AUD 1.05 - Modified Opinions GAAP

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The flashcards below were created by user BethG on FreezingBlue Flashcards.


  1. When should the auditor issue a qualified opinion on the FS?
    When misstatements, individually or in the aggregate, are material but not pervasive.
  2. When should the auditor issue an adverse opinion on the FS?
    When misstatements, individually or in the aggregate, are both material and pervasive.
  3. When issuing a qualified opinion for a nonissuer, which paragraphs of the auditor's report are modified?
    • Auditor's Responsibility is modified
    • Basis for Qualified Opinion is added
    • Opinion paragraph is modified
  4. What is the modification made to the Auditor's Responsibility section when issuing a qualified opinion for a nonissuer?
    "Auditor believes that the audit evidence obtained is sufficient and appropriate to provide a basis for the qualified audit opinion."
  5. What are the contents of the Basis of Qualified Opinion paragraph for a nonissuer? Where is this paragraph placed in the auditor's report?
    • Placed just prior to the Opinion paragraph
    • Heading "Basis for Qualified Opinion"
    • Description of misstatements or omission of information in either the FS or disclosures.
    • Quantification of the financial effects of any misstatement that relate to specific amounts in the FS when practicable, OR a statement that the effects cannot be quantified, OR reference to the disclosures if the effects are noted there.
  6. What are the contents of the Opinion paragraph when issuing a qualified opinion for a nonissuer?
    "In our opinion, except for the effects of the matter(s) described in the basis for qualified opinion paragraph, the financial statements are presented fairly, in all material respects, in accordance with the applicable financial reporting framework.
  7. When issuing an adverse opinion for a nonissuer, which paragraphs of the auditor's report are modified?
    • Auditor's Responsibility is modified
    • Basis for Adverse Opinion is added
    • Opinion paragraph is modified
  8. What is the modification made to the Auditor's Responsibility section when issuing an adverse opinion for a nonissuer?
    "Auditor believes that the audit evidence obtained is sufficient and appropriate to provide a basis for the adverse audit opinion."
  9. What are the contents of the Basis of an Adverse Opinion paragraph for a nonissuer? Where is this paragraph placed in the auditor's report?
    • Placed just prior to the Opinion paragraph
    • Heading "Basis for Adverse Opinion"
    • Description of misstatements or omission of information in either the FS or disclosures.
    • Quantification of the financial effects of any misstatement that relate to specific amounts in the FS when practicable, OR a statement that the effects cannot be quantified, OR reference to the disclosures if the effects are noted there.
  10. What are the contents of the Opinion paragraph when issuing an adverse opinion for a nonissuer?
    "In our opinion, because of the effects of the matter(s) described in the basis for qualified opinion paragraph, the financial statements do not present fairly in accordance with the applicable financial reporting framework.
  11. When issuing a qualified opinion for an issuer, which paragraphs of the auditor's report are modified?
    • Basis for Qualified Opinion is added
    • Opinion paragraph is modified
  12. What are the contents of the Basis of Qualified Opinion paragraph for an issuer? Where is this paragraph placed in the auditor's report?
    • Placed just prior to the Opinion paragraph
    • No heading is used for issuer reports
    • Description of misstatements or omission of information in either the FS or disclosures.
    • Quantification of the financial effects of any misstatement that relate to specific amounts in the FS when practicable, OR a statement that the effects cannot be quantified, OR reference to the disclosures if the effects are noted there.
  13. What are the contents of the Opinion paragraph when issuing a qualified opinion for an issuer?
    "In our opinion, except for the effects of the matter(s) described in the basis for qualified opinion paragraph, the financial statements are presented fairly, in all material respects, in accordance with the applicable financial reporting framework.
  14. When issuing an adverse opinion for an issuer, which paragraphs of the auditor's report are modified?
    • Basis for Adverse Opinion is added
    • Opinion paragraph is modified
  15. What are the contents of the Basis of an Adverse Opinion paragraph for an issuer? Where is this paragraph placed in the auditor's report?
    • Placed just prior to the Opinion paragraph
    • No headings are used
    • Description of misstatements or omission of information in either the FS or disclosures.
    • Quantification of the financial effects of any misstatement that relate to specific amounts in the FS, OR a statement that the effects cannot be quantified when practicable, OR reference to the disclosures if the effects are noted there.
  16. What are the contents of the Opinion paragraph when issuing an adverse opinion for an issuer?
    "In our opinion, because of the effects of the matter(s) described in the previous paragraphs, the financial statements do not present fairly in accordance with the applicable financial reporting framework.
  17. What are the 4 typical GAAP issues that could lead to a qualified opinion?
    • GAAP consistency change that is not justified and for which the auditor disagrees
    • Inadequate or incorrect disclosure
    • An unjustified departure from GAAP (including omitting the Statement of Cash Flows)
    • Unreasonable accounting estimate
  18. What is meant by "when practicable" regarding the inclusion of information?
    The information is reasonably obtainable from the entity's accounts or records and that providing the info in the auditor's report does not require the auditor to assume the position of a preparer of the financial info (such as preparing the statement of cash flows).
  19. An auditor should withdraw from an engagement if an omission created FS that could be labeled any of the 4 following:
    • False
    • Fraudulent
    • Deceptive
    • Misleading

Card Set Information

Author:
BethG
ID:
332015
Filename:
AUD 1.05 - Modified Opinions GAAP
Updated:
2017-06-20 17:23:22
Tags:
audit AUD
Folders:

Description:
Becker Review 2017
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