PCAOB Audit Reports

Question 1

What is the structure of the PCAOB audit reprot?

Answer 1

LABELS ON ALL SECTIONS

1) Opinion Section
2) Basis for Opinion
3) Critical Audit Matters (If applicable)

Question 2

What is stated in the opinion section of the audit report?

Answer 2

1) Financial statements that were audited (balance sheet, income statement, cash flows, etc) and the years of those statements
2) In our opinion…. in accordance with the applicable financial reporting framework

Question 3

What is contained in the basis for opinion FIRST Paragraph

Answer 3

1) One sentence on management responsibility
2) sentence on auditor responsibility express an opinion. State that the firm is registered with the PCAOB and are required to be INDEPENDENT

Question 4

What is contained in the basis for opinion in the SECOND Paragraph?

Answer 4

• Conducted audit in accordance with PCAOB standards
• Plan and perform the audit to obtain reasonable assurance that the F/S are free from material misstatement whether due to error or fraud
• Evaluated accounting principles, significant estimates as well as evaluating the overall presentation of the F/S

Question 5

What is stated in the Critical Audit Matters

Answer 5

• Communications that were required to be communicated to the audit committee and that (1) related to accounts or disclosures that are MATERIAL to the financial statements and (2) were challenging, subjective, or complex judgments
• “Not providing separate opinions on the accounts listed

Question 6

What is the title of the audit report for public audits?

Answer 6

Report of Independent Registered Public Accounting Firm

Question 7

T/F: The number of years the audit firm has served the client needs to be reported?

Answer 7

TRUE

Question 8

What needs to be included under the signature block on the audit report for a public company?

Answer 8

• Number of years the audit firm has audited the client
• City and State or Country
• Date (date of substantial evidence was acquired to state an opinion)

Question 9

T/F: The critical audit matters section states an opinion on all of the accounts listed?

Answer 9

FALSE! That is also stated in the main paragraph of the CAM section.

Question 10

What is the FORM AP?

Answer 10

Effective 2017

PCAOB required each registered pubic accounting firm to file a Form AP (Auditor Reporting of Certain Audit Participants) for every audit of an issuer.

Question 11

What needs to be included in FORM AP?

Answer 11

1) The engagement partners name
2) The name, location, and extent of participation of any other accounting firm whose participation in the audit accounts for 5% or more of the total audit hours
3) The number of and extent in total of all other accounting firms of all other accounting firms whose participation in the audit accounts for less than 5% of the total audit hours

Question 12

What matters are required to be communicated with the audit committee?

Answer 12

• Significant risks identified
• Relevant matters concerning accounting policies and estimates
• Significant unusual transactions
• Matters involving related parties and transactions with related parties
• Other matters significant to the oversight of the company’s financial reporting process

Question 13

What items must be included in the CAM Section?

Answer 13

• Identify each specific CAM
• Describe conditions causing matter to be identified as a CAM
• Describe how the CAM was addressed during the audit
• Reference the related financial statement elements or disclosures

Question 14

If you have an adverse opinion, do you need to include a CAM Section?

Answer 14

NOPE

Question 15

If you have a disclaimer of opinion, do you need to include communication on CAMS?

Answer 15

NOPE

Question 16

If you issue a qualified opinion, do you need to include communication on CAMS?

Answer 16

YES