Reporting when 1 period is audited
I. The report on the unaudited financial statements should be reissued.
II.The report on the audited financial statements should include a separate paragraph describing the responsibility assumed for the unaudited financial statements.
Other engagement Reports:
o Special purpose
o Single F/S (A/R or inventory)
o Contractual Regulatory
o Summary of F/S
Auditors Report on OCBOA
o Special: describe purpose/refer to note that has info
o Non-GAAP Titles: statement of______ income tax basis
o EMP:
CASH/TAX
Refer to note
State that it’s a basis of accounting not GAAP/ special purpose frame work
o OMP
REG/Contractual
Restricts Use
Compliance Audited F/S:
- Contractual/REG
- The auditor must have audited complete set of F/S and ONLY issue negative assurance on compliance
- Not a compliance or attest engagement
- NEGATIVE ASSURANCE
a. No noncompliance issues
- Nothing came to the auditors attention
- No compliance issues
- Unmodified opinion on F/S
- Subject to audit procedures
b. Identified noncompliance
- 1> instances of non-compliance
- Describe - Report on Compliance:
- EITHER Separate report OR 1 or more paragraphs (OMP)
- Restrict use on both
- Negative assurance on both
Summary F/S
- **Only if engaged to audit full F/S
- No opinion/ assurance
- Before accepting engagement:
a. Evaluate Summary F/S
b. Obtain agreement/ acknowledgement of MGT
c. Report will differ from form/ content
Form and Opinion: - Only unmodified OR adverse (not consistent w/ F/S)
- Adverse/disclaimer= withdraw
o If not possible:
State opinion in auditors report
Describe basis for opinion
State NO OPINION is Expressed
Compilation:
Compilation:
- Non-issuers only
- Don’t need rep letter
- Need engagement letter only
- Independence not required but need disclosure
- CAR MR ARSOM
- Understand Clients Business (STAFF)
- Opinion disclaimed
- read f/s only
REVIEW
- Higher than compilation
- Limited assurance
- Non issuer
- Analytical procedures / inquiries
- Engagement Letter required
- Rep letter required or with draw
- requirements U LIAR CPA
- Accountant’s Communication: oAM I SAD MR FIR SALA
Accountant’s Communication:
AM I SAD MR FIR SALA
Analytical Procedures To MGT Finanacial Data Inquiries Substantantially less in scope then Audit Dosent express opinion MGT Responsibility Fair presentation of F/S I/C Accountants RESPONSIBILITY SSARS AICPA Limited Assurance Accountant believes reasonable basis
Requirements
- U LIAR CPA
o Understand o Learn/obtain sufficient knowledge o Inquiries- internal o Analytical procedures – ratios, compare, detect relationship, predictable patterns o Review- other procedures should be performed o Client Rep Letter- o Professional judgment o Account CPA should communicate results
SUPPLEMENTARY INFO
o Accountant indicates degree of responsibility
A. Compilation
a. Refer to supplementary info
b. Or Issue separate report
c. And State…it is for additional analysis
B. Review
a. Explanation on review report
b. Should be included in Review report OR
c. Separate report
d. And State…it is for additional analysis
i. HAS or HAS not been Subject to inquiry and analytical procedures
REPORTS ON COMPARATIVE F/S
- All periods compiled or Reviewed
a. Update prior period and
b. Issue it as current period - Current period Reviewed and Prior Period Compiled (UP GRADE)
a. Update prior period and
b. AND issued as the last paragraph of current period - Current Period Compile and Prior Period Reviewed (DOWN GRADE)
a. Issue compilation report + paragraph to the current year report
i. It should have date of original report
ii. And statement that no other review procedures performed
OR
b. Reissue prior period report
i. Combine with current period compilation
1. And statement that no other review procedures performed
ii. Presented separately from current period report
Other Accountants Involved in Prior Periods
A. Predecessor Accountant’s Compilation/Review REISSUED UNCHANGED
a. Decide if report is appropriate
i. Current presentation
ii. Subsequent events
iii. Modifications that may be needed
b. Perform following procedures (OLD CPA)
i. Reread F/S
ii. Compare old/new statements
iii. Obtain letter from new CPA (don’t need letter from MGT)
If old cpa does find info that may affect the F/S
• Perform same procedures as the old engagement
• Perform additional procedures if necessary
B. Predecessor Accountant’s Compilation/Review NOT REISSUED
a. Successor responsibility
i. Make reference to the report of old cpa
ii. OR perform that level themselves
b. Expanded report and include additional paragraph
i. Prior period was perform by another accountant
ii. Date of old report
iii. Disclaimer or limited assurance
iv. Description of modifications
C. Restated Prior-period F/S
a. Report on Changed Statement
b. New CPA may report only on the adjustment of old report and indicate old cpa reported on old report before adj
Reporting when one period is audited
A. Reissue prior period report
OR
B. Include and additional paragraph in the current report describing the responsibility assumed for old report
a. DOWNGRADE
- Issue current period report
- State that old report was audited
- Date of old report
- Opinions expressed/ reasons for modification
- no auditing procedures were performed since last period
b. UPGRADE
- INCLUDE OMP
- Service performed in old period
- Date of old report
- Material modification description
- Statement that old report was less in scope than an audit and did not have basis for opinion
o If turned into SEC do mention in auditors report
Review of Interim F/S info
- Independence
- NO OPINION …limited assurance
- *Determining if any material modification required for conformity of framework
- Condensed form of F/S OR
- A period of less than a full year
- A 12 month period ending on a date other than an entities fiscal year
- Review with SAS or PCAOB standards
- Can inquire fraud
- U LIAR CPA
Comfort Letters
- Negative assurance
- Positive assurance: on CPA independent and SEC Regs
- From CPA to underwriter
- Period from the date of the last auditors report to effective date of registration
- Unaudited interim F/S
- Restricted use
- Underwriter needs rep or attorney letter
- “give me assurance that nothing bad has happened”
- SAS
Attest Engagements:
- Examination, Review, compilation, Agreed upon procedure report on subject matter, or an assertion about subject matter that is the responsibility of another party
- Understanding of I/C is not required
- Review: Negative
- Compilation, agreed upon: no assurance
Statement of Standards SSAE
- Agreed upon procedures
- Financial forcasts and projections
- Proforma Financial Statements
- Internal control over Financial reporting
- Compliance
- MD&A
- (only apply to attest engagments)
- 11 Attestation Standards
TIPPY PASSER
o 5 General TIPPY- Training/ Proficiency, Independent, Professional Judgment, Performance, Your belief
o 2 Field Work PA- Plan and supervise, appropriate
o 4 Reporting Standards SSER: ID subject matter, Disclose Significant Reservations, Express conclusions about subject matter, Restrict USE
AGREED UPON PROCEDURES
- Practitioner is engages by a client to issue a report of findings based on agreed upon procedures
- Independence required
- Written assertion not needed
- Restricted
- Disclaimer: no opinion
- Statement of limitations
- I AM SURE : Independence, Agreement of parties, measurable/ consistent, suffienciency, Use Restricted, Client is responsible for subject matter, Engagements on Prospective F/S have summary of significant assumptions
FINANCIAL FORECASTS AND PROJECTIONS:
- Prospective F/S: Forcasts/ projections
- Only Compiled- disclose summary of significant findings
- Proforma: past financial results of an expired period would have been if something was different
- Adverse opinion: 1 or more of the significant assumptions do not provide a reasonable basis for the financial statements
- Compilation- Assembling, no assurance
- Examination – Evidence and independence required, gives opinion
- Agreed upon procedures- partial presentation, limited use
Proforma F/S
- SEC type info
- Hypothetical
- past financial results of an expired period would have been if something was different
- Rep Letter
- State if historical F/S were audited or unaudited
- Don’t need to RE-evaluate I/C
- Recompute math stuff
