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Chapter 3

Audit Reports
1. Report title
2. Audit report address
3. Introductory paragraph
4. Management’s Responsibility
5. Auditor’s Responsibility
6. Opinion Paragraph
7. Name and Address of CPA firm
8. Audit report date

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1. Includes all financial statements
2. Sufficient appropriate evidence
3. Financial statements present in
accordance with U.S.GAAP
4. No circumstances require an explanatory
paragraph or report modification

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Chapter 6
Audit Responsibilities
and Objectives
The purpose of an audit is to provide financial
statement users with an opinion by the auditor
on whether the financial statements are
presented fairly, in all material respects, in
accordance with applicable financial accounting
framework.

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Financial statements and internal controls.

Sarbanes-Oxley increases management’s


responsibility for the financial statements.

CEO and CFO must certify quarterly and annual


financial statements submitted to the SEC.
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The Sarbanes-Oxley Act provides for criminal
penalties for anyone who knowingly falsely
certifies the statements.

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Auditor’s Responsibilities

Material Reasonable
misstatements Assurance

Professional
Errors vs. Fraud
Skepticism
Fraudulent
reporting
vs.
theft of assets
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Auditor suspects
Inquire of management
Consult client’s counsel or specialist
Consider accumulating evidence

Auditor knows
Consider effects on financial
statements
Consider effect on relationship
with management
Communicate with audit
committee or equivalent 6-11