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Audit AU standards Material Type: Notes; Professor: Tan; Class: Auditing I; Subject: Accounting; University: California State University-East Bay;
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Inadequate disclsire in the f/s as per GAAP involvoing risks or uncertainty = qualified or adversed opinion. Consider materiality when evaluating the adequacy of dislcosure of matters involving risks or uncertainty Mgt estiamte of the effect of the risk or uncertainty is materially misstated = qualified or adverse opinion Mgt change a/c principle = not GAAP, & mgt has not provided reasonable justificaiton for change = qualified but if material adv the auditor should consider possible effect of that change when reporting on the entity's f/s for subsequent years. Adverse Opinion = f/s taken as a whole not presented fairly in conformity with the GAAP. When auditor express and adverse opinion, should disclose in a separate explanatory paragraph before the opinion -reasons, The adverse opinion paragraph should include a direct reference to a separae paragraph that discloses the baise for adverse Dislcaimer opinion = when auditor has not performed an audit sufficient in scope to eanble to form an opinion. Disclaimer cannot be used when there is material departure from GAAP When disclaiming an opinion because of a scope limitation, state in a separate paragraph reason for disclaimer. Auditor should scope of the audit was not sufficient to express an opinion. The audit should NOT identify procedures that were performed. Au disclose any reservation of presenetation with GAAP When disclaimer or adverse NO piecemeal opinions = piecemeal means opinionn on a certain item of f/s because f/s taken as Report on comparative f/s = f/s taken as a whole applies to one or more prior periods that presented on a comparative basis see p833 for example of standard prior year but qualified on current year f/s report of predecessor auditor report to be reissued in a comparative basis of a subsequent period, predecessor auditor should any subsequent event that make prior year report not comparable, and obtain management representation letter. If predecessor auditor report not presented, then successor aduitor should indicate in the introductory paragraph. The audit report should not be dated earlier than the date on which the aduitor has obtained sufficient evidence to support the A subsequent event requiring adjustment of the f/s occurs after the date of audit report but before the issuance of the f/s and th comes to the attention of the aduitor the f/s should be adjusted or the aduitor should qualify the opinion. If adjusted without dis event , audit report dated as original. The auditor has two methods available for dating the report when a subsequent event disclosed in the f/s occurs after the origi the aduitors report but beofre the issuances of the related f/s. (1) dual dating : dated xxx except for note xxxx as to which the d (2) date the report as to a latter date. Dual dating = audit responsibility of subsequent event is limited to that specified mention Later date then full responsibilty of subsequent event extends to the date of the report. If the princial aduitor is able to satisfy himself as to the independence and professional reputation of the other auditor and take satisfy himself the aduit performed by the others auditor, the principal aduitor may express opinion without reference to the the of the other auditor. Unable to review the other auditor's work or if the compoenent of the f/s audit by other auditor is material = make reference in the audit of the other auditor. = indicate clearly in both the introductory, scope and opinion paragraph, the dividsion of respons between the portion of the f/s covered by his own audit and that by others. The report should disclose the magnitude of the po f/s audited by the other. Name of the other auditor disclosed with other auditors consent and both principal & other audit report if name of other mentioned. see report of different responsibility from AU and textbook. GAAP applies to companies whose accounting practices are prescribed by government regulatory authority Other information = in addition to the audited f/s and the audit report. Auditor's responsibility with respect to informaiton in a document does not extend beyond the f/s identified in his report, and th auditor has no obligation to perform any procedures to corroborate other information contained in a document. Auditor should read the information to see if any material inconsistent. If material inconsistent 1) revise f/s and report, 2) need f/s or report but request client to revise other information. 3) if other information not revised, explanatory paragraph , wihtolding audit report in the doucment and withdrawn from engagement
Requires supplementary information as required by FASB GASB FAASB The identify the supplementary information on page … is not a required part of the basica f/s and we did not audit or apply limi to such information and do not express any asusrance on such information. Auditor has no responsibility to aduit information outside the basica f/s in accordance with GAAP But, required by FASB, GASB, FAASB information becomes essential part of the financial reporting of the entities. The auditor apply limited procedures to required supplementary informaiton and should report deficiencies or ommission of such informaito Audit procedures: 1) inquire of mgt about methods of preparing the information, 2) compare the informaiton consistency with f/