Flashcards in Chapter 7 - 2 Deck (20)
What is typed on each page of the accountant's review report
"see Independent Accountants review report"
When you downgrade from a review to a compilation . . .
Issue a unmodified compilation report unless there are any circumstances other than the change in audit that would result in a report modification
What should an accountant do when providing limited assurance that the F/S require no material modification to be in accordance with GAAP
- Understand the accounting principle of the industry in which the entity operates
If you are doing a compilation and become aware of errors or departures that mgmt refuses to change or give more info on . . .
If accountant believes that the deficiency can't be adequately disclosed - then withdraw from the engagement
Why is it inappropriate to include a compilation a financial projection in a public offering?
Because they are hypothetical and meant for limited use - only for people mgmt is negotiating directly who can ask questions etc.
What statement be included in a standard report on a review of the F/S of a non issuer
the account tis not aware of any material modifications that should be made to the F/S for them to conform to accounting principles generally accepted in the US
If you are doing F/S prep and client refuses to include "no assurance provided" on each page . . .
move them up to a compilation
include a disclaimer
What do you include in your report on a compilation report on a financial forecast
- warn users that the forecast includes assumptions as to future events and circumstance that may not be accurate and actual results often differ
In a compilation what is your responsibilities
- no test of data
- yes- read F/S for obvious error
- understand co. accounting records, business transactions and significant accounting practices and policies
What standards are you required to comply with if you the F/S were prepared through the use of computer software without any modification
None - this is not a professional service and there are no standards that need to be complied with - you are merely printing them from Quickbooks
When reissuing a compilation or review report - a predecessor auditor must do what . . .
- consider if the report is still appropriate
- read the current periods F/S
- compare to previously issued and current report
- and obtain a letter of assurance from the successor indicating whether or not the successor is aware of matter that would affect the statements
What kind of report must you issue if you are performing a major financial assistance
progam such as a report on compliance with requirements governing major federal assistance programs in accordance with the single audit act
Can Reviews be performed for prospective financial statements?
Can you do a Review for a single financial statement such as a balance sheet
What kind of service is being performed when you testify as an expert witness
Consulting - SCS
What is the difference between Projection financial statements and forecasted F/S
Forecast - these are prospective F/S that present an entities expected financial position. These are assumptions that you expect to exists and action you expect to take. Can do a compilation of these - SSARS
Projection - These are prospective F/S based on hypothetical assumptions - what would happen if?
What do you have to do to a compilation report in order for it to be used to obtain credit?
The compilation must be restricted
If you are engaged to Review or perform a compilation of F/S and find major departures from GAAP that you can not explain properly in the report and management refuses to change - what do you do?
When you are doing a review of a clients interim F/S - what do you do to update your knowledge about an entity?
Read Available documentations
- read annual and compare to interim
- consider results of any A/P with respect to current periods's F/S
-make inquiries of management about changes in Internal control
This info will be used to select the inquiries and A/P to be performed on the interim f/S