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  1. 3 general standards of GAAS
    • Training=adequate technical training and proficiency
    • Independence=in fact and appearance
    • Professional care=sufficient appropriate evidence to provide reasonable assurance
  2. 3 fieldwork standards of GAAS
    • Planning and supervision=adequately planned and properly supervised
    • Internal control=understand entity and environment
    • Evidence =sufficient appropriate evidence to provide reasonable basis for opinion
  3. 4 reporting standards of GAAS
    • Accounting=GAAP=explicit statement
    • Consistency=enhances comparability, implicit (silence means it's OK)
    • Express opinion=explicit statement
    • Disclosure=implicit (silence means it's OK)
  4. 3 differences between US and Intn'l auditing standards
    • 1. Intn'l requires expanded descriptions of responsibility
    • 2. Intn'l report should name location in country or jurisdiction
    • 3. If intn'l and country are same auditor can refer to both
  5. Types of opinions
    • Unqualified (can be modified)
    • Qualified (except for)
    • Adverse
    • Disclaimer
  6. opinions resulting from GAAP problems
    • Material problem=qualified (except for)
    • Very material=Adverse
  7. opinions resulting from GAAS problems
    • Material=qualified (except for)
    • Significant=disclaimer
  8. Position of explanatory paragraph
    • Unqualified opinion=explanatory paragraph after opinion paragraph
    • Qualified opinion=explanatory paragraph before opinion paragraph
    • Justified GAAP departure and emphasis of a matter=explanatory paragraph after or before
  9. Modified unqualifed opinion
    • Another CPA
    • Consistency
    • Emphasis of a matter
    • Justified GAAP departure
    • Other
    • Going concern
  10. Reliance on another auditors work
    • modified unqualified opinion
    • division of responsibility
    • modify all three paragraphs
  11. Justified departure from GAAP
    • modified unqualifed opinion
    • explanatory paragraph before or after opinion
    • describe departure, effects and why
  12. Going concern
    • consider mitigating factors=borrow money, sell assets, delay expenditures, increase equity
    • explanatory paragraph after opinion
    • modified unqualified if disclosed, qualified/adverse for lack of disclosure
  13. Emphasis of a matter
    • professional judgement
    • explanatory paragraph after or before opinion paragraph
  14. Lack of consistency (acceptable/justified change in accounting principle)
    • comparability of financial statements from year year
    • change estimate=no paragraph needed
    • change depreciation=need paragraph
  15. Qualified (except for GAAP)
    • non-GAAP change in accounting principle
    • inadequate disclosure
    • unjustified departure from GAAP
    • unreasonable accounting estimate
  16. Non GAAP change in accounting principle
    • unjustified
    • consistency problem
    • explanatory paragraph before opinion
    • modify opinion paragraph
  17. Inadequate disclosure
    • qualified or adverse depending on materiality
    • if causing fraud, insist on correction
    • no CFS=explanatory before opinion, modify intro
    • modify opinion paragraph
  18. Unnecessary/unjustified departure from GAAP
    • f/s not prepared in accordance with GAAP
    • explanatory paragraph before opinion
    • modify opinion paragraph
  19. Unreasonable accounting estimate
    • causes f/s to be materially misstated
    • qualified or adverse
  20. adverse opinion
    • same as qualified but very material GAAP problem
    • explanatory before opinion
    • modify opinion
  21. Qualified (except for GAAS)
    • uncertainty
    • scope limitation
    • material
  22. uncertainty
    • unable to obtain sufficient evidence to support managements assertions
    • unqualified is OK if evidence supports managments assertions about uncertainty
  23. scope limitation
    • unable to fully complete audit
    • time restraints, lack of sufficient appropriate evidence, refusal of mngt letter or attorney response
    • explanatory paragraph before opinion
    • modify scope and opinion
  24. Disclaimer of opinion (GAAS problem) uncertainty, scope, lack of independence
    • significant problem
    • explanatory before opinion
    • modify intro and opinion
    • NO scope
  25. automatic disclaimer
    • lack of independence
    • unaudited f/s
  26. unaudited f/s
    • no audit work=no opinion
    • lack of independence=no intro, no scope, modify opinion to disclaimer
  27. reporting different opinions in different years
    • CY qualified, PY unqualified=explanatory before opinion, modify opinion
    • CY unqualified, PY disclaimer=like scope limitation, explanatory before opinion, modify scope and opinion, disclaim i/s, RE, and CFS
  28. amended opinion
    • explanatory before opinion
    • modify opinion
  29. reporting on supplementary info
    • auditor must get mngt representation letter
    • if material misstatement=modify opinion or withhold report
    • can be either
    • -explanatory paragraph after opinion paragraph
    • -separate report
  30. RSI procedures
    • f/s opinion does not generally cover RSI
    • procedures include
    • -inquire of mngt
    • -is RSI consistentwith mngt and f/s
    • -get written representation
  31. AICPA code of professional conduct
    • applies to all members
    • distinguishing mark that accepts high degree of responsibility toward public
    • 2 major sections- principles and rules
  32. Rule 101 independence requirements
    • covered members
    • immediate family
    • close relatives
    • not required for complitations and non attest services
  33. disclose confidential info without consent of client
    • subpoena or summons
    • peer quality review
    • inquiry by ethics division of AICPA or state board
    • for defense if client is suing
  34. permission of contingent fees
    • tax/bankruptcy court
    • compilations of f/s used by 3rd parties with lack of independence disclosure
  35. partner rotation under SEC
    • lead partner=5 year rotation with 5 year time out
    • other partners=7 year rotation with 2 year time out
    • exemption=small firms with <five issuer clients and <10 partners
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