Shared Flashcard Set

Details

SU 18
Review, Compilation, and Special Reports
160
Accounting
Undergraduate 4
06/01/2015
Click here to study/print these flashcards.

Create your own flash cards! Sign up here.

Additional Accounting Flashcards

 

 

Cards

Term
review and compilation services
 Definition
provided in conjunction with the dissemination of F/S. These services are not as comprehensive as an audit.
Term
audit
 Definition
provides positive assurance that F/S are presented fairly in accordance w/GAAP
Term
Statements on Standards for Accounting and Review Services (SSARSs)
 Definition
governs services performed w/respect to unaudited F/S, which are codified as AR 60, 80, 90, etc.
Term
AU 722
 Definition
governs reviews of interim/quarterly F/S for issuers
Term
AR 80 and AR 90
 Definition
basic pronouncements on compilations and reviews and are outlined in the first two subunits.
Term
understanding w/the entity
 Definition
Regardless of the service provided, the CPA should establish understanding w/the entity, preferably in writing, describing the nature and limitations of the services to be performed and the report to be issued.
Term
Are reviews/compilations intended to detect errors, fraud, or illegal acts?
 Definition
No, and the CPA's understanding w/the entity should reflect us.
Term
Must a CPA be independent to perform a review? To perform a compilation?
 Definition
Review: Yes.
Compilation: No.
Term
special report
 Definition
basis of virtually all special reports is the standard, 3-paragraph audit report (one more reason to memorize the standard audit report).
Term
OCBOA
 Definition
other comprehensive basis of accounting, besides cash basis
Term
three elements of special reports on OCOBA
 Definition
In general, if the auditor can form an opinion on the fairness of:
1. F/S info prepared on an OCBOA.
2. Specified elements, accounts, or items, or
3. Info presented in other formats,
The auditor can express an opinion on the fairness of the presentation.
Term
compilation
 Definition
service with the objective of assisting management in presenting F/S information in the form of F/S without undertaking to obtain or provide any assurance.
Term
Is compilation an assurance engagement? An attest engagement?
 Definition
It is not an assurance engagement, but it is considered an attest engagement b/c it falls under that set of standards.
Term
assurance levels provided by compilation, review, and audit
 Definition
compilation: No assurance.
review: Limited assurance.
audit: Positive assurance.
Term
compilation does not contemplate performing...
 Definition
inquiries, analytical procedures, or other procedures performed in a review.
Term
A compilation also does not...
 Definition
1. obtaining an understanding of the entity's IC.
2. Assessing fraud risk.
3. Testing accounting records by obtaining sufficient appropriate audit evidence through inspection, observation, and confirmation, or
4. Examining source documents.
Term
For whom are compilations typically performed?
 Definition
Nonissuers.
Term
engagement letter
 Definition
The accountant should establish an understanding w/management regarding the services to be performed for compilation engagements and should document the understanding through a written communication w/management.
Term
understanding of the industry
 Definition
The accountant should possess an understanding of the industry in which the client operates, including the accounting principles and practices generally used in the industry.

This understanding should be sufficient to enable the accountant to compile F/S that are appropriate in form for an entity operating in that industry.
Term
Does lack of knowledge about the industry does not prevent the accountant from accepting a compilation engagement?
 Definition
Not when the accountant has no prior knowledge of the industry, but the accountant then has the responsibility to obtain that knowledge.
Term
accountant
 Definition
The accountant should obtain knowledge about the client, including an understanding of the client's business and accounting principles and practices uses by the client.
Term
How does the accountant obtain an understanding of the business?
 Definition
By obtaining an understanding of the accounting principles and practices used by the client in measuring, recognizing, recording, and disclosing all significant accounts and disclosures in the F/S.
Term
compilation procedures
 Definition
Reading the F/S.
Term
reading the F/S
 Definition
Before submission of the F/S to the client or others, the accountant should read the F/S and consider whether such F/S appear to be appropriate in form and free form obvious material errors.
Term
other compilation procedures
 Definition
The accountant is not required to make inquiries or perform other procedures to verify, corroborate, or review information supplied by the entity. However, the accountant may have made inquiries or performed other procedures.
Term
If the result of compilation procedures make the accountant to become aware that information supplied to the entity is incorrect, incomplete, or otherwise unsatisfactory, what should the accountant do?
 Definition
Request that management consider the effect of these matters on the F/S and communicate the results of such consideration to the accountant.
Term
If management refuses to comply with compiler's requests...
 Definition
the accountant should withdraw from the engagement.
Term
documentation kept in a compilation engagement
 Definition
a. The engagement letter documenting the understanding with the client.
b. Any findings or issues that, in that accountant's judgment, are significant.
c. Communications, whether oral or written, to the appropriate level of management regarding fraud or illegal acts that comes to the accountant's attention.
Term
standard compilation report
 Definition
contains three paragraphs.
1st paragraph: We have compiled... We have not audited... and do not express an opinion...

2nd paragraph: Management is responsibile for... fair presentation...maintaining IC...

3rd paragraph: My responsibility is to conduct the compilation in accordance w/SSARS. Objective of compilation is to...
Term
objective of compilation
 Definition
to assist management in presenting financial information in the form of F/S w/out undertaking to obtain or provide any assurance that there are no material modifications that should be made to the F/S.
Term
F/S prepared in accordance w/an OCBOA are not considered appropriate in form unless the F/S include...
 Definition
1. A description of the OCBOA, including a summary of significant accounting policies and a description of the primary differences from GAAP. The effects of the differences need not be quantified.
2. Informative disclosures similar to those required by GAAP.
Term
The accountant may compile such F/S...
 Definition
provided that the omission of substantially all disclosures is not, to his/her knowledge, undertaken w/the intention of misleading those who might be reasonably be expected to use such F/S.
Term
The accountant should include in the compilation report after the paragraph describing the accountant's responsibility a paragraph w/the following elements:
 Definition
1. A statement that management has elected to omit substantially all the disclosures.
2. A statement that if the omitted disclosures (and SCF, if applicable) were included in the F/S, they might influence the user's conclusions about the company's financial position, results of operations, and cash flows.
3. A statement that the F/s are not designed for those who are not informed about such matters.
Term
When should the accountant's report should be modified?
 Definition
When the accountant is issuing a report on a compilation of F/S for an entity from which s/he is not independent.
Term
Must the accountant disclose the reasons why his/her independence is impaired?
 Definition
S/he may. If so, all reasons for this must be disclosed.
Term
When is a compilation report not required?
 Definition
When the compilated F/S are not expected to be used by a third party.

In this case, "For Management Use Only" should be written on the compilated F/S.
Term
Can a compilation report emphasize a matter?
 Definition
In a separate explanatory paragraph.
Term
Are emphasis paragraphs ever required?
 Definition
No; they are added solely at the accountant's discretion.
Term
examples of matters that the accountant may wish to emphasize...
 Definition
1. Uncertainities.
2. That the entity is a competent of a larger business enterprise.
3. That the entity has had a significant transactions w/related parties.
4. Unusually important subsequent events.
5. Accounting matters, other than those involving a change or changes in accounting principles, affecting the comparability of the F/S w/those of the preceding period.
Term
Can an emphasis-of-matter paragraph be used in lieu of management disclosures?
 Definition
No, so the accountant should not include an emphasis paragraph in a compilation report on F/S that omit substantially all disclosures unless the matter is disclosed in the F/S.
Term
If the accountant concludes that modification of the standard report is appropriate b/c of a departure from GAAP...
 Definition
the departure should be disclosed in a separate paragraph of the report, including disclosure of the effects of the departure on the F/S if such effects have been determined by management or are known as the results of the accountant's procedures.
Term
Is the accountant required to determine the effects of a departure if management has not done so?
 Definition
No, provided that the accountant states in the report that such determination has not been made.
Term
If the accountant believes that modification of the standard report is not adequate to indicate the deficiencies in the F/S as a whole...
 Definition
the accountant should withdraw from the compilation engagement and provide no further services with respect to those F/S.
1. No adverse compilation report.
2. The accountant may wish to consult w/his/her legal counsel upon withdrawal.
Term
general use
 Definition
applies to accountants' reports that are not restricted to specified parties. Accountants' reports on F/S prepared in conformity w/an applicable financial reporting framework ordinarily are not restricted regarding use.
Term
restricted use
 Definition
applies to accountants' reports intended only for one or more specified third parties.

The need for restriction on the use of report may result from a number of circumstances, including, but not limited to, the purpose of the report and the potential for the report to be misunderstood when taken out of the context in which it was intended to be sold.
Term
When should the accountant restrict the use of the report?
 Definition
When subject matter is based on measurement or disclosure criteria not in conformity w/GAAP or framework.
Term
Should a restricted-use report state the restriction?
 Definition
Yes, in a separate paragraph at the end of the report.
Term
reasonable period of time for substantial doubt
 Definition
not to exceed 1 year beyond the date of F/S being audited
Term
If the auditor has substantial doubt?
 Definition
The accountant should request that management consider the possible effect of the going concern uncertainty on the F/S, include the need for related disclosure.
Term
After management communicates to the accountant the results of its consideration of the possible effects on the F/S...
 Definition
the accountant should consider the reasonableness of management's conclusions, including the adequacy of the related disclosures, if applicable.
Term
If the accountant determine that management's conclusions are unreasonable or the disclosure of the uncertainty regarding the entity's ability to continue as a going concern is adequate...
 Definition
a deviation from GAAP (or other framework) has occurred.
Term
If the accountant learns of subsequent events that could affect the F/S...
 Definition
s/he should request that management consider the possible effects, including the adequacy of any related disclosure, if applicable.
Term
After the date of the accountant's compilation report, is the accountant obligated to perform other compilation procedures?
 Definition
Not unless new info comes to his/her attention.
Term
When the accountant becomes aware of new info that relates to F/S that was not known as of the report date but would have been investigated had it been known...
 Definition
the accountant should, as soon as practicable, undertake to determine whether the information is reliable and whether the facts existed as of the report date.
Term
When further use of F/S needs to be prevented, the accountant should...
 Definition
inform the client to disclose this.
Term
If the client refuses to notify report users that the report should no longer be used, the accountant should...
 Definition
notify high-level client management or those charged with governance of such refusal and take other steps if necessary.
Term
supplementary analysis purposes
 Definition
accountant has less, if any responsibility
Term
Must the accountant report all fraud/illegal acts to management?
 Definition
All except those that are clearly inconsequential, in oral or written form.
Term
When should the accountant consider resigning from the compilation?
 Definition
When fraud/illegal acts involve the business owner.
Term
Must an accountant in a compilation disclose fraud/illegal acts?
 Definition
No, except for these reasons:
1. To comply w/certain legal and regulatory requirements.
2. To a successor accountant when successor communicates w/you in accordance w/AR 400.
3. In response to subpoena.
Term
objective of review
 Definition
express limited assurance that no material modifications should be made to the F/s for then to conform w/GAAP or framework
Term
AR 80
 Definition
compilation
Term
AR 90
 Definition
review of annual F/S of nonissurers
Term
A review does not contemplate...
 Definition
1. Understanding entity's IC.
2. Assessing fraud risk.
3. Testing accounting records through inspection, observation, and confirmation to obtain sufficient appropriate audit evidence.
4. Examining source documents.
5. Performing other procedures in an audit.
Term
review and engagement letter
 Definition
The accountant performing a review should establish an understanding w/management regarding the services to be performed for review engagements and document this understanding in the engagement letter.
Term
How should procedures be designed in a review?
 Definition
To accumulate review evidence that will provide a reasonable basis for obtaining limited assurance.
Term
procedures used in review
 Definition
usu. analytical procedures and inquiry, though additional procedures may be necessary.
Term
Must a reviewer obtain an understanding of the entity and industry?
 Definition
Yes, but the reviewer can come into a review without that knowledge. S/he just has to then learn it on the job.
Term
Why is the understanding of the entity and industry necessary for a review?
 Definition
So the reviewer can obtain such knowledge sufficient to determine the specific nature, timing, and extent of review procedures to be performed.
Term
knowledge about client necessary for a review
 Definition
1. Understanding of the client's business (experience w/client)
2. Understanding of the client's accounting principles and practices. (experience w/client, review of client-prepared docs., and inquiry)
Term
The accountant should design and perform analytical procedures and make inquiries and perform other procedures based on...
 Definition
1. His/her understanding of the industry.
2. His/her knowledge of the client, and
3. The RMM.
Term
In a review, where should the accountant focus review procedures?
 Definition
In those areas where s/he believes thee are increased risks of material misstatement.
Term
analytical procedures
 Definition
involve comparisons of expectations developed by the accountant to the clients recorded amounts or ratios.
Term
How does the accountant develop expectations for analytical procedures?
 Definition
by identifying and using plausible relationships that are reasonably expected to exist based on the accountant's understanding of the industry in which the client operates and knowledge of the client.
Term
five sources of information for developing expectations for analytical procedures
 Definition
1. Financial information for comparable prior period(s), giving consideration to known changes.
2. Anticipated results: budgets or forecasts.
3. Relationships among elements of financial info w/in the period.
4. Information regarding the industry in which the client operates.
5. Relationships of financial information w/relevant nonfinancial info.
Term
When can analytical procedures be performed?
 Definition
At the F/S level or at the detailed account level. Those at the F/S level typically provide evidence of the "big picture."
Term
If analytical procedures identify fluctuations or relationships that are inconsistent w/other relevant information or that differ from expected values by a significant amount...
 Definition
the accountant should investigate these differences first by questioning management and then by performing other procedures as necessary in the circumstances.
Term
inquiry in reviews (inquiring of management who have responsibility for financial and accounting matters concerning...)
 Definition
a. Whether the F/S have been prepared in conformity w/GAAP or framework.
b. The entity's accounting principles and practices and the methods followed in applying them.
c. The entity's procedures for recording, classifying, and summarizing transactions and accumulating information for disclosure in the F/S.
d. Unusual or complex situations that may have an effect on the F/S.
e. Significant transactions occurring or recognized near the end of the reporting period.
f. The status of uncorrected misstatements identified during the previous engagement.
g. Questions that have arisen in the course of applying the review procedures.
h. Events subsequent to the date of the F/S that could have a material effect of the F/S.
i. Their knowledge of any fraud or suspected fraud affecting the entity involving management or others.
j. Significant journal entries and other adjustments.
k. Communications from regulatory agencies.
l. Actions taken at meetings of shareholders, the BOD, committees of the BOD, or comparable meetings that may affect the F/S.
Term
review procedures
 Definition
Inquiring of management who have responsibility for financial and accounting matters.
Reading the F/S to consider, on the basis of information coming to the accountant's attention, whether the F/S appear to conform w/GAAP or framework.
Obtaining reports from other accountants, if any, who have been engaged to audit or review the F/S of significant components of the reporting entity, its subsidiaries, and other investees.
Term
Is the accountant required to corroborate management's responses with other evidence?
 Definition
No, but the accountant should consider the reasonableness and consistency of management's responses in light of the results of other review procedures and the accountant's knowledge of the client's business and the industry in which it operates.
Term
If the accountant becomes aware that information coming to his/her attention is incorrect, incomplete, or otherwise unsatisfactory...
 Definition
the accountant should request that management consider the effect of these matters on the F/S and communicate the results of its consideration to the accountant.
Term
If the accountant believes the F/S may be materially misstated...
 Definition
the accountant should perform additional procedures deemed necessary to obtain limited assurance.
Term
If the accountant concludes the F/S may be materially misstated...
 Definition
the accountant should modify the report.
Term
review procedures
 Definition
The accountant may perform reconciliations, confirmations, tests of details, or other procedures to gain the evidence to provide limited assurance.
Term
Does AR 90 specifically identify require additional procedures but expects the accountant to use appropriate judgment?
 Definition
No.
Term
Are written representations required from management?
 Definition
Yes, for all F/S and periods covered by the review report.
Term
The specific written representations obtained by the accountant will depend on...
 Definition
circumstances of the engagement and the nature and basis of presentation of the F/S
Term
Management's representations set forth in the management representation letter should be made as of...
 Definition
the date of the accountant's review report.
Term
Who should sign the management representation letter?
 Definition
Those members of management whom the accountant believes are responsible for and knowledgeable about the matters covered in the representation letter.

Normally, the CEO and CFO sign it.
Term
How detailed should documentation for a review be?
 Definition
In sufficient detail to provide a clear understanding of the work performed (including the nature, timing, extent, and results of review procedures performed), the review evidence obtained and its sources, and the conclusions reached.
Term
role of review documentation
 Definition
Provides the principal support for the representation in the accountant performed the review in accordance w/SSARS.

Provides the principal support for the conclusion that the accountant is not aware of any material modifications that should be made to the F/S in order for them to b in conformity w/GAAP & framework.
Term
form, content, and extent of documentation depends on...
 Definition
The circumstances of the engagement, the methodology and tools used, and the accountant's professional judgment.
Term
review documentation includes...
 Definition
1. Engagement letter.
2. Analytical procedures performed.
3. Significant matters covered in accountant's inquiry procedures and the responses thereto.
4. Significant findings.
5. Significant unusual matters.
6. Communications (oral or written) to the appropriate level of management regarding fraud/illegal acts that come to the accountant's attention.
7. Management representation letter.
Term
accountant's objective in reporting on the F/S
 Definition
to prevent misinterpretation of the degree of responsibility the accountant is assuming when his/her name is associated w/F/S
Term
standard report
 Definition
accountant has no reservations providing limited assurance
Term
reference
 Definition
Each page of F/S reviewed by accountant should include a reference.
Term
components of Independent Accountant's Review Report
 Definition
To the Owners...
First: We have reviewed the F/S... A review includes... Review less in scope than audit...We do not express an opinion.
Second: Management responsible for fair presentation of F/S...and for maintaining IC.
Third: Auditor responsibility...
Fourth: Based on our review...
Term
review
 Definition
includes primarily applying analytical procedures to management's financial data and making inquiries of company management.
Term
When the accountant is unable to perform the inquiry and analytical procedures s/he considers necessary or the client does not provide the accountant w/a representation letter...
 Definition
the review will be incomplete.
Term
incomplete review
 Definition
does not provide an adequate basis for issuing a review report. In such a situation, the accountant should consider the effect on the engagement and report.
Term
typical response for incomplete review
 Definition
withdraw from the engagement.
Term
Can the account issue a review report on one F/S?
 Definition
Yes, if the scope of his/her inquiry and analytical procedures has not been restricted.
Term
Are F/S prepared in accordance w/OCBOA considered appropriate in form?
 Definition
Not unless the F/S include:
1. A description of the OCBOA (summary of significant accounting policies and a description of the primary differences from GAAP). The effects of the differences need not be quantified.
2. Informative disclosures similar to those required by GAAP.
Term
emphasis of matter
 Definition
same as w/compilation in terms of how to present, requirements of emphasis of matter, and examples of matters that are emphasized.
Term
If F/S are not revised according to reviewer's concerns...
 Definition
the accountant should consider whether modification of the standard report is adequate to disclose the departure.
Term
How should F/S be revised according to reviewer's concerns?
 Definition
W/ an except for modification.
Term
Is the accountant required to determine the effects of a departure if management has not done so?
 Definition
No, provided that the accountant states in the report that such determination has not been made.
Term
If the accountant believes that modification of the standard report is not adequate to indicate the deficiencies in the F/S as a whole.
 Definition
The accountant should withdraw from the review engagement and provide no further services w/respect to those F/S.
Term
request for change in engagement may result from...
 Definition
1. Change in circumstances affecting the entity's requirements.
2. Misunderstanding as to the nature of one of the services.
3. Scope restriction, whether imposed by the client or circumstances.
Term
considerations for changing from higher to lower level of assurance
 Definition
1. The reason for the entity's request, particularly the implications of a scope restriction, whether imposed by the entity or by circumstances.
2. The additional effort required to complete the original engagement.
3. The estimated additional cost to complete the original engagement.
Term
reasonable basis for requesting a change in the engagement
 Definition
A change in circumstances that affects the entity's requirement for the service or a misunderstanding about the nature of a service is ordinarily a reasonable basis for requesting a change in the engagement.
Term
In considering the implications of a scope restriction...
 Definition
the accountant should evaluate the possibility that the information affected may be incorrect, incomplete, or otherwise unsatisfactory.
Term
An accountant cannot issue a review when...
 Definition
S/he cannot contact the entity's legal counsel.
A signed representation letter is not provided.
Term
When should an accountant consider completing a higher level of service?
 Definition
When the cost of switching up is insignificant.
Term
The report on the changed engagement should not mention the following...
 Definition
1. The original engagement.
2. Any auditing or review procedures performed.
3. Scope limitation that led to the changed engagement.
Term
Which assurance services requires the practitioner to apply procedures specifically directed toward the detection of fraud or illegal acts?
 Definition
Audit, not compilation or review. But, in all three forms, suspicion of fraud should be communicated to the appropriate management level.
Term
A continuing accountant who performs the same or higher level of service for the current period should...
 Definition
update his/her report for the prior period.
Term
A continuing accountant who performs a lower level of service for the current period should...
 Definition
either indicate a separate paragraph describing the responsibility assumed for the F/S of the prior or reissue the previous report.
Term
compiled F/S that omit substantially all of the disclosures required by GAAP...
 Definition
are not comparable w/F/S that include such disclosures.
Therefore, the accountant should not issue a report on comparative F/S when statements for one or more, but not all, of the periods presented omit substantially all of the disclosures require by GAAP.
Term
Before reissuing a compilation or review report, a predecessor accountant should consider whether the report is still appropriate.
 Definition
The precedessor should:
1. Read current F/S and successor's report.
2. Compare the prior-period F/S w/the current statements.
3. Obtain a representation letter from the successor.
Term
alternative form of standard compilation report is used when.... (AR 300)
 Definition
a prescribed form or related instructions call for departure from GAAP by specifying a measurement principle not in conformity w/GAAP or failing to require disclosures in accordance w/GAAP.
Term
presumption of compilation report in a certain prescribed form
 Definition
that the information required in a prescribed form is sufficient to meet the needs of the body that designed or adopted form.
Term
indications made in a certain prescribed form
 Definition
The accountant should indicate that the statements are in a prescribed form and that they may differ from those presented in accordance w/GAAP, but differences in the report need not be described.
Term
AR 300
 Definition
compilation reports on F/S included in certain prescribed forms
Term
AR 400
 Definition
communications between predecessor and successor accountants
Term
Are communications between predecessor and successor accountants required?
 Definition
In audits, yes, w/client permission. In compilations and reviews, no.
Term
The predecessor is required to respond promptly and fully on the basis of known facts?
 Definition
No.
Term
AU 315
 Definition
Communications between Predecessor and Successor Auditors
Term
A successor who believes the statements reported on by the predecessor...
 Definition
may require revision must request that the client communicate this information to the predecessor.
Term
AR 600
 Definition
reporting on personal F/S included in written personal financial plans
Term
An accountant may submit a written personal financial plan containing unaudited personal F/S to a client without complying w/requirements of AR 80 if the accountant...
 Definition
1. Has an understanding w/the client about its use.
2. Has no reason to believe that the F/S will be used to obtain credit or for any other purpose except the financial plan, and
3. Attaches a report describing the engagement.
Term
Special reports may be issued on...
 Definition
a. F/S that are prepared in conformity w/OCBOA.
b. Specified elements, accounts, or items of an F/S.
c. Compliance w/aspects of contractual agreements or regulatory requirements related to audited F/S.
d. Financial presentations to comply w/contractual agreements or regulatory provisions.
e. Financial information presented in prescribed forms or schedules that require a prescribed form of auditor's report.
Term
GAAS are applicable when...
 Definition
an auditor audits and reports on any F/S.
Term
financial statement (F/S)
 Definition
presentation of financial data, including notes, derived from accounting records and intended to communicate an entity's economic resources or obligations at moment in time or the changes therein for a period of time in conformity w/comprehensive basis of accounting.
Term
In addition to the basic F/S, the following financial presentations are considered to be F/S for reporting purposes...
 Definition
1. Statement of assets and liabilities that does not include owners' equity
2. Statement of revenue and expenses
3. Summary of operations
4. Statement of operations by product lines
5. Statement of cash receipts and disbursements.
Term
different types of OCBOAs
 Definition
a. A basis of accounting that the reporting entity uses to comply w/the requirements or financial reporting provisions of a regulatory agency.
b. A basis of accounting used for tax purposes.
c. Cash basis and modifications of the cash basis having substantial support.
d. A definite set of criteria having substantial support that is applied to all material items,.
Term
differences between standard audit report and a special report on statements prepared on an OCBOA
 Definition
1. specific F/S being audited may differ from traditional F/S
2. Explanatory paragraph before opinion paragraph states the basis of presentation and discloses that basis of presentation as different from GAAP.
3. In opinion paragraph, opinion expressed that F/S are or are not fairly presented in conformity w/specific OCBOA.
4. If report is prepared for regulatory agency, it must be labeled restricted-use (AU 532).
Term
Departures from GAAP and OCBOA
 Definition
treated the same (qualified or adverse opinion)
Term
appropriate OCBOA titles
 Definition
Not the same as those used for GAAP.

1. Balance sheet- cash basis.
2. Statement of assets and liabilities arising from cash transactions.
3. Statement of assets, liabilities, and capital -- income tax basis
4. State of revenue collected and expenses paid
5. Statement of revenues and expenses
6. Statement of income -- statutory basis
7. Statement of operations -- income tax basis
Term
ISAs & special purpose audit report
 Definition
Under the ISAs, any special purpose audit report should include the auditor's address.
Term
Should the auditor apply the same criteria for F/S prepared in accordance w/OCBOAs as GAAP?
 Definition
Yes.
Term
What should F/S prepared in OCBOA include in the notes?
 Definition
A summary of significant accounting policies that discuss the basis of presentation and describes how it differs from GAAP. However, the effects of the differences need not be quantified.
Term
special report
 Definition
An independent auditor may issue a special report that expresses an opinion on 1+ specified elements, accounts, or items of a F/S, which may be presented in the report or in an accompanying document.
Term
examples of the elements, accounts, or items that may be reported on based on...
 Definition
an audit include rentals, royalties, receivables, a profit participation, or a provision for income taxes.
Term
first standard of reporting
 Definition
only GAAS not applying to OCBOA F/S
Term
materiality measurement for special reports
 Definition
must relate to each element, account, or item because the auditor expresses an opinion on each element, etc. covered by the report.

Thus, an audit of a specified element, etc. is ordinarily more extensive than the consideration of the same information in an audit of the F/S.
Term
materiality consideration for special reports
 Definition
The auditor must become satisfied that elements, etc. interrelated w/those on which s/he expresses an opinion have been considered.
Term
If special report is a piecemeal opinion...
 Definition
avoid reporting if your opinion is qualified or adverse, unless only one or a few account balances are included (a major part of the F/S is not involved).
Term
When is a restricted-use report is necessary? (AU 532)
 Definition
If the preparation of the element, account, or item complies w/the requirements or provisions of a contract or agreement that results in a presentation not in conformity w/GAAP or OCBOA.
Term
Can special reports be required?
 Definition
Entities may be required by contractual agreements, such as bond indentures and certain types of loan agreements, or by regulatory agencies to furnish special reports by independent auditors on compliance.
Term
How should reports based upon compliance w/aspects of contractual agreements or regulatory provisions be provided?
 Definition
In conjunction w/an ordinary audit of F/S.
Term
What type of assurance is provided by a report based upon compliance w/aspects of contractual agreements or regulatory provisions.
 Definition
Negative assurance that may be given in a separate paragraph(s) in the audit report on the F/S or in a separate report.
Term
When should negative assurance be given?
 Definition
When an audit of the F/S has been made and it should not extend to any of the covenants relating to matters that have not been subjected to audit procedures in the audit (AU 623).
Term
financial presentations to comply w/contractual agreements or regulatory provisions
 Definition
These statements may not constitute a complete presentation but may otherwise be prepared in conformity w/GAAP or an OCBOA.
Term
Does an audit of financial presentations to comply w/contractual agreements or regulatory provisions result in an opinion?
 Definition
Yes.
Term
On what basis can a special-purpose presentation be prepared?
 Definition
On a basis that results in a presentation not in conformity w/GAAP or an OCBOA.
Term
A special report's emphasis-of-matter paragraph should... (AU 532)
 Definition
restrict the use of the report to those knowledgeable of the arrangements or provisions.
Term
printed forms
 Definition
designed by the bodies with which they will be filed; often prescribe the wording of the auditor's report.
Term
Are printed forms usually acceptable to auditors?
 Definition
Many are unacceptable to auditors b/c they conflict w/reporting standards.
Term
When a report form calls upon an auditor to make an unjustified assertion...
 Definition
s/he should reword the form or attach a separate report (AU 623).
Supporting users have an ad free experience!