Transcript Unqualified Opinion

AU-C Sections
700, 705, 706 & 708
Audit Reports
1
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheet as of December 31, 20X1, and the
related statements of income, changes in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial
statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally
accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control.2 Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ABC Company as of
December 31, 20X1, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally
accepted in the United States of America.
[Auditor's signature, city and state, date of report]
Phases of an Audit
Phase I
p. 67
Plan & design an audit approach
Understand the Entity, Environment, Internal Controls
Phase II
Tests of Controls
Substantive Tests of Transactions
Phase III
Analytical Procedures – substantive
Tests of Details of Balances
Phase IV
Complete the audit
Issue Audit Report
3
Mackenzie
What is the objective of AU-C 700?
4
AU-C 700 Forming an Opinion and Reporting on Financial
Statements
.10 The objectives of the auditor are to
a. form an opinion on the financial statements based on an
evaluation of the audit evidence obtained, including evidence obtained about comparative
financial statements or comparative financial information, and
b. express clearly that opinion on the financial statements
through a written report that also describes the basis for that
opinion.
Melissa
What are the four sections of the
independent auditors’ standard
unmodified report ?
6
sections in the standard report
•
•
•
•
Report on the financial statements
Management’s responsibility
Auditor’s responsibility
Opnion
7
8
9
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheet as of December 31, 20X1, and the
related statements of income, changes in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial
statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally
accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control.2 Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ABC Company as of
December 31, 20X1, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally
accepted in the United States of America.
[Auditor's signature, city and state, date of report]
Julia
State the first sentence of each of the
four sections of the auditor’s report.
11
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which
comprise the
balance sheet as of December 31, 20X1, and the related statements of income, changes in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these
financial statements in accordance with accounting principles generally accepted
in the United States of America; this includes the design, implementation, and
maintenance of internal control relevant to the preparation and fair presentation of
financial statements that are free from material misstatement, whether due to
fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control.2 Accordingly, we express no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of ABC Company as of December 31,
20X1, and the results of its operations and its cash flows for the year then ended
in accordance with accounting principles generally accepted in the United States
of America.
Peter
What audit report do we issue if
everything is OK ?
the financial statements are fairly presented
there are no material misstatements
13
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which
comprise the
balance sheet as of December 31, 20X1, and the related statements of income, changes in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in the United States
of America; this includes the design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control.2 Accordingly, we express no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of ABC Company as of December 31,
20X1, and the results of its operations and its cash flows for the year then ended
in accordance with accounting principles generally accepted in the United States
of America.
[Auditor's signature, city and state, date of report]
Std Reports are Unmodified
Opinions
Unmodified Opinion
We may add an Emphasis or
Other Material paragraph
GAAS problem
Qualified Opinion
or
We did not comply with
auditing standards (GAAS)
Disclaim an Opinion
GAAP problem
Qualified Opinion
NOT fairly presented
f/s do not conform to
GAAP
or
Adverse Opinion
15
Levi
the company refuses to adopt ASC 605-25-25
Accounting Standards Codification 605-25-25
Revenue Recognition for Multiple-Element
Arrangements
They argue that the amounts are immaterial
very immaterial
what opinion will you issue
16
Unmodified
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheet as of December 31, 20X1, and the
related statements of income, changes in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial
statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally
accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ABC Company as of
December 31, 20X1, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally
accepted in the United States of America.
[Auditor's signature, city and state, date of report]
Pei
What reporting issue does AU-C 708
address?
18
AU-C 708 Consistency of Financial Statements
.03 The objectives of the auditor are to
a. Evaluate the consistency of the financial statements for
the periods presented and
b. Communicate appropriately in the auditor’s report when
the comparability of financial statements between periods
has been materially affected by a change in accounting
principle or by adjustments to correct a material
misstatement in previously issued financial statements.
David
Where in the independent auditor’s
report do we address issues
regarding consistency (AU-C708)?
Communicate appropriately in the auditor’s report
when the comparability of financial statements
between periods has been materially affected by a
change in accounting principle or by adjustments to
correct a material misstatement in previously issued
financial statements
20
Emphasis-of-Matter Paragraph Because There Is Inconsistent Application of Accounting Principles
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheet as of December 31, 20X1, and the related statements of income, changes
in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the
United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence that we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects the financial position of ABC Company as of December 31, 20X1, and the results of its
operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in Note X to the financial statements, the entity has elected to change its method of accounting for [describe accounting method change] in [insert
year(s) of financial statements that reflect the accounting method change]. Our opinion is not modified with respect to this matter.
[Auditor's signature]
Priya
the financial statements are fairly
presented
BUT the company will
probably go bankrupt
the statements clearly indicate the
company is in very serious financial
trouble but…..
22
Emphasis-of-Matter Paragraph Because of going concern
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheet as of December 31, 20X1, and the related statements of income, changes
in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the
United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence that we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects the financial position of ABC Company as of December 31, 20X1, and the results of its
operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
If ABC Company continues to suffer recurring losses from operations and continues to have
a net capital deficiency, there may be substantial doubt about its ability to continue as a
going concern.
[Auditor's signature]
Algernon
the client faces a huge environmental liability
(very material)
they will probably incur a loss
they cannot estimate the amount of the loss
Although they have appropriately disclosed this
contingent liability in a footnote, you wish to
emphasize the matter
24
Emphasis-of-Matter Paragraph Because There Is Uncertainty Relating to a Pending Unusually Important Litigation
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheet as of December 31, 20X1, and the related statements of income, changes
in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the
United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence that we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects the financial position of ABC Company as of December 31, 20X1, and the results of its
operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in Note X to the financial statements, the entity has elected to change its method of accounting for [describe accounting method change] in [insert
year(s) of financial statements that reflect the accounting method change]. Our opinion is not modified with respect to this matter.
[Auditor's signature]
Cody
the company reports financial instruments using
ASU 2013-11 for 2014, the current year
( Accounting Standards Update 2013-11 relates to Unrecognized Tax
Benefits when a Net Operating Loss Carryforward, a Similar Tax Loss,
or a Tax Credit Carryfoward Exists)
different accounting principles are used in
2014 relative to 2013 because companies
were not required to implement ASU 2013-11
until 2014
26
Emphasis-of-Matter Paragraph Because There Is Inconsistent Application of Accounting Principles
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheet as of December 31, 20X1, and the related statements of income, changes
in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the
United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence that we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects the financial position of ABC Company as of December 31, 20X1, and the results of its
operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in Note X to the financial statements, the entity has elected to change its method of accounting for [describe accounting method change] in [insert
year(s) of financial statements that reflect the accounting method change]. Our opinion is not modified with respect to this matter.
[Auditor's signature]
Emily
what does it imply about GAAP when no
changes have been made to the first
four paragraphs of the report
but there is a fifth paragraph following
the opinion paragraph
29
unmodified
std
Auditing
Accounting
Qual
Disc
Qual
Adv
We audited
std
std
std
modify
std
std
Mgmt’s Resp
std
std
std
std
std
std
Auditor Resp
Std
std
std*
modify
std*
std*
Basis for Opinion
no
no
yes
yes
yes
yes
Fairly Present
conform w/ GAAP
std
std
except for
because of
except for
because of
Emphasis para
Other Matters
Consistency
Emphasis
Go Concern
30
Rule 203 departure
• Justified Departures from GAAP
• Rule 203: Rules of Conduct
in the Code of Professional Conduct
31
Std Reports are Unmodified
Opinions
Unmodified Opinion
We may add an Emphasis or
Other Material paragraph
GAAS problem
Qualified Opinion
or
We did not comply with
auditing standards (GAAS)
Disclaim an Opinion
GAAP problem
Qualified Opinion
NOT fairly presented
f/s do not conform to
GAAP
or
Adverse Opinion
32
Departure from GAAP
misstatement
33
Jeffrey
What opinions do we choose from if
the opinion paragraph isn’t true
\\
there is a GAAP problem
34
• Qualified
• Adverse
35
Bart
the company refuses to adopt ASC 605-25-25
Accounting Standards Codification 605-25-25
Revenue Recognition for Multiple-Element
Arrangements
They argue that the amounts are immaterial
very immaterial
what opinion will you issue
36
Unmodified
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheet as of December 31, 20X1, and the
related statements of income, changes in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial
statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally
accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ABC Company as of
December 31, 20X1, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally
accepted in the United States of America.
[Auditor's signature, city and state, date of report]
Jo Ellen
the client forgot to depreciate their building
they refuse to correct the error
although material, you can accurately
estimate the effects of this
misstatement
38
Unmodified
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheet as of December 31, 20X1, and the
related statements of income, changes in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial
statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally
accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ABC Company as of
December 31, 20X1, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally
accepted in the United States of America.
Qualified Opinion Due to a Material Misstatement
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheets as of December 31, 20X1 and 20X0, and the related statements of
income, changes in stockholders' equity, and cash flows for the years then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the
United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our qualified audit opinion.
Basis for Qualified Opinion
The Company has stated inventories at cost in the accompanying balance sheets. Accounting principles generally accepted in the United States of America require
inventories to be stated at the lower of cost or market. If the Company stated inventories at the lower of cost or market, a write down of $XXX and $XXX would have been required as of
December 31, 20X1 and 20X0, respectively. Accordingly, cost of sales would have been increased by $XXX and $XXX, and net income, income taxes, and stockholders' equity would
have been reduced by $XXX, $XXX, and $XXX, and $XXX, $XXX, and $XXX, as of and for the years ended December 31, 20X1 and 20X0, respectively.
Qualified Opinion
except for the effects of the matter described in the Basis for Qualified Opinion
paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of ABC Company as
In our opinion,
of December 31, 20X1 and 20X0, and the results of its operations and its cash flows for the years then ended in accordance with accounting
principles generally accepted in the United States of America.
Jordan
after you tell the client what opinion you
are going to issue and they read your
explanatory paragraph
they will most likely agree to correct
the financial statements
what opinion will you issue if they
correct their financial statements
41
Joseph
the client does not have the expertise to
implement
715-30-25 Defined Benefit Plan Recognition
you can’t estimate the amounts
it is too complicated
but you are sure it is very material
42
Unmodified
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheet as of December 31, 20X1, and the
related statements of income, changes in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial
statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally
accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ABC Company as of
December 31, 20X1, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally
accepted in the United States of America.
Adverse Opinion Due to a Material Misstatement
Independent Auditor’s Report
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of ABC Company and its subsidiaries, which comprise the consolidated balance sheet as of December 31, 20X1,
and the related consolidated statements of income, changes in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the
United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the
auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our adverse audit opinion.
Basis for Adverse Opinion
As described in Note X, the Company has not consolidated the financial statements of subsidiary XYZ Company that it acquired during 20X1 because it has not yet been able to
ascertain the fair values of certain of the subsidiary's material assets and liabilities at the acquisition date. This investment is therefore accounted for on a cost basis by the Company.
Under accounting principles generally accepted in the United States of America, the subsidiary should have been consolidated because it is controlled by the Company. Had XYZ
Company been consolidated, many elements in the accompanying consolidated financial statements would have been materially affected. The effects on the consolidated financial
statements of the failure to consolidate have not been determined.
Adverse Opinion
because of the significance of the matter discussed in the Basis for Adverse Opinion paragraph, the consolidated financial
statements referred to above do not present fairly the financial position of ABC Company and its subsidiaries as of December 31, 20X1, or the results of their
In our opinion,
operations or their cash flows for the year then ended.
Juancarlos
What are the elements of the
financial statements?
45
Meredith
Where in the independent auditor’s
report do we address inadequate
disclosure?
When the auditor determines that informative
disclosures are not reasonably adequate, the auditor
must so state in the auditor’s report
46
Garren
The audit client supplies contractors. It
deals primarily with home builders in
South Florida. ASC 825-10-50 requires
footnote disclosures when credit risk is
concentrated in a certain geographic
area or among a certain class of
customer.
The company fails to disclose these
credit risks.
47
Unmodified
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheet as of December 31, 20X1, and the
related statements of income, changes in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial
statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally
accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ABC Company as of
December 31, 20X1, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally
accepted in the United States of America.
Qualified Opinion for Inadequate Disclosure
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheets as of December 31, 20X1 and 20X0, and the related statements of
income, changes in stockholders' equity, and cash flows for the years then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the
United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our qualified audit opinion.
Basis for Qualified Opinion
The Company's financial statements do not disclose [describe the nature of the omitted information that is not practicable to present in the auditor's report]. In our opinion, disclosure of
this information is required by accounting principles generally accepted in the United States of America.
Qualified Opinion
except for the omission of the information described in the Basis for Qualified Opinion
paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of ABC Company as of December 31, 20X1 and
In our opinion,
20X0, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Std Reports are Unmodified
Opinions
Unmodified Opinion
We may add an Emphasis or
Other Material paragraph
GAAS problem
Qualified Opinion
or
We did not comply with
auditing standards (GAAS)
Disclaim an Opinion
GAAP problem
Qualified Opinion
NOT fairly presented
f/s do not conform to
GAAP
or
Adverse Opinion
50
Jeanette
Briefly
What does AU-C 315 discuss?
What does AU-C 500 discuss?
51
Objectives
AU-C 315 Understanding the Entity and Its Environment and Assessing the
Risk of Material Misstatement
AU-C 330 Performing Audit Procedures in Response to Assessed Risks and
Evaluating the audit Evidence Obtained
AU-C 500 Audit Evidence
Failure to comply with GAAS
scope limitation
53
John
Which audit reports do we choose from if
there is a scope limitation
insufficient evidence
there is a GAAS problem
54
• Qualified
• Disclaimer
55
you are unable to perform all the auditing
procedures that you would like …. because
you accepted the engagement late you can
not observe beginning inventory
the client had an outside service organization
perform a physical inventory on 1/1/14
the bank that requested the audit is aware of
the situation and is comfortable with the
situation
56
Mackenzie
What opinion do we issue
there is a scope limitation
57
Unmodified
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheet as of December 31, 20X1, and the
related statements of income, changes in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial
statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally
accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Qualified Opinion Due to the Auditor’s Inability to Obtain Sufficient Appropriate Audit Evidence
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheet as of December 31, 20X1, and the related statements of income, changes
in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the
United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our qualified audit opinion.
Basis for Qualified Opinion
ABC Company's investment in XYZ Company, a foreign affiliate acquired during the year and accounted for under the equity method, is carried at $XXX on the balance sheet at
December 31, 20X1, and ABC Company's share of XYZ Company's net income of $XXX is included inABCCompany's net income for the year then ended.We were unable to obtain
sufficient appropriate audit evidence about the carrying amount of ABC Company's investment in XYZ Company as of December 31, 20X1 and ABC Company's share of XYZ
Company's net income for the year then ended because we were denied access to the financial information, management, and the auditors of XYZ Company. Consequently, we were
unable to determine whether any adjustments to these amounts were necessary.
Qualified Opinion
except for the possible effects of the matter described in the Basis for Qualified
Opinion paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of ABC Company as of
In our opinion,
December 31, 20X1, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of
America.
[Auditor's signature]
Difference between Qualified Opinions
Qualified Opinion
except for the possible effects of the matter
described in the Basis for Qualified Opinion paragraph,
the financial statements referred to above present fairly, in all material respects, the financial
In our opinion,
position of ABC Company as of December 31, 20X1, and the results of its operations and its cash flows for the
year then ended in accordance with accounting principles generally accepted in the United States of America.
Qualified Opinion
except for the effects of the matter described in
the Basis for Qualified Opinion paragraph, the financial statements
referred to above present fairly, in all material respects, the financial position of ABC Company as
In our opinion,
of December 31, 20X1 and 20X0, and the results of its operations and its cash flows for the years then ended in
accordance with accounting principles generally accepted in the United States of America.
Melissa
you are unable to perform all the auditing
procedures that you would like ….
because you accepted the engagement
late you can not observe beginning
inventory …. inventory is very material
the client hasn’t taken a physical inventory
in years
61
Unmodified
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheet as of December 31, 20X1, and the
related statements of income, changes in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial
statements.
Disclaimer of Opinion Due to the Auditor’s Inability to Obtain Sufficient Appropriate Audit Evidence
Independent Auditor’s Report
Report on the Financial Statements
We were engaged to audit the accompanying financial statements of ABC Company, which comprise the balance sheet as of December 31, 20X1, and the
related statements of income, changes in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on conducting the audit in accordance with auditing standards generally accepted in the United States of
Because of the matter described in the Basis for Disclaimer of Opinion paragraph,
however, we were not able to obtain sufficient appropriate audit evidence to provide a basis
for an audit opinion.
America.
Basis for Disclaimer of Opinion
The Company's investment in XYZ Company, a joint venture, is carried at $XXX on the Company's balance sheet, which represents over 90 percent of the Company's net assets as of
December 31, 20X1. We were not allowed access to the management and the auditors of XYZ Company. As a result, we were unable to determine whether any adjustments were
necessary relating to the Company's proportional share of XYZ Company's assets that it controls jointly, its proportional share of XYZ Company's liabilities for which it is jointly
responsible, its proportional share of XYZ Company's income and expenses for the year, and the elements making up the statements of changes in stockholders' equity and cash flows.
Disclaimer of Opinion
Because of the significance of the matter described in the Basis for Disclaimer of Opinion
paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion .
Accordingly,
we do not express an opinion on these financial statements.
Independence
• Ultimate scope limitation
64
Not Independent - Disclaimer
We are not independent with respect to Miller Motor Co. and the
accompanying balance sheet of as of Dec. 31, 2014 and the related
statements of income, retained earnings and cash flows were not audited
by us. Accordingly, we do not express an opinion or any other form of
assurance on these financial statements.
65
unmodified
std
Auditing
Accounting
Qual
Disc
Qual
Adv
We audited
std
std
std
modify
std
std
Mgmt’s Resp
std
std
std
std
std
std
Auditor Resp
Std
std
std*
modify
std*
std*
Basis for Opinion
n/a
n/a
yes
yes
yes
yes
Fairly Present
conform w/ GAAP
std
std
except for
because of
except for
because of
Emphasis para
Other Matters
Consistency
Emphasis
Go Concern
66
AAM Section 10,000
ACCOUNTANTS REPORTS
These examples are for illustrative purposes only. They are included as conveniences for users of this manual who may want
points of departure when drafting reports to meet their individual needs. This manual is a non authoritative kit of practice aids and
accordingly, does not include extensive explanation or discussion of authoritative pronouncements. Users of this manual are urged
to refer directly to applicable authoritative pronouncements when appropriate.
These examples illustrate the body of various reports. For comment on addressing and dating of the report, see section 10,100.
Examples which are assembled from illustrative reporting language set forth in Statements on Auditing Standards (SAS) and
Statements on Standards for Accounting and Review Services (SSARS) include citation of the particular source and its location in
AICPA Professional Standards.
TABLE OF CONTENTS
Section ..................................................................................................................................Paragraph
10,100 Format of Accountants' Reports ........................................................................................01-.10
Addressing the Report..............................................................................................01-.05
Dating the Report ..................................................................................................06-.10
10,210 Unqualified Opinions.....................................................................................................010-.240
Auditor's Standard Report-Comparative Financial Statements ......................................010
Auditor's Standard Report-Single Year Financial Statements......................................020
Report on a Single Statement Audit (Balance Sheet Only Presented)..........................030
Report on Balance Sheet Only Audit When Other Financial Statements are Also
Presented ................................................................................................................031
Reference to Other Auditors-Successor Auditor's Report When Predecessor's
Report (Unqualified) Is Not Presented
.040
Reference to Other Auditors in Report
.050
Reference to Other Auditors-Successor Auditor's Unqualified Report When
Predecessor's Report That Included an Explanatory Paragraph Is Not Presented..... .060
Reference to Other Auditors-Successor Auditor's Report When Prior Year
Financial Statements Have Been Restated Following Issuance of the
Predecessor's Report
.070
Reference to Other Auditors-Prior Year Financial Statements Restated Following
a Pooling of Interests
.080
Reference to Other Auditors-Successor Auditor Report When Prior Period
Financial Statements Were Audited by a Predecessor Auditor Who Has Ceased
Operations
.083
Reference to Other Auditors-Successor Auditor Report When Prior Period
Financial Statements Were Audited by a Predecessor Auditor Who Has Ceased
Operations Have Been Restated
.084
Reference to Other Accountants-Report on Nonpublic Entity Presented With
Prior Period Financial Statements Reviewed by a Predecessor Accountant Who
Has Ceased Operations
.085
AICPA Audit and Accounting Manual
Contents
67
10,210
Unqualified Opinions-continued
Reference to Other Accountants-Report on Nonpublic Entity Presented With
Prior Period Financial Statements Compiled by a Predecessor Accountant Who
Has Ceased Operations
Change in Accounting Principles or Method of Accounting
Uncertainty - Litigation
Going Concern Uncertainty
Liquidation Basis Accounting-Uncertainty Re or in
Settlement of Obligations
Liquidation Basis of Accounting-Single Year Financial Statements
Liquidation Basis of Accounting-Comparative Financial Statements
Comparative Financial Statements-Unqualified Opinion on the Current Year's
Financial Statements With Disclaimer' of Opinion on the Prior Year's Statements
of Income, Retained Earnings, and Cash Flows
Comparative Financial Stotements-Subseqt;ent Restatement of Prior-Period
Financial Statements to Conform With Generally Accepted Accounting Principles
Comparative Financial Statements-Current Year's Statements Audited and Prior
Year's Statements Reviewed........................................................................................................
Comparative Financial Statements-Current Year's Statements Audited and Prior
Year's Statements Compiled ........................................................................................................
Comparative Financial Statements-Current Year's Statements Audited and
Disclaimer on Prior Year's Unaudited Statements......................................................................
U.S.-Style Report Modified to Report on Financial Statements Prepared in
Conformity With Accounting Principles Generally Accepted in Another Country
That Are Intended for Use Only Outside the United States.........................................................
Report on Financial Statements Prepared in Conformity With the Accounting
Principles Generally Accepted in Another Country That Will Have More Than,
Limited Distribution in the United States...................................................................................
Correction of on Error, Not Involving an Accounting Principle.......................................................
Subsequent Event Prior to Issuance of Auditor's Report .................................................................
Reissued Report Due to Subse uent Discovery of Facts Existing at the Date of the
Auditor's Report.......................................................................................................................
.086
.090
.100
.110
.120
.130
.140
.150
.160
.170
.180
.190
.200
.210
.220
.230
.240
10,220 Adverse Opinions .................................................................................................. .01
Departures From GAAP ................................................................................................................ .01
.01.03
Beginning Inventory Not Observed (First, Examination)
.01
Inability to Obtain Sufficient Competent Evidential Matter Due to a Scope
Limitation
.02
Scope Limitatioir Inventory and GAAP Departure Capitalized Lease
Obligation I
.03
10,230 Disclaimers of Opinion
l0,240 Qualified Opinions
Scope Limitation---4nvestment in Foreign Affiliate (Assuming Effects Are Such That
Qualification Rather Than Disclaimer Is Appropriate)
Departure from GAAP@, Leases Not Capitalized
Departure from GAAP-Leases Not Capitalized-Pertinent Facts Disclosed in
Note
Inadequate Disclosure Omission of Disclosures
Inadequate Disclosur&--Omission of Statement of Cash Flows
010-.080
.010
.020
.030
.040
.050
68
Julia
What is the objective of AU-C 700?
69
AU-C 700 Forming an Opinion and Reporting on Financial
Statements
.10 The objectives of the auditor are to
a. form an opinion on the financial statements based on an
evaluation of the audit evidence obtained, including evidence obtained about comparative
financial statements or comparative financial information, and
b. express clearly that opinion on the financial statements
through a written report that also describes the basis for that
opinion.
Peter
Where in the independent auditor’s
report do we “express an opinion”
71
Levi
Where does the independent
auditor’s report describe the nature
of the auditor’s work?
72
Unmodified
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheet as of December 31, 20X1, and the
related statements of income, changes in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial
statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally
accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ABC Company as of
December 31, 20X1, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally
accepted in the United States of America.
[Auditor's signature, city and state, date of report]
Std Reports are Unmodified
Opinions
Unmodified Opinion
We may add an Emphasis or
Other Material paragraph
GAAS problem
Qualified Opinion
or
We did not comply with
auditing standards (GAAS)
Disclaim an Opinion
GAAP problem
Qualified Opinion
NOT fairly presented
f/s do not conform to
GAAP
or
Adverse Opinion
74
unmodified
std
Auditing
Accounting
Qual
Disc
Qual
Adv
We audited
std
std
std
modify
std
std
Mgmt’s Resp
std
std
std
std
std
std
Auditor Resp
Std
std
std*
modify
std*
std*
Basis for Opinion
n/a
n/a
yes
yes
yes
yes
Fairly Present
conform w/ GAAP
std
std
except for
because of
except for
because of
Emphasis para
Other Matters
Consistency
Emphasis
Go Concern
75
Unmodified
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheet as of December 31, 20X1, and the
related statements of income, changes in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial
statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally
accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ABC Company as of
December 31, 20X1, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally
accepted in the United States of America.
[Auditor's signature, city and state, date of report]
Qualified Opinion Due to a Material Misstatement
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheets as of December 31, 20X1 and 20X0, and the related statements of
income, changes in stockholders' equity, and cash flows for the years then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the
United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our qualified audit opinion.
Basis for Qualified Opinion
The Company has stated inventories at cost in the accompanying balance sheets. Accounting principles generally accepted in the United States of America require
inventories to be stated at the lower of cost or market. If the Company stated inventories at the lower of cost or market, a write down of $XXX and $XXX would have been required as of
December 31, 20X1 and 20X0, respectively. Accordingly, cost of sales would have been increased by $XXX and $XXX, and net income, income taxes, and stockholders' equity would
have been reduced by $XXX, $XXX, and $XXX, and $XXX, $XXX, and $XXX, as of and for the years ended December 31, 20X1 and 20X0, respectively.
Qualified Opinion
except for the effects of the matter described in the Basis for Qualified Opinion
paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of ABC Company as
In our opinion,
of December 31, 20X1 and 20X0, and the results of its operations and its cash flows for the years then ended in accordance with accounting
principles generally accepted in the United States of America.
[Auditor's signature]
Qualified Opinion for Inadequate Disclosure
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheets as of December 31, 20X1 and 20X0, and the related statements of
income, changes in stockholders' equity, and cash flows for the years then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the
United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our qualified audit opinion.
Basis for Qualified Opinion
The Company's financial statements do not disclose [describe the nature of the omitted information that is not practicable to present in the auditor's report]. In our opinion, disclosure of
this information is required by accounting principles generally accepted in the United States of America.
Qualified Opinion
except for the omission of the information described in the Basis for Qualified Opinion
paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of ABC Company as of December 31, 20X1 and
In our opinion,
20X0, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
[Auditor's signature]
Adverse Opinion Due to a Material Misstatement
Independent Auditor’s Report
Report on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of ABC Company and its subsidiaries, which comprise the consolidated balance sheet as of December 31, 20X1,
and the related consolidated statements of income, changes in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the
United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the
auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our adverse audit opinion.
Basis for Adverse Opinion
As described in Note X, the Company has not consolidated the financial statements of subsidiary XYZ Company that it acquired during 20X1 because it has not yet been able to
ascertain the fair values of certain of the subsidiary's material assets and liabilities at the acquisition date. This investment is therefore accounted for on a cost basis by the Company.
Under accounting principles generally accepted in the United States of America, the subsidiary should have been consolidated because it is controlled by the Company. Had XYZ
Company been consolidated, many elements in the accompanying consolidated financial statements would have been materially affected. The effects on the consolidated financial
statements of the failure to consolidate have not been determined.
Adverse Opinion
because of the significance of the matter discussed in the Basis for Adverse Opinion paragraph, the consolidated financial
statements referred to above do not present fairly the financial position of ABC Company and its subsidiaries as of December 31, 20X1, or the results of their
In our opinion,
operations or their cash flows for the year then ended.
[Auditor's signature]
Qualified Opinion Due to the Auditor’s Inability to Obtain Sufficient Appropriate Audit Evidence
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheet as of December 31, 20X1, and the related statements of income, changes
in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the
United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our qualified audit opinion.
Basis for Qualified Opinion
ABC Company's investment in XYZ Company, a foreign affiliate acquired during the year and accounted for under the equity method, is carried at $XXX on the balance sheet at
December 31, 20X1, and ABC Company's share of XYZ Company's net income of $XXX is included inABCCompany's net income for the year then ended.We were unable to obtain
sufficient appropriate audit evidence about the carrying amount of ABC Company's investment in XYZ Company as of December 31, 20X1 and ABC Company's share of XYZ
Company's net income for the year then ended because we were denied access to the financial information, management, and the auditors of XYZ Company. Consequently, we were
unable to determine whether any adjustments to these amounts were necessary.
Qualified Opinion
except for the possible effects of the matter described in the Basis for Qualified
Opinion paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of ABC Company as of
In our opinion,
December 31, 20X1, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of
America.
[Auditor's signature]
Disclaimer of Opinion Due to the Auditor’s Inability to Obtain Sufficient Appropriate Audit Evidence
Independent Auditor’s Report
Report on the Financial Statements
We were engaged to audit the accompanying financial statements of ABC Company, which comprise the balance sheet as of December 31, 20X1, and the
related statements of income, changes in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on conducting the audit in accordance with auditing standards generally accepted in the United States of
Because of the matter described in the Basis for Disclaimer of Opinion paragraph,
however, we were not able to obtain sufficient appropriate audit evidence to provide a basis
for an audit opinion.
America.
Basis for Disclaimer of Opinion
The Company's investment in XYZ Company, a joint venture, is carried at $XXX on the Company's balance sheet, which represents over 90 percent of the Company's net assets as of
December 31, 20X1. We were not allowed access to the management and the auditors of XYZ Company. As a result, we were unable to determine whether any adjustments were
necessary relating to the Company's proportional share of XYZ Company's assets that it controls jointly, its proportional share of XYZ Company's liabilities for which it is jointly
responsible, its proportional share of XYZ Company's income and expenses for the year, and the elements making up the statements of changes in stockholders' equity and cash flows.
Disclaimer of Opinion
Because of the significance of the matter described in the Basis for Disclaimer of Opinion
paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion .
Accordingly, we do not express an opinion on these financial statements.
[Auditor's signature]
Emphasis-of-Matter Paragraph Because There Is Inconsistent Application of Accounting Principles
Or Because There Is Uncertainty Relating to a Pending Unusually Important Litigation Matter
Independent Auditor’s Report
Report on the Financial Statements
We have audited the accompanying financial statements of ABC Company, which comprise the balance sheet as of December 31, 20X1, and the related statements of income, changes
in stockholders' equity, and cash flows for the year then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the
United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence that we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects the financial position of ABC Company as of December 31, 20X1, and the results of its
operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in Note X to the financial statements, the entity has elected to change its method of accounting for [describe accounting method change] in [insert
year(s) of financial statements that reflect the accounting method change]. Our opinion is not modified with respect to this matter.
[Auditor's signature]
AU-C Section 200 Overall Objectives of the Independent Auditor and Conduct of an Audit in Accordance with
Generally Accepted Auditing Standards
.11 The overall objectives of the auditor, in conducting an audit of financial statements, are to
a. obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, thereby enabling the auditor to express an opinion on whether the financial statements are
presented fairly, in all material respects, in accordance with an applicable financial reporting framework; and
b. report on the financial statements, and communicate as required by GAAS, in accordance with the auditor's findings.
AU-C 315 Understanding the Entity and Its Environment and Assessing the Risk of Material Misstatement
.03 The objective of the auditor is to identify and assess the risks of material misstatement, whether due to fraud or error, at
the financial statement and relevant assertion levels through understanding the entity and its environment, including the
entity's internal control, thereby providing a basis for designing and implementing responses to the assessed risks of
material misstatement.
AU-C 315 Performing Audit Procedures in Response to Assessed Risks and Evaluating the audit Evidence
Obtained
.03 The objective of the auditor is to obtain sufficient appropriate audit evidence regarding the assessed risks of material
misstatement through designing and implementing appropriate responses to those risks.
AU-C 500 Audit Evidence
.04 The objective of the auditor is to design and perform audit procedures that enable the auditor to obtain sufficient
appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditor's opinion.
Overall Objective
AU-C Section 200 Overall Objectives of the Independent
Auditor and Conduct of an Audit in
.11 The overall objectives of the auditor, in conducting an audit of
financial statements, are to
a. obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement,
whether due to fraud or error, thereby enabling the auditor to express an
opinion on whether the financial statements are presented fairly, in all material
respects, in accordance with an applicable financial reporting framework; and
b. report on the financial statements, and communicate as required by GAAS, in accordance with the auditor's findings.
Objectives
AU-C 315 Understanding the Entity and Its Environment and Assessing the
Risk of Material Misstatement
AU-C 330 Performing Audit Procedures in Response to Assessed Risks and
Evaluating the audit Evidence Obtained
AU-C 500 Audit Evidence
AU-C 700 Forming an Opinion and Reporting on Financial Statements
AU-C 315 Understanding the Entity and Its Environment
and Assessing the Risk of Material Misstatement
.03 The objective of the auditor is to identify and assess the
risks of material misstatement, whether due to fraud or error,
at the financial statement and relevant assertion levels
through understanding the entity and its environment,
including the entity's internal control, thereby providing a
basis for designing and implementing responses to the
assessed risks of material misstatement.
AU-C 330 Performing Audit Procedures in Response to
Assessed Risks and Evaluating the Audit Evidence
Obtained
.03 The objective of the auditor is to obtain sufficient
appropriate audit evidence regarding the assessed risks of
material misstatement through designing and implementing
appropriate responses to those risks.
AU-C 330 Performing Audit Procedures in Response to
Assessed Risks and Evaluating the Audit Evidence Obtained
.03 The objective of the auditor is to obtain sufficient appropriate audit evidence regarding the
assessed risks of material misstatement through designing and implementing appropriate responses to
those risks.
AU-C 500 Audit Evidence
.04 The objective of the auditor is to design and perform audit
procedures that enable the auditor to obtain sufficient
appropriate audit evidence to be able to draw reasonable
conclusions on which to base the auditor's opinion.
AU-C 700 Forming an Opinion and Reporting on Financial
Statements
.10 The objectives of the auditor are to
a. form an opinion on the financial statements based on an
evaluation of the audit evidence obtained, including evidence obtained about comparative
financial statements or comparative financial information, and
b. express clearly that opinion on the financial statements
through a written report that also describes the basis for that
opinion.
AU-C 708 Consistency of Financial Statements
.03 The objectives of the auditor are to
a. Evaluate the consistency of the financial statements for
the periods presented and
b. Communicate appropriately in the auditor’s report when
the comparability of financial statements between periods
has been materially affected by a change in accounting
principle or by adjustments to correct a material
misstatement in previously issued financial statements.