AICPA_Auditing Study Notes

Chapter1-AuditReportreviewsimulation2and61.adverse-onlyGAAPproblemdisclaimer-onlyGAASproblem/independenceandunauditedmustbedisclaimer2.uncertainty-mostlyaboutimpairment,intangible,lawsuit,andwarrantsmanagement-recordordisclosureauditor-unqualified,qualified(GAAS)ordisclaimerduetoalimitationinscope,thelastchoiceistoqualified(GAAP)oradverseduetoadisagreementwithmanagement3.unqualified-explainaftertheopinionqualified,adverse,anddisclaimer-explainbeforetheopinionnote*-justifiedGAAPdepartureoremphasisofamattercanbeplacedeitherbeforeoraftertheopinion4.modifiedunqualifiedincludes:●divisionofresponsibilities-decidewhetherisprincipalauditorandwhethertomakereferenceofotherauditors(namecannotbepresentedunlesspermittedandneedtomentioninallthreeparaandthenumberor%needtobepresented;IFRSdoesn’tallowfordivisionofresponsibilities)-----ifnotmakereference,auditormustobtain,review,andretainevidenceandalsoifthequalifiedopinionisnotmaterial,theauditorneedstomakereferenceeventhoughthewholeF/Sisunqualified.●justifiedanything●emphasisofamatter-reportparaisNOTrequired,canbeafterorbeforeopinioninGAAPbutisafteropinioninIFRS●goingconcern-theconcernperiodisatleastoneyearaftertheauditdate(ISA)ornotexceedoneyearfromauditdate(GAAP);ISAalsorequiresauditortoevaluatemanagement’sassessmentaboutgoingconcernwhileGAAPisnotrequired-GAAPevaluatemanagement'splans.auditoralsocanissuedisclaimerasaresultofgoingconcernifGAAPisgood.HoweverifthereisbadGAAPduetogoingconcern,qualified(GAAP)oradversecanbeused.●SECS-Komitted●problemaboutsupplementaryinformationrequiredbyGAAP●documentismateriallyinconsistentwithinformationonF/S5.qualifiedopinion(exceptfor)----ALLpresentedbeforeopiniona.nonGAAPchange-beforeopinionandstateeachyearthereafterb.inadequatedisclosurec.specialsituationsuchasnocashflowstatement-onlymentioninmiddleparaandopiniond.unjustifieddeparturefromGAAPe.unreasonableestimates6.Adverse-onlyduetoGAAPproblem-ALLpresentedbeforeopinionunlikeunqualifiedandqualifiedreport,Inthereport,inconformitywithisnowbeforethefinancialpositionofcompanyXYZ,alsotheword“inallmaterialrespect”hasbeenomitted.7.qualifiedopinionduetoGAAS-scopeanduncertainty●whenalternativeauditproceduresisOK,thencanreportedunqualifiedanddonotneedmention●qualifiedduetoGAAS-reasonisbeforeopinionandneedtostateinbothscopeandopinion;scopeandopinionshouldBOTHstate“exceptforstated/suchadjustment,”cannotsay“exceptforalimitinscope.”8.disclaimer-scope,uncertainty,independence,andunaudited●noscopeparaisused●GAAPproblemfoundshouldalsobepresented●noauditwork=noopinion,evenbadopinioncannotbepresented9.changeindepreciationestimateisunqualifiedwithaddingexplainpara10.addresseeshouldbewhoengagewiththeCPA11.allowedaccountingchange-ifmaterialandOK,unqualifiedwithaddedpara,ifnot-qualifiedopinion.Ifit’sOKimmaterialchange,noreferisneeded.12.ifuncertaintyisunqualified,noreferenceisneeded.P1813.justifiedaccountingdoesnotneedtostatewhythechangeisneededintheauditreport,rather,thereasonshouldbereferredtothenotes14.referenceofotherauditorisnotanaddedpara,instead,youmentiontheotherauditorinallthreenormalparas15.thechangeagreedbytheauditordoesnotneedtobestateddirectly16.footnotedisclosuresisnotrequiredforinmaterialGAAPdepartures17.situationforstandardunqualified-noreference:uncertainty-CPAagreedandisproperlyreportedanddisclosed---notethatgoingconcernneedsmodifiedunqualifiedeventhoughit’sproperlydisclosedallowedaccountingchangewithismaterial-addedparaaftertheopinion.P27ReportsoncomparativeF/S1.lastyearOK,thisyearisqualifiedsameintro,samescope,addedexplainpara,exceptforthisyear,andallother“fairly”and“conformitywithGAAP.”2.lastyearisdisclaimer,thisyearisunqualified---likeascopelimitationindicateinbothscopeandopinionpara(e.g.,onlycashflowthisyearisOK),addedexplainbeforeopinion3.updating(changing)lastyearopinion-iftheyrestatetoconformitywithGAAPthisyear,thenanunqualifiedopinionshouldbeissued-addedexplainbeforeopinion-dateandopinionoflastreport,whythisopinion,whatcompanyhasmadethechange,andouropinionisdifferentnow4.ifpriorCPAneedtoreissuereport,priorCAPshould-1,readthecurrentf/s2,compare3,obtainaletterfromcurrentCPA4,obtainaletterfrommanagementifnorevised-usetheoriginalreportdate;ifrevised-usedualdate5.whencurrentcpadoesnotpresentlastauditreport,intheintro,thecurrentcpashould:-statethatothercpaauditedlastyear-dateandtheiropinion-ifthereisareasonotherthananunqualifiedreportEventsafteryearend1.Onorbeforetheb/sdate-f/sadjustmentaftertheb/sdatebutbeforetheendoftheaudit-footnoteonly2.auditorisactivelyresponsibleforthedateoff/stothedateoftheauditreport-subsequentperiod-likeDec31toFeb10/dateoftheauditreport3.ifadjustmentismadeaftertheoriginalauditreportformistakeinsubsequentperiod,notaftertheauditreportdate-Duedaterequired(howeveratthistimeauditorhasnoactiveresponsibility),orusenewdateindicatingtheresponsibilitiesofallsubsequentevents4.wemissedsomethingafterthereportisissued-clientreissue,disclose,orstatethatthef/scannotbereliedon---ifclientrefusestodoso,disassociate,reporttoBOD,alertagenciesandrelyingparties.*notethatauditorhasnoobli