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Six elements of quality control (HELPME) pertaining to accounting firms
- Human resources
- Engagement
- Leadership responsibilities
- Performance of the engagement
- Monitoring
- Ethical requirements
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5 areas of special reports
- OCBOA
- specified elements/accounts
- f/s compliance with regulatory or contractual requirements
- financial presentation compliance with regulatory or contractual requirements
- financial info that requires a specific auditor's report
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Reporting on OCBOA
- modify intro and opinion
- explanatory before opinion
- for regulatory compliance restrict use
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piecemeal opinions
- NOT allowed if accompanying adverse/disclaimer on major item
- IS allowed if not accompanying adverse/disclaimer on minor item
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report on specific element/account etc.
- audit required if element is pervasive
- for contractual compliance restrict use
- no explanatory
- modify intro, scope and opinion
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Compliance report on audited f/s
- auditor must have audited f/s
- only give negative assurance
- no report if adverse or disclaimer was given
- issued in separate report with restriction paragraph
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2 levels of unaudited f/s services
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compilation
- attest, but no assurance
- present info in form of f/s
- no audit/review procedures or opinion
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review
- attest and assurance
- limited/negative assurance on unaudited f/s
- no material modifications needed
- inquiry and analytical procedures
- NO i/c understanding or control risk assessment
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SSARS applicability
- compilation and review of nonissuers
- specific elements reports
- pro forma financial info
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compilation engagement letter
- presumptively mandatory
- create understanding with management
- objectives of engagement
- responsibilities of management and accountant
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compilation of f/s with omitted disclosures allowed
- indicate omission with extra paragraph
- f/s otherwise conform with GAAP
- deception was not intended
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compilation of personal financial statements
- governed by SSARS
- SSARS not required if f/s not used for credit
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Items not required for review
- Test internal controls
- Perform audit tests
- Assess fraud risk
- Communicate with predecessor accountant
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Analytical procedures
- develop expectation
- use comparisons and ratios
- f/s or individual acct level
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If client departs from financial framework (comp or review)
- add separate disclosure paragraph to end of accountants report
- if disclosure isn't enough, withdraw
- not opinion is given
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Considerations before changing an engagement
- reason for request
- effort required to complete it
- estimated additional cost
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comparative f/s report when CY is reviewed and PY is compiled (service upgrade)
update PY report and issue as last paragraph of CY report
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comparative f/s report when CY is compiled and PY is reviewed (service downgrade)
- add paragraph to CY compilation report
- OR
- reissue PY review report
- in either case say that no review prodecures were done after date of PY report
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predecessor's PY report reissued unchanged OLD accountant should
- read CY stmts and report
- compare PY stmts with CY stmts
- obtain letter from NEW accountant
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predecessor's report not reissued NEW accountant should
- reference PY report in CY report with additional paragraph
- OR
- do the work themselves
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from audited to unaudited
- add additional paragraph
- say no audit procedures done since date of PY report
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from unaudited to audited
- add additional paragraph
- say PY service was less in scope
- disclaim public review
- describe non public services
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review of public interim f/s
- same procedures as private review
- U LIAR CPA
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accountants responsibility for public review report
- use SAS or PCAOB standards
- comply with 3 general standards always, fieldwork and reporting if relevant
- no opinion or i/c assurance
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management representation is required
- completeness of info provided
- responsibility for controls
- disclose significant deficienies of i/c
- knowledge of fraud or suspected fraud
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Review report on interim financials
- clearly marked unaudited
- state info is mngt responsibility
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departure from financial framework
- add explanatory paragraph before concluding paragraph
- modify concluding paragraph
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If report on interim financials in a registration statement
statement that report is not part of registration statement
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trust services
- addresses risks and opportunities related to IT
- WebTrust engagement=assurance related to e-commerce
- SysTrust engagement=assurance related to reliablity of specific electronic system
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Attestation different from GAAS standards
- no reference to f/s
- no reference to GAAP
- assurance level below GAAS audit
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11 attestation standards
- TIPPY PA SSER
- 5 general
- 2 fieldwork (no i/c assessment)
- 4 reporting
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5 general attestation standards
- Training and proficiency
- Independence
- Professional care in planning and performance
- Professional knowledge of subject matter
- Your belief that subject can be evaluated appropriately
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2 fieldwork attestation standards
- Planning and supervision
- Appropriate, sufficient evidence
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4 reporting attestation standards
- Subject matter of assertion is identified
- Significant reservations are disclosed
- Express conclusions
- Restrict use if needed
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3 attestation conclusions
- Examination=+ opinion, high assurance, procedures include search, verification, inquiry and analysis
- Review=-assurance, moderate level, inquiry and analytical procedures
- Agreed-upon procedures=NO assurance, list procedures and findings
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prospective financial statements
- expected financial position and results of operations
- review is not allowed
- forecasts
- projections
- NOT pro forma
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financial forcast
- expected results
- based on expected conditions and actions
- report can be general or limited use
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financial projection
- what if...results
- based on hypothetical assumptions
- report must be restricted
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compilation of prospective f/s
- entity MUST disclose summary of significant assumptions
- report states no assurances and results may not happen
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examination of prospective f/s
- express an opinion (conformity with AICPA guidelines and assumptions are reasonable)
- indepedence is required
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