unadjusted misstatments, look overall)
2. Measurability (lawsuit pending?)
3. Nature of item (transaction illegal or fraud, future will be material but it isn't right now, small loss into small gain,
Acctg principle not consistently applied, substantial doubt about going concern, justified departure from GAAP, emphasis on matter and use of another auditor (if immaterial and material)
immaterial - unqualified
material - unqualified, explanatory pp
EXCEPT use of another auditor, which would be immaterial-unqualified, and material-unqualified with modified wording
Scope restricted by client, FS not prepared in accordance w/ GAAP, auditor not independent (immaterial and material)
Scope- Immaterial = unqualified, Material = Qualified Scope, addt't pp and qualified opinion, but if so material, must issue Disclaimer.
FS not GAAP- Immaterial=Unqualified, Material = Addt'l pp and qualified opinion except if so material, the Adverse Opinion
Auditor not independent = Disclaimer regardless of materiality