AUD 1.11 - Other & Supplementary Info

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  1. True / False: The auditor is responsible for determining whether or not other information that contains the auudited FS is properly stated.
    • False
    • Although the auditor should read it for material inconsistencies.
  2. What are the 3 basic steps of the audit when starting with management?
    • (1) Inquire of mgmt about the methods used, any changes to the methods from prior years (and reasons), and any significant assumptions underlying the creation
    • (2) Determine if the info is consistent with management's responses
    • (3) Obtain written management representations regarding the info.
  3. If an auditor discovers and verifies a material inconsistency in the FS and management refuses to fix the issue - what is the auditor's recourse?
    Modify the audit opinion.
  4. If an auditor discovers and verifies a material inconsistency, or has unresolved doubts, in the Other or Supplementary Information and management refuses to fix the issue - what is the auditor's recourse?
    • Inform those charged with governance
    • Describe the material inconsistency in an Other Matter or Explanatory paragraph that should include a disclaimer of opinion on the other information, OR
    • Withhold use of the report, OR
    • Withdraw from the engagement (false, fraudulent, deceptive, misleading)
  5. What are the two objectives for the auditor if engaged to report on supplementary info?
    • (1) Evaluate the presentation of the supplementary info in relation to the FS as a whole
    • (2) Report on whether the supplementary info is fairly stated, in all material respects, in relation to the FS
  6. The client has engaged the auditor to report on supplementary information. Can the auditor perform this function in conjunction with an audit of the FS as a whole?
    • Yes, if all of the following conditions are met:
    • (1) The info is derived from or relates directly to the info used to prepare the FS in the same period
    • (2) The FS were audited and the auditor issued an auditor's report
    • (3) Neither an adverse opinion nor a disclaimer of opinion was issued on the FS
    • (4) The supplementary info will accompany the audited or readily available FS
  7. The client has engaged the auditor to report on supplementary information. What is management's responsibility?
    • (1) To prepare the information in accordance with applicable criteria
    • (2) To provide the auditor with written representations related to the info
    • (3) To include the auditor's report on the supplementary info in any document that contains the info
    • (4) To present or make available the audited FS by the issuance date of the supplementary info
  8. True / False: When auditing supplementary information in addition to the audit of the FS, a separate materiality level should be assigned the supplementary info.
    • False
    • The same materiality used for the FS should be assigned to the supplementary info.
  9. What additional audit procedures are required when auditing supplementary info (even if the supplementary info is required)?
    • Inquire from management:
    • ** the purpose of the supplementary info
    • ** the criteria, methods, and any significant assumptions used to prepare the info
    • Obtain written representations from mgmt regarding the info
    • The auditor should:
    • ** Determine whether the form & content of the info complies with the applicable criteria
    • ** Compare and reconcile the info to the audited FS & records
    • ** Evaluate the appropriateness and completeness of the info
  10. True / False: The auditor has no responsibility to consider subsequent events with respect to supplementary info.
    True
  11. What are the two methods of presenting the auditor's report on supplemental information for both issuers and nonissuers?
    • (1) As an Other-Matter or Explanatory paragraph in the auditor's report on the entire FS, OR
    • (2) In a separate report that should include
    • ** a reference to the report on the FS,
    • ** the date of that report,
    • ** the nature of the opinion on the FS,
    • ** an alert restricting use of the separate report
    • ** dated not earlier than the date that the required procedures were completed, but after the date of the auditor's report for the FS
  12. The client (either issuer or nonissuer) has engaged the auditor to report on supplementary info. The auditor also performs the audit on the FS, resulting in an adverse or disclaimer of opinion. What type of opinion may the auditor provide on the supplemental info?
    • For non-issuer: The auditor is prohibited from expressing an opinion
    • For issuer: express an adverse or disclaimer of opinion
  13. The client (either issuer or nonissuer) has engaged the auditor to report on supplementary info. The auditor also performs the audit on the FS, resulting in a qualified opinion. What type of opinion may the auditor provide on the supplemental info?
    Assuming the qualification also pertains to the supplemental info, the auditor should explain the effect and issue a qualified opinion on the supplemental info.
  14. The SEC and GASB have required supplementary information. Does the auditor's opinion on the FS cover the required supplementary info?
    No
  15. What procedures must the auditor follow when supplementary information in required by GAAP, FASB, GASB, etc?
    Apply certain limited procedures to ensure nothing is omitted, or there are no material departures, and add an other-matter paragraph to the FS audit report.
  16. Management declines to present supplementary information required by GAAP, GASB, FASB, etc. Does it affect the opinion on the FS, and how is this reported by the auditor?
    • It does not affect the opinion of the auditor
    • It is presented in an Other-Matter paragraph

Card Set Information

Author:
BethG
ID:
332123
Filename:
AUD 1.11 - Other & Supplementary Info
Updated:
2017-06-20 14:13:45
Tags:
audit AUD
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Description:
Becker Review 2017
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