Reports

Question 1

Examination - MD&A

Answer 1

1. Title – “Independent Accountant’s Report.”
2. Standard examination report consists of four paragraphs –
   
   1. Introductory paragraph (four sentences) –
      
      1. Identify MD&A presentation.
      2. Identify management’s responsibility.
      3. Identify accountant’s responsibility.
      4. Refer to related audit report.
   2. Scope paragraph (three sentences) –
      
      1. Refer to attestation standards established by AICPA.
      2. Describe scope of examination.
      3. Say that examination provides reasonable basis for opinion.
   3. Explanatory paragraph (three sentences) –
      
      1. Comment on the need for estimates and assumptions.
      2. Comment on the role of future expectations.
      3. State that actual results may differ.
   4. Opinion paragraph (one long sentence) – Whether
      
      1. the presentation includes elements required by SEC;
      2. the historical amounts are accurately derived; and
      3. the underlying information and assumptions provide a reasonable basis for the MD&A.
3. Dating report – As of completion of the examination procedures.
4. Modifications of the standard report. –
   
   1. Reservations as to presentation – Results in a qualified or adverse opinion.
   2. Reservations as to scope – Results in a qualified opinion or a disclaimer of opinion
   3. Division of responsibility – May refer to another practitioner’s report on MD&A for a specific component as a partial basis for one’s own report.
   4. Emphasis of a matter – Presented as a separate paragraph (e.g. information included beyond the SEC’s requirements).