- Specific element is stockholder’s equity, perform procedures necessary to express opinion about BS (Fin.

Positon
- If specific element is net income, perform procedures necessary to express opinion about BS + IS
- Subsequent event: PRIME upto report date not Release date; AR = review Post BS transactions, Rep letter, inquiry,
reading minutes, compare latest interim FS with FS under audit ; if new info comes after audit report date, may dual
date to extend responsibility only for that subsequent event
- Other Information: Generally audtr NOT responsible, Should read. If material discrepancy: Modify op. in Other-
matter/explanatory para or withdraw (False/Fraudulent/deceptive/misleading).
- Supplementary info or Reqd Suppl. Information: Apply limited procedures. Auditor report may be reqd. by client
- Report on supp info (separate engagement) → evaluate presentation & fairly stated in relation to FS as a whole ;
report in separate report OR in OM paragraph
- Report on req’d supp info → apply limited procedures ; report in OM paragraph ; opinion permitted but not req’d
- Report on special purpose frameworks:
- Non GAAP titles,OCBOA-Tax/cash/Regu./Contr.; IFRS based FS are subject to US GAAS similar to normal audit
- EoM identifying special framework, it’s different than GAAP, refers to note
- Cash Basis (non-issuer) Private co: opinion on fair presentation, EoM, Statement that it’s different than GAAP
- Regulatory Basis General use: No Choice, Dual Opinion: Opinion of Fair presentation per Special framework &
Adverse Opinion para as difference between US GAAP & Special framework is Presumed material
- Regulatory Basis Restricted use : Single opinion, opinion on fair presentation w/ special purpose framework, OM
restricting use IF contractual / regulatory basis ;
- Report on FS prepared w/ framework of another country → distribution outside US only = use other country’s report
OR US form report with modification; distribution inside US = US form report w/ EoM identifying framework, refers to
- Report on application of framework [GAAP]→ restricted use, independence not req’d but disclose lack of independenc
- Reporting accountant (Consultant/Advisory): Hired to report or oral advice on a specific transaction accounting,
Independence not reqd. Consult with continuing accountant after taking management approval.
- Continuing accountant: with whom client has an ongoing relationship.
- System of Quality Control (CPA Firm): Policies & Procedures HELP ME maintain quality practice. Human Resource ,
Engagement acceptance, Leadership, Engagement Performance, Monitoring, Ethical policies
- HR policies: recruitment, Assigning personnel, Prof. Development, Training, Perf. Evaluation, Compensation
- Eng./Client acceptance: Min. Assoc. with Mgt lack Integrity, Background check, Nature/Scope of Eng, Firm competenc
- Leadership: Ultimate responsibility, Leaders attitude, adherence & action to Quality Control systm
- Eng. Performance: Supervise & review work, Expert consultation, Guidance material, Documentation,
- Monitoring: Implementation & maintenance of QC, Peer review: Appoint CPA firm every 3 yr, (1 Yr for >100 PCAOB)
- Ethical requ.: Independence, Integrity & objectivity, Annual written Indepenedence confirmation
- GAAS vs SQCS: GAAS relate to conduct of each engag. & SQCS-Quality Control standards relate to Firm’s practice
- Eng. Partner: Ulitimate responsibility, Review & Conclude, Critical areas, Significant risks (Revenue/Mgt override)
- Eng Quality Control Review: Review eng findings, significant matters, Fin. Statement, report, SOAP, Com with Mgt
- Audit documentation: assembled within 45 days (issuers) or 60 days (non-issuers) after report release date ; must be
retained for 7 years (issuers) or 5 years (others) ; Doc. Can’t be deleted after Document Completion Date
- Permanent (Continous File): Stock plan, leases, Minutes of meeting, pension plan, contracts
- Mgt Imposed Restriction: Don’t accept engagement if Resteiction likely result in Disclaimer op. Unless reqd by law
- Audit committee = members of the board, 3 - 5 “outside” directors, don’t have a material financial interest
- Communications: SPAM PODIUM MARS: Selection/chang in accounting policies, Process of accounting estimates,
Adequacy of disclosures, Manangement judgments, Planned scope & timing of the audit, Other issues, Difficulties
mgmt, Impairm Independence, Uncorrected misstatements, Mgt Disagreements
Material corrected misstate, Accountant consulted, Representation Mgt, Significant audit findings dis. With MGT ;
add’l comm for issuers = critical acct policies, alternative GAAP treatments, material comm btwn auditor + mgmt
- Written communication should be restricted, oral communication should be documented
- Nonissuers → timely manner give enough time for appropriate action to be taken
- Issuers → before issuance of audit report
- 5 components of internal control (CRIME): control environment, risk assessment (by mgmt), information &
communication systems, monitoring, existing control activities