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Unqualified Opinion
- Introductory Paragraph: Nature of engagement
- Scope Paragraph: worked perfomed
- Opinion paragraph: provides reasonable assurance
- Signed by auditor
- Date: last day of fieldwork
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Introductory Paragraph
- Financials audited
- Managements responsibility for financials
- Auditors responsibilities to express an opinion
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Scope Paragraph
- Accordance with GAAS
- Obtained reasonable assurance about material mistattements
- Examined evidence
- Assessing the accounting principles
- Evaluated overall financial statement presentation
- Audit provides reasonable basis for opinion
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Opinion Paragraph
- Opinion: The financial statements referred to above present fairly in all material respects
- In conformity with GAAP
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PCAOB Report
- Report of Independent Registered Public Accounting Firm
- Accordance with PCAOB
- Signature of auditor
- listed city and state of auditor office
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Emphasis of a Matter
- Unqualified opinion with standard report
- Additional paragraph after OPINION to emphasize the matter
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Emphasis of Matter Include
- Justifiable departire from GAAP
- Justifiable lack of consistency
- Omission of supplementary info req by FASB, GASB, SEC
- Material inconsistency between unaudited docs and financials
- Uncertainty raising going concerns doubts
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Raising Going Concern Doubts
- Operating losses, negative cash flows, negative trends
- Loan defaults, dividend arrearages, financial difficulty
- Labor difficulties or internal matters
- Legal proceedings, declining industry
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Procedures for Going Concern
ADMITS
- A: Analytical procedures
- D: Debt Compliance
- M: Minutes read
- I: Inquiry of legals council
- T: Third parties financial support arrangements
- S: Subsequent events reviw
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Auditor does not take responsibility
- Modify intro, scope, opinion paragrapghs
- indicate division of responsibility
- Other auditor maybe named if permission is reveived & report is included
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Scope Limitations
- Restrictions on the actions of auditor
- Time constraints
- Lack of evidence
- Unavailability of records
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Types of Scope Limitations
- Unable to confirm A/R
- Unable to obtain audited financial of investee
- Unable to observe inventory
- Unable to obtain letter from attorney
- Inadequate accounting records
- Unwilling to sign management rep letter
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Modify by Scope Limitation
- Material: Qualified opinion
- Able to express opinion on financials take as a whole
- Pervasive: Disclaimer of opinion
- uable to express opinion on financials taken as a whole
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Qualified Opinion due to Scope
- Scope paragrapgh: Except as stated in the following paragrapgh
- Explanatory pargrapgh: added after scope
- Opinion paragrapgh: Except for the possible effects of....
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Departures from GAAP
- Non- Gaap change in accounting principles
- Inadequate disclosures
- Unreasonable accounting estimates
- Unjustifiable
- Material: Qualified opinion
- Pervasive: Adverse opinion
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Qualified/adverse due to Departure from GAAP
- Intro and Scope same
- Explanatory added after scope
- Opinion paragrapgh refers to departure...except for
- Qualified: Limited Assurance
- Adverse: Negates Assurance
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Inconsistency Justified
- Unqualified Opinion
- Explanatory paragrapgh added after Opinion
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Unjustified Inconsistency
- Qualified Opinion
- Explanatory paragragh added after Scope
- Opinion refers to change in accounting principle
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Qualified Opinion due to Inadequate disclosure
- Standard Intro & Scope
- Expanatory paragraph added after Scope describe natire of ommited disclosure
- Opinion refers to Ommited disclosure
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Statement of Cashflow Ommited
- Intro omit cash flow reference
- Standard scope
- Explanatory added after Scope
- Opinion refers to Ommited CF
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Differing Opinion
- Intro & Scope the same if Unqualified
- Explanatory paragraph after Scope will indicate to which period the exception applies
- Opinion paragraph will also indicate exception
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Reissuance of Predecessors report
- Report is still appropriate
- Compare prior periods to those presented
- Obtained updated management rep letter
- If no revision: Original date
- If restated/revised: Dual Dated
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Predecessor report NOT reissued
- Intro paragrapgh modified
- Indicate prior period were audited by another auditor (no name)
- Date of predecessor report
- Type of report
- Substantive reasons for modifications to prior period
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Restrictions on Auditors report
- Contractual Agreements:restricted to parties to contract
- Regulations:restricted to regulatory agency
- Agreed Upon Procedures: parties agreein upon procedures
- Inlcude in last final paragrapgh the restriction
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Compilations
- No assurance
- Does not gather evidence
- Free from obvious error
- No independence required
- See accountants Compilation Report on each page
- Dated as end of compilation
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Reviews
- Limited assurance
- Inquiries & Analitical procedures
- Does not obtain an understanding of Internal Controls
- Obtain a management representation letter
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Review Report
- Perfomed in accordance with SSARS issued by AICPA
- info in financials is presentation of management
- Review consist of Inquiries and Analytical Procedures
- Substantially less than an audit intended to express an opinion
- No opinion is expressed
- Not aware of any material modifications needed to conform with GAAP
- Dated completion of inquiries and AP's
- See Accountants Review Report on each page
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Effects on other information
- Read for Consistency
- Report on Exceptions only
- No effect unless exception
- Explanatory paragraph
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Information Required by FASB or GASB
- Limited review procedures
- Report on exceptions only
- No effect unless ommision or departures
- Explanatory paragrapgh
- State that opinion not affected but entity has not complied
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Information in Auditor submitted document
- Depends on nature of information
- Must report but may disclaim opinion
- No effect other than paragrah to discuss information
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Segment Information
- Evaluate for errors or omisions
- Report on exception only
- Qualified opinion if omissions or departures or scope limitation
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U.S. Entity in Other Country
- Accounting Principles in Another Country
- For use outside US
- Report form of other country
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Special Reports
- Financials prepared under Comprehensive Basis of Accounting Other than GAAP (OCBOA)
- Specefied elements, accounts or items of financials
- Compliance with acpects of contractual agreements or regulatory requirements
- Financial information provided in prescribed forms or schedules
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OCBOA Financials
- Accounting used for Tax purpose (income tax return)
- Accounting required to comply with regulatory agency
- Cash receipts & disbursements - cash basis
- Another set of cirteria having substantial support
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Prospective Financial Statements
- Forecast: What is expected to occur under normal circumstances (General or Limited use)
- Projections: Expected to occur hypothetical assumptions (Limited use exclusively for those negotiating with party)
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Compilation Report Prospective FS
- Prospective statements presented by the responsible party
- In accordance with AICPA
- limited in scope does not provide a basis for an opinion
- Prospective results may not be achieved
- Not responsible for updating the report
- Limitations on the use of statements if is projections**
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Pro-Forma Financials
- Based on Historical Information
- Considered an event or transaction that has not occurred
- Restated to provide info if event/transaction had occured
- Procedures that managements assumptions & presentation are reasonable
- Review: Identify the financials from which historical info is derived
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Government Auditing Standards
- Reasonable assurance of detecting material misttatements
- Direct & Material effect on financials
- Opinion on Financials
- Info regarding the consideration of internal controls
- Info regarding compliance with laws and regualtions
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Internal Control Consideration GAS
- Indicate:
- Scope of testing of controls
- Understanding of IC
- Assesment of control Risk
- Defficiencies in the design of IC
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Compliance with laws & regulations GAS
- Responsibility of Management
- Any materials instances of Fraud & Illegal Acts discovered
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Single Audit Act
- State & local Gov
- Nonprofits receiving Federal Financial Assistance FFA
- Engage auditor to perform Single coordinated audit
- Relates to applicable FFA programs
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Single Audit Act Report
- Opinion on Financial statements
- Compliance with Laws & Regs
- Internal Controls
- General requirements applying to FFA
- Specific requirements of Major Federal Programs
- Specific requirements of Non major programs test
- Report on list of Total Expenditures for each federal award
- Schedule of reportable conditions, material noncompliance, questioned cost, known fraud
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General requirements Financial Federal Assitance
- Drugfree workplace
- Prohibits use of Federal funds for parisian political activities
- Prohibits violations of civil rights
- Minimizing time between receipt&disbursement of funds
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Major Federal Programs
- Identify on basis of:
- Expenditures exceeding certain amounts in realtion to total expenditires of FFA
- Materilality is determined in relation to each program
- Management identifies:
- Funds received directly or inderectly from federal agencies through local, state gov, or nonprofits
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Attestation Engagements General Standards
TIPPY
- T: Training & Proficiency
- I: Independence
- P: Professiocnal care in perfomance
- P: Professional Knowledge of subject area
- Y: Your belief that the assertaion is capable of evaluating against criteria that are suitable and available to users
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Attestation Standards of Fieldwork
P.E
- Planning and supervision
- Evidential matter as a reasonable basis for conclusion
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Attestation Standards of Reporting
- Identify Assertations reported on & character engagement
- Conclusion as to presentation of assertation in conformity with establsihed or stated criteria
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