CACC521-Week03-text

CACC521-Week03-text - CACC521Session03...

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CACC521-Session03 08/10/2010 13:07:00 Chapter 3 review questions 1. Cannot assume communication If no audit is performed, you want to make a lesser assurance 2.positive assurance  negative assurance audit Qualified Adverse Denial 3. Negative assurance is nothing has come to our attention that these financial  statements are materially misleading. High level of assurance is 95-99% assurance 4. difference between assurance and accounting creditability Assurance – creditability provided by public accountants (PA) Creditability - facts/financial as it relates to GAAP 5. What does an unqualified opinion mean. FS present fairly in all material respects
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Notes present fairly including paragraph about going concern GAAS standards –  auditors are trained,  proficient,  independent,  reasonable,  properly planned and supervised,  sufficient and appropriate evidence 6. departures from unqualified report GAAP departure scope o can’t get evidence o management won't give access to evidence not independent – cannot give an opinion except for denial 7. what extent of evidence is required as a basis for the unqualified opinion o materiality – moderate o evidence - scope
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o isolated -  Adverse o materiality – high o evidence - s o isolated qualified for GAAP departure o materialitiy – high o evidence – not enough evidence to support opinion, scope o Evidence – either gathered or not isolated or persuasive ? find in textbook persuasive if some part of audit did not audit the balance sheet o this would affect many different accounts which would lead to an  adverse opinion if the evidence was isolated to a specific account without affecting other  accounts. 8. Immaterial means unqualified material means qualified – requires an explanatory paragraph reservation paragraph explains why opinion is qualified. 9. Core knowledge question Qualified – except for paragraph -> 
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o reservation paragraph GAAP departure, note disclosure tries to quantify reason Scope paragraph directs attention to the reason for the opinion 10. opinion is disclaimed because of scope limitation intro paragraph – o “we have been engaged to audit” instead of “we have audited” no opinion was given reservation paragraph to explain that scope was limited scope paragraph is omitted entirely since no audit took place auditor takes no responsibility
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This note was uploaded on 04/14/2011 for the course ACC 521 taught by Professor G.caers during the Spring '11 term at Ryerson.

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CACC521-Week03-text - CACC521Session03...

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