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37 Cards in this Set
- Front
- Back
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Should include the word Independent:
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Report Title
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____ lists the financial statements that were audited, including the balance sheet dates and the accounting periods for the income statement and statement of cash flows.
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Introductory paragraph
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States that the statements are a responsibility of management and that the auditors responsibility is to express an opinion on the statements based on an audit.
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Introductory paragraph
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A factual statement about what the auditor did in the audit.
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Scope paragraph
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States that the auditor followed US GAAS.
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Scope paragraph
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States that the audit is designed to obtain reasonable assurance about whether the statements are free of material misstatement.
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Scope paragraph
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States the auditors conclusions based on the results of the audit.
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Opinion paragraph
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Identifies the CPA firm or practitioner who preformed the audit.
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Name of CPA Firm
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The day the auditor completed the auditing procedures in the field.
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Audit report date
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Standard Unqualified Audit report conditions:
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1. All statements are included in the financial statements 2. Three general standards have been followed 3. Sufficient evidence has been accumulated 4. financial statements are in accordance with GAAP 5. no circumstances requiring an additional paragraph
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A complete audit took place with satisfactory results and financial statements that are fairly presented, but the auditor believes that it is important or is required to provide additional information.
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Unqualified with Explanatory Paragraph or Modified Wording
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The auditor concludes that the overall financial statements are fairly presented, but the scope of the audit has been materially restricted or GAAP was not followed in preparing financial statements.
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Qualified
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The auditor concludes that the financial statements are not fairly presented, he is unable to form an opinion as to whether the financial statements are fairly presented, or he is not independent.
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Adverse or Disclaimer
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The financial statements are not presented fairly.
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Adverse
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Auditor is unable to form an opinion as to whether the financial statements are fairly presented, or he is not independent.
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Disclaimer
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Requires the auditor of a public company to attest to managements report on the effectiveness of internal control over financial reporting.
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Section 404 of the Sarbanes--Oxley Act
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Requires the audit of internal control to be integrated with the audit of the financial statements.
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PCAOB Auditing Standard 5
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Most important causes of the addition of an explanatory paragraph:
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1. lack of consistent application of GAAP 2. Substantial doubt about going concern 3. Auditor agree with a departure from promulgated principles 4. emphasis of a matter 5. reports involving other auditors
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Only reports involving the use of other auditors uses a _____.
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Modified Wording Report
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Changes that affect consistency and need an explanatory paragraph:
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1. Changes in accounting principles such as FIFO or LIFO 2. Changes in reporting entities such as inclusion of an additional company 3. Corrections of errors involving principles
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Changes that affect Comparability and do NOT need an explanatory paragraph:
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1. Changes in an estimate 2. Error corrections not involving principles 3. Variations in format 4. changes because of substantially different transactions or events
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Existence of one or more causes uncertainty of going concern:
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1. reoccurring operating losses or working capital 2. inability to pay obligations 3. loss of major customers 4. legal proceedings
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When there is substantial doubt about the entities ability to continue as going concern, _____ is required.
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unqualified opinion with an explanatory paragraph.
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____ states that in unusual situations, a departure from GAAP may not require a qualified, or adverse opinion.
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Rule 203 of the AICPA Code of Professional Conduct
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Auditors who rely on other auditors to perform part of an audit have three alternatives:
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1. Make No reference in the Audit Report 2. Make Reference in the Report (Modified Wording Report) 3. Qualify the Opinion
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Departures from an Unqualified Opinion:
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1. Scope imitation 2. GAAP departure 3. Auditor not independent
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User's decisions are unlikely to be affected
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Unqualified Opinion, Immaterial
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Users' decisions are likely to be affected
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Qualified Opinion, Material
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Users' decisions are likely to be SIGNIFICANTLY affected
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Highly material, Disclaimer, Adverse
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The extent to which the exception affects different parts of the financial statements is referred to as:
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pervasiveness
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If the auditor is determined to lack of independence under the rules of the Code of Professional Conduct a _____ must be issued.
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Disclaimer
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When a client has failed to follow GAAP, the audit report will be:
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unqualified, qualified opinion only, or adverse depending on the materiality.
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When there is a scope limitation the audit report will be:
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unqualified, qualified scope and opinion, or disclaimer depending on materiality.
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Two major categories of scope:
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1. those caused by a client 2. those caused by conditions beyond the control of either the client or the auditor
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The client's unwillingness to include a statement of cash flows is specifically address in _____.
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AU 508
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Audit report on the financial statements and the effectiveness of internal control over financial reporting required for public companies under section 404 of Sarbanes--Oxley Act
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Combined report on financial statements and internal control over financial reporting
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Audit report on the effectiveness of internal control over financial reporting for public companies under Section 404 of SOX that cross-references the separate audit report ont he financial statements
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Separate report on internal control over financial reporting
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