Chapter 3 Reading - C hapter 3 Reports are essential...

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Chapter 3 Reports are essential because they commute the auditor’s findings. Audit Report is the FINAL step in the audit process Standard Unqualified Report Contains 7 distinct parts: 1. Report title 1. the word independent must be included in here. 2. Audit Report address 1. who is the report addressed to? 3. Introductory paragraph – says that it’s a report, and not a review or compilation. 1. Says that audit was done 2. Lists the financial statements that were audit 3. Says they’re the responsibility of management 4. Scope paragraph 1. Says what the auditor did in the audit 2. Auditor followed U.S generally accepted auditing standards PCAOB 3. Country of origin must be identified. 4. Scope paragraph states that auditor is responsible for only Reasonable assurance, free of material misstatements. Meaning that the audit only makes reasonable assurance, for MATERIAL misstatements. 5. On a test basis: means that sampling was done. Not full examining 5. Opinion paragraph
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1. This is the last paragraph and includes the auditor’s opinion on the F/ S. 2. This is the most important part of the report, sometimes the whole report known as auditor’s opinion. 3. Stated as an opinion, rather than Absolute FACT 4. Still includes some information risk. 5. This paragraph is required to state an opinion about the F/S conformity with U.S GAAP. 6. Law requires that the auditors go beyond. 6. Name of CPA firm 1. Only name of firm and not of partner, because the whole firm is responsible for the audit. 7. Audit Report Date 1. This is the LAST DAY of Fieldwork, meaning this is the last day the auditor reviews and is responsible. That is the last day the auditor searched for Material Misstatments 5 REQUIREMENTS OF A STANDARD UNQUALIFED REPORT: 1. All of the 4 statements are included in the financial statements 2. The 3 general standards have been followed during the engagement 1. Auditor must have adequate technical training and proficiency to perform audit 2. Auditor must maintain independence in mental attitude in all matters 3. Auditor must exercise DUE professional care in prep of audit
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3. Sufficient appropriate evidence has been accumulated, and the auditor has conducted the engagement in a manner that enables him to conclude that the three standards of fieldwork have been met: 1. Auditor must properly plan and supervise any assistants 2. Auditor must obtain a sufficient understanding of the entity and its environment, including its internal control, to asses the risk of material misstatement due to error or fraud 3. Auditor must obtain sufficient appropriate evidence by performing audit procedures to afford a reasonable basis for an opinion regarding
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This note was uploaded on 11/23/2009 for the course ACCT 411 taught by Professor Jackson during the Fall '09 term at Michigan State University.

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Chapter 3 Reading - C hapter 3 Reports are essential...

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