CHAPTER 2

AUDIT REPORTS

ATTESTATION REPORTS

• AUDIT REPORT ON GAAP STATEMENTS

• SPECIAL REPORT

• ATTESTATION REPORT

• REVIEW REPORT

STANDARD UNQUALIFIED AUDIT REPORT

• CONDITIONS FOR REPORT– ALL STATEMENTS ARE PRESENTED– THREE GENERAL GAAS STANDARDS

MET– SUFFICIENT EVIDENCE GATHERED– F/S PRESENTED WITH GAAP– NO MODIFICATIONS NEEDED

• PARTS OF REPORT– TITLE– ADDRESS– INTRODUCTORY PARAGRAPH– SCOPE PARAGRAPH– OPINION PARAGRAPH– NAME OF CPA FIRM– REPORT DATE

CATEGORIES OF AUDIT REPORTS

• STANDARD UNQUALIFIED– MODIFIED FOR EXPLANATORY

PARAGRAPH• LACK OF CONSISTENCY

• SUBSTANTIAL DOUBT ABOUT GOING CONCERN

• 203 DEPARTURE FROM GAAP

• EMPHASIS OF A MATTER

• OTHER AUDITORS

• CONDITIONS REQUIRING DEPARTURE FROM STANDARD OPINION– SCOPE OF AUDIT HAS BEEN RESTRICTED– FINANCIALS ARE NOT GAAP– AUDITOR NOT INDEPENDENT

• OTHER REPORTS– QUALIFIED OPINION– ADVERSE OPINION– DISCLAIMER OF OPINION

MATERIALITY

• DEFINITION– AMOUNTS ARE IMMATERIAL– AMOUNTS ARE MATERIAL BUT NOT

PERVASIVE– AMOUNTS ARE PERVASIVE

• MATERIALITY DECISIONS– DOLLAR AMOUNT – BASE– SCOPE LIMITATION CONDITIONS

CONDITION REQUIRING A DEPARTURE

• SCOPE HAS BEEN RESTRICTED– CLIENT IMPOSED RESTRICTIONS

• AICPA SUGGESTS A DISCLAIMER

– CIRCUMSTANCE IMPOSED RESTRICTIONS• DEPENDING ON MATERIALITY

– QUALIFIED OPINION OR DISCLAIMER

• NOT GAAP– MATERIALITY

• QUALIFIED OR ADVERSE

– 203 DEPARTURES

AUDITOR DECISION PROCESS

• CONDITIONS EXIST REQUIRING DEPARTURE?

• DECIDE MATERIALITY FOR SUCH CONDITION

• DECIDE APPRPORIATE REPORT FOR THE CONDITION

• WRITE THE REPORT