Audited Financial Statements

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Sarbanes-Oxley Act = SOX
- Services must be preapproved by audit committe
- Second Partner Review
- Severe Penalties- Fraud, destroy records
- Auditors report to and are overseen by the issuer's audit committe
What is a SAS?

Statement on Auditing Standards
Generally Accepted Auditing Standards = GAAS

Thre are three groups of Standards:
- -Fieldwork
- -General
- -Reporting
What are the General Standards?

( T . I . P.)

T - Training

I - Independence ( look and smell independent)

P - Professional Care (perform job professionally)
What are the Standards of Fieldwork?

( P. I. E.)
P - Planning and Supervising
- I - Internal Control, Entity and Environment (sufficient understanding)
- Strong Control = will require less evidence
- Weak Control = will require more evidence
E - Evidence (appropriate evidence)
What are the standards of Reporting?

(A.C.D.O.)
A - Accounting = GAAP (Explicit Statement) MUST STATE

C- Consistency (Implicit Statement) SILENCE IS OKAY
- D- Disclosure (Implicit Statement) SILENCE IS OKAY
- O- Express Opinion (Explicit Statement) MUST STATE
Different Opinions are okay.

Unqualified opinion on financial statement - balance sheet and Qualfied opinion on Income Statement

The auditor may report on one basic financial statement and not the others, as long as access is not limited to information underlying the basic f/s.

One Statement Opinons are okay

A.K.A. Limited Reporting Engagement
Unqualified Opinion = The Auditors Standard Report:

A. Title- Independent must be included

B. Addresse - Company, Stockholders, Board of Directors - NEVER management

C. Introductory Paragraph:
- A statment that the financial statements as identified in the report were audited and

R R - A stmt that f/s are the responsibiity of mgmt and that the auditor's responsibility is to express an opinion.
D. Scope Paragraph

A A - A stmt that the audit was conducted in accordance with US GAAS

P P - Audit was planned and performed to obtain reasonable assurance
- M M - that the financial statements are free from material misstatement
- E E - Audit includes examing evidence on a test basis,
A A - Assessing the accounting principles used and significant estimates

M M- Made by management and

Statement that the audit provides a reasonable basis for an opinion
E. Opinion Paragraph
1. A Statement referring to the financial statements specifically identified in the introductory paragraph
2. Opinion as to the facir presentation of the f/s (ACDO) ; and
3. Stmt Regarding conformitiy with US GAAS (ACDO)

F. Firm Name - printed or singed

G. Report Date- on or after the date on which appropriated audit evidence sufficient to support the opinion has been obtained.
Shows the final date of the auditor's responsiblity

Heading - Independent

Intro - RR

Scope - AA, PP, MM, EE, AA, MM

Opinion - (ACDO) Explicit
What are the types of Opinions?

Unqualfied (Clean) Opinion - No materiality

Qualified Opinion (Except For) - Material GAAP or GAAS Problem

Adverse Opinion - VERY material GAAP Problems

Disclaimer of Opinion - Significant GAAS problems
GAAS = Scope Paragraph

GAAP = Opinion Paragraph
- Qualified "Except For"
- (GAAP) Material
- 1. Non GAAP Change
- 2. Inadequate Disclosure
- 3. Unjustified Departure from GAAP
- 4. Unreasonable Acct Est.
- Adverse
- GAAP - VERY material
- 1. Non GAAP Change
- 2. Inadequate Disclosure
- 3. Unjustified Departure from GAAP
- 4. Unreasonable Acct Est.
- Qualified "except for"
- GAAS - Material
- 1. Uncertainty
- 2. Scope limitation
- Disclaimer
- GAAS - Significant
- 1. Uncertainty
- 2. Scope limitation
- 3. Lack Independentce
- 4. Unaudited

Author

Anonymous

2571

Card Set

Audited Financial Statements

Description

Opinion Reports

Updated

2009-12-09T02:58:29Z

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