AUD 1
What are the steps to the audit process?
1. Engagement acceptance 2. Assess risk and plan response 3. Perform procedures and obtain evidence 4. Form conclusions 5. Reporting
What is the GAAS hierarchy from most to least authoritative?
1. SAS (nonissuers) and PCAOB AS (issuers) 2. Interpretive publications 3. Other auditing publications
What aspects of critical audit matters must be identified? (IPAD)
1. description of the Principal considerations that led the auditor to determine that the matter was a CAM 2. description of how the CAM was Addressed in the audit 3. and reference to the relevant FS accounts or Disclosures
What does "should" mean?
A presumptively mandatory requirement
Which standard setting body issues the Statements on Standards for Attestation Engagements (SSAE)?
AICPA
Which standard setting body issues Statements on Standards for Accounting and Review Services (SSARS)?
AICPA Accounting and Review Services Committee
What standard setting body issues Statements on Auditing Standards (SAS)?
AICPA Auditing Standards Board
If FS are materially and pervasively misstated, what opinion should be issued?
Adverse opinion
Where does the explanatory paragraph go in the auditor's report?
After the opinion paragraph when added to an unqualified report
What does "must" or "is required" mean?
An unconditional requirement
Who or what is the Statements on Standards for Attestation Engagements for?
Attestation engagements (examination, review, or agreed-upon procedures)
What does AS stand for?
Auditing Standards
What is the result of the PY FS not being audited, while the CY FS are audited?
Auditor faces scope limitation and may be unable to issue an opinion on the statements of income, RE, and CF
Where is GAAS mentioned within the auditor's report?
Auditor's responsibility paragraph
Where are PCAOB AS mentioned within the auditor's report?
Basis for Opinion section
What happens to the auditor's report if one CPA refuses to take responsibility for another CPA's work?
Change opinion section
If an updated opinion is issued that differs from the previous opinion, the auditors should disclose the reason(s) in an OM or EOM or explanatory paragraph disclosing what? (DORCS)
Date of auditor's previous report Opinion type previously issued Reasons for prior opinion Changes that have occurred Statement that opinion is different
If the inability to obtain sufficient appropriate audit evidence is material and pervasive, what audit opinion should be issued?
Disclaimer of opnion
An explanatory paragraph does or does not affect the auditor's opinion?
Does not
When an auditor concurs with a change in accounting principle, what type of paragraph should be added?
EOM
Where is change in audit opinion included?
EOM or OM paragraphs
What type of paragraph should be added if the opinion on the PY FS is changed when presented in comparative form?
EOM paragraph
Where is going concern discussion included?
EOM paragraph
Where is material justified change in accounting principle discussion included?
EOM paragraph
Where is material misstatement in prior FS that is corrected included?
EOM paragraph
Where is special purpose framework discussion included?
EOM paragraph
What does "may," "might," and "could" mean?
Explanatory material, not a requirment
How often must the auditor of an issuer file a form AP?
For each audit report issued
What does GAGAS stand for?
Generally Accepted Government Auditing Standards
Who or what is GAGAS for?
Government
What standard setting body issues Generally Accepted Government Auditing Standards (GAGAS)?
Governmental Accountability Office
Where should an OM be included in the auditor's report?
Immediately after the opinion paragraph and after any EOM paragraph
What does RSI refer to and what is the correct treatment of it by the auditor?
Information required by another major standard setting body that is not GAAP; limited procedures must be applied
Who or what is the PCAOB AS for?
Issuers
Where is GAAP mentioned within the auditor's report?
Management's responsibility or opinion paragraphs
What happens to the auditor's report if one CPA takes responsibility for another CPA's work?
No changes are made
Who or what is the Statements on Auditing Standards for?
Non-issuers
If the component auditor isn't independent or the group engagement team has serious concerns, the group engagement team should do what?
Not use the work of the component auditor or make reference to the component auditor in the auditor's report
Where is a report on compliance included in auditor's report included?
OM paragraph
Where is comparative FS where the CY is audited and the prior period is not audited included?
OM paragraph
Where is discussion concerning prior FS audited by prior auditor and prior auditor's report not being presented included?
OM paragraph
Where is material inconsistency in other info included?
OM paragraph
Where is reference to RSI included?
OM paragraph
Where is report on supplementary info within auditor's report included?
OM paragraph
Where is restricted use of report included?
OM paragraph
What is the date used in reissuing the predecessor auditor's report?
Original date if unrevised Dual date if revised
If the inability to obtain sufficient appropriate audit evidence is material, but not pervasive, what audit opinion should be issued?
Qualified
If FS are materially misstated, but not pervasively misstated, what opinion should be issued?
Qualified opinion
If there is a material misstatement related to an uncertainty, a ____ or ____ opinion is issued.
Qualified/adverse
If there is insufficient evidence related to an uncertainty, a _____ opinion is issued.
Qualified/adverse
If a company issues FS that purport to present financial position and results of operations, but omits the related SOCF, the auditor will issue a ______ opinion.
Qualified/modified
What opinion should the auditor express if the auditor believes that the FS need to be revised to reflect a subsequent event, but management doesn't make the revision?
Qualified/modified or adverse
What is the difference between recognized and non-recognized subsequent events?
Recognized: occurring as of BS date Non-recognized: has not occurred as of the BS date, but must be disclosed in notes
Which procedures should be performed during the subsequent period?
Review post BS transactions for proper cut-off and to evaluate YE balances Obtain rep letter from management regarding whether any events occurred during the subsequent period that requires adjustments to or disclosures in the FS Inquire of client's legal counsel concerning litigation, claims, and assertions Review the minutes of stockholders, directors, and other committee meetings during the subsequent period Examine the latest available interim FS and compare them with the FS under audit
What does SAS stand for?
Statements on Auditing Standards
What does SSARS stand for?
Statements on Standards for Accounting and Review Services
What does SSAE stand for?
Statements on Standards for Attestation Engagements
When must the auditor of an issuer file Form AP with the PCAOB?
The 35th day after the audit report is first filed in a document with the SEC or within 10 days if the audit report is included in a registration statement
When is an EOM paragraph required? (GAASP)
The auditor concludes there is no substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time To describe a justified change in accounting principle that has a material effect on the entity's FS Subsequently discovered facts lead to a change in audit opinion (or OM) FS are prepared in accordance with an applicable special purpose framework, other than regulatory basis FS intended for general use
Who or what is the Statements on Standards for Accounting and Review Services for?
The preparation, compilation, and reviews of historical FS and preparation or compilation of pro forma financial information and forecasts for non-issuers
If there is no material misstatement and sufficient evidence regarding an uncertainty, a ______ opinion is presented.
Unmodified
If the inability to obtain sufficient appropriate audit evidence is immaterial, what audit opinion should be issued?
Unmodified/qualified opinion
When the auditor expressed an adverse opinion or disclaimer of opinion on the complete set of financial statements, the auditor's report should not also include a(n) __________ opinion on a single FS or one or more specific elements, accounts, or items of a FS.
Unmodified/unqualified
If FS are immaterially misstated, what opinion should be issued?
Unmodified/unqualified opinion
When FS are false, fraudulent, deceptive, or misleading, and management refuses to correct them, and modification of the CPA's report is not sufficient to correct the item, the CPA should consider
Withdrawing from the engagement
When an EOM paragraph is included in the auditor's report, it should be placed
immediately after the opinion paragraph
OM paragraphs refer to matters
other than those presented or disclosed in the FS that are relevant to the users' understanding of the audit, the auditor's responsibilities, or the auditor's report
EOM paragraph is used when referring to any matter
that is appropriately presented or disclosed in the FS and is of such importance that is fundamental to the user's understanding of the FS
Who must the auditor of an issuer file the Form AP with?
the PCAOB
For comparative FS, the audit report date should be the date of
the most recent audit report
