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What do you do if you change your opinion between years

Use an "Other Matter" paragraph to say you did
Include the date of the old opinion and why the change


You are doing a group audit and you decide not to refer to the work of a component CPA

This means the group auditor is taking responsibility for the work of the auditors and is taking responsibility of the work of the other CPA
If you do make sure you:
1- Make inquiries about their reputation
2- Review the work of the auditors and reperform some procedures
3 - If you decide to rely - unmodified opinion


What opinion can you give if you have omitted a statement of cashflows

Qualified - b/c departure from GAAP
Add an "explanatory paragraph" before the opinion


The "Other Information" in the F/S is materially inconsistent with the F/S and mgmt refuses to chg.

Unlikely -
-withhold the audit report
- more likely
will include an "other matter" paragraph


Rules on Consistency:
1 - If its the first audit and you are able to get information on consistency from LY
2- If its your first audit but the information was inconsistent, but properly reported and justifiable

1 - Then no need to add a reference to consistency in your report
2 - "Unmodified - with an "emphasis of matter" paragraph


Interim Report- what if you don't audit or review them, but the company wants to put your name on them (or)

1 request to have your name removed
2 - If they want to include your name - then make sure they say that they are unaudited and have no opinion


Comparative F/S - You are the successor and LY a predecessor auditor reported on them:

1- the report is not presented and the predecessor reported was unmodified

1 - if the report is not presented - this means the predecessor report was unmodified - include an "other matter" paragraph - with the date of the predecessor report


Comparative F/S - You are the successor and LY a predecessor auditor reported on them:
2. The report Ly was modified - qualified and the report is not present

2 - Indicate reasons why it was qualified in an "other matter" paragraph


You are the predecessor auditor and were asked to reissue F/S from prior periods without any changes to them

As the predecessor auditor you should -
1 - read the F/S
2 - compare them to the prior period
3 - get a written representation letter from successor to make sure nothing in the new F/S will affect your old reports
4 - Us the original date


What is there are adjustments to the predecessor auditor's report -

You can dual date


Comparative F/S
LY was NOT audited, this year is audited and are presented in comparative format - how do you present them

1- The UNAUDITED F/S need to be clearly marked
2 - They need to be EITHER
The report should include an "Other Matter" paragraph telling you what level of service was performed LY and that responsibility is assumed for the unaudited F/S


Going Concern - when you find it what do you do . . .

Only for the next year out - "reasonable time"

1. See if there are plans to mitigate it - if these are OK - then no effect on the audit report - Unmodified

2. If There are still lingering concerns:
1 - Are the concerns properly disclosed?
- Yes - Unmodified Opinion and Emphasis of Matter paragraph mention "Going Concern" and "Substantial Doubt"
-No - this is considered inadequate disclosure- QUALIFIED with a "Basis-for" paragraph

If extreme - which is rare - and you can't form an opinion then disclaim


If you had a Going Concern issues LY, but this year they are all fixed

Make no mention in This years F/S


When you are asked to report on a Summary Statement Review from a completed set of audit statements

- Summary statements can be presented in individual or comparative form
- They are usually in a document with all of the audited F/S so you do not need to worry about having all of the disclosures
- If the Audited report are ADVERSE or DISCLAIM - then you can't report on the summary F/S
- The report will use this language" They are "consistent with" Audited F/S - NOT Fairly presented


Adverse Opinion - what paragraphs are added and how is an opinion modified

Add - "Basis for" before opinion. In it you describe the principle effect of the departure from GAAP

the OPINION paragraph will say that the F/S are not fairly presented and refer to the preceding "Basis for" paragraph"


Use of a specialist in a report

If a report is UNMODIFIED - make no reference to the specialist

If the report is MODIFIED - put in an explanatory paragraph E - like if there is a conflict between the finding of a specialist and client


Under which circumstances would you refer to consistency

- change in ACCTING principle

- Mgmt lack of reasonable justification for changes in acting principle

-change from non GAAP to GAAP

no - change in estimate


When can you present a single year F/S

If LY was audited by someone else and the opinion was unmodified.


What do you put in the "Emphasis of Matter" paragraph about related party disclosures when properly disclosed

- A clear reference to the related party disclosures
- an indication that the audit opinion is NOT Modified


What does a Group Financial Audit Report Look Like

I - standard
M- Standard
A - ref to % or $ audited by other
O - Unmodified