Accounting and Financial Control Department Auditing W 2019

Tutorial (3)
Types of Audit Reports

Parts of the Standard Unqualified Audit Report:

1. Report Title: Independent Auditor Report.
2. Report Address: To the stockholders of the corporation.
3. Introductory Paragraph:
a) The CPA has done an audit.
b) Name of the company being audited. (Auditee)
c) Listing of the financial statements that have been audited.
d) Preparing the financial statements is the management’s responsibility.
e) The job of the auditor is to express an opinion on the statements based on the audit.

4. Scope Paragraph:
a) Audit is conducted in accordance with GAAS.
b) Purpose of the audit: the audit is designed to obtain reasonable assurance that the financial
statements are free of material misstatements.
c) The type of the audit evidence that have been accumulated.
d) The auditor’s responsibility for evaluating the appropriateness of the accounting principles,
estimates, and financial statements disclosures.

5. Opinion Paragraph:
a) A statement of "In Our Opinion………………"
b) A statement about whether the financial statements were fairly presented, and in accordance
with GAAP.

6. Name and Signature of the CPA firm

7. Date of the Audit report: Date of ending the audit.

Types of the Audit Report:

Standard Unqualified Audit Report:
The 5 conditions requiring for the issuance of a Standard Unqualified Audit report are as
follows:
1. All statements are included in the financial statements.
2. The three general standards have been followed in all matters related to the audit
engagements.
3. Sufficient evidence has been followed and the other 2 field work standards have been followed
by the auditor.
4. The financial statements are presented in accordance with GAAP, including the presence of
the footnotes.
5. There are no circumstances requiring the addition of an explanatory paragraph or modification
of the wording of the report.

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Question (1): MCQs

1) The following are categories of audit reports except:

a. Standard Unqualified
b. Qualified
c. Adverse
d. All of these are categories of audit reports

2) The audit report should be dated:

a. The date on which the auditor completed the auditing procedures in the
field
b. The last day of the calendar year
c. The last day of the fiscal year
d. None of the above

5) Auditing standards require that the audit report must be titled and that the title must:
a. include the word “independent.”
b. indicate if the auditor is a CPA.
c. indicate if the auditor is a proprietorship, partnership, or incorporated.
d. not include any discriminatory language.

6)The basic elements of the auditor's standard report include all of the following
except:
a. A title that includes the word 'independent'.
b. A statement that the financial report is the responsibility of the company's
management
c. A statement that auditor has followed GAAP while conducting his audit.
d. None of the above

7)Which of the following is not an essential condition for issuing the standard uard
unqualified audit opinion?
a. All statements are included in the financial statements.
b. The general standards have been followed in all respects.
c. The financial statements are prepared in accordance with regulatory principles.
d. Sufficient appropriate audit evidence has been accumulated.

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9)The scope paragraph of the standard unqualified audit report states that the audit is
designed to:
a. discover all errors and/or irregularities.
b. discover material errors and/or irregularities.
c. conform to generally accepted accounting principles.
d. obtain reasonable assurance whether the statements are free of material
misstatement.

Question (2): T/F

1. The phrase “auditing standards generally accepted” can be found in the

introductory paragraph of a standard, unqualified audit report .

a. True
b. False
2. The phrase “generally accepted accounting principles” can be found in the
opinion paragraph of a standard unqualified report.

a. True
b. False

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Question (3): Audit Report Correction

An audit report prepared by Youssef and Omar ( CPAs in PWC), is provided below. The audit
for the year ended December 31, 2018 was completed on March 1, 2019, and the report was
issued to Goory Corporation, a private company, on March 13, 2019. List any deficiencies in
this report.

REPORT TITLE
To Mr. Mohamed Kareem, the General Manager,
We have audited the accompanying financial statements of Dalton Corporation as of December 31, 2017.
It is our reasonability to prepare these financial statements, and also our responsibility is to express an
opinion on these statements based on our audit. LIST THE FINANCIAL STATEMENTS
We conducted our audit in accordance with generally accepted accounting principles.

Those standards require that we plan and perform the audit to obtain absolute assurance about whether the
financial statements are free of (MATERIAL )misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements .An audit also includes
assessing the accounting principles used and the significant estimates made by the management, as well
as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable
basis for our opinion.

In our opinion, the financial statements referred to above present accurately in all material respect the
financial position of Javlin Corporation as of December 31, 2017, and the result of their operations and
their cash flows for the year then ended, in conformity with accounting principles generally accepted.

Youssed and Omar, CPAs ( Audit Firm Name)

March 13, 2019

Solution:
1- The title independent auditor report, or the opinion of an independent auditor
should be stated
2- The report should be addressed to the stockholders or the board of directors.
3- Wrong Name of the Auditee
4- It is not the responsibility of the auditor to prepare the financial statements.
5- No listing of financial statements names
6- The audit should be conducted according to the GAAS and this sentence should
be mentioned in the scope paragraph and not in the introductory.
7- The audit should be planned and performed to obtain reasonable assurance ( not
absolute assurance) that the financial statements are free from material
misstatements.
8- Not accurately ( fairly )
9- No Audit firm name
10- Wrong date ( march 1st )