3air_im03 - 30 CHAPTER 3 Reports on Audited Financial...

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30 CHAPTER 3 Reports on Audited Financial Statements LEARNING OBJECTIVES Review Checkpoints Exercises and Problems Cases 1. Determine whether an accountant is associated with financial statements. 1 31, 31 2. Explain the general meaning of the three "levels of assurance." 2, 3 3. Write a detailed description of the meaning of the scope paragraph and opinion paragraph in a standard unqualified audit report. 4, 5 4. Write a qualified, adverse, and disclaimer report for a given description of accounting facts and audit circumstances. 6, 7, 8, 9, 10, 11 33, 40 43, 46, 47 5. Write an audit report with an unqualified opinion but containing additional explanation or modified wording for a given description of accounting facts and audit circumstances. 12, 13, 14, 15 34, 39 44, 45 6. Explain the reasons auditors have standards for reporting on the application of accounting principles. 16, 17 7. List and explain the effects of materiality on audit report choices. 18 32, 41 * Ashton Behavioral Case 42 8. Write an audit report in which a principal auditor refers to the work of another independent auditor. 19, 20 36, 37 49 9. Write the required modifications when a report on prior year comparative financial statements is changed. 21 35 48 10. Describe the type of report issued when an audit engagement is limited. 22
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31 11. Explain auditors' reporting responsibilities in connection with "other information" and supplementary information. 23, 24 38 50 12. Describe the reporting requirements involved in auditors' association with condensed financial information. 25 POWERPOINT SLIDES PowerPoint slides are included on the website. Please take special note of: * Association with Financial Statements * Level of Assurance Reservations in Auditor’s Report Effects of Materiality on Auditor’s Report SOLUTIONS FOR REVIEW CHECKPOINTS - Main Body of Chapter 3.1 Investors, creditors and other users tend to assume that financial statements are audited and "everything is OK" whenever they know a public accountant has been involved in producing the statements. If an audit has not been performed, accountants need to make the fact known so users will not mislead themselves. If an audit has been performed, accountants must report their work and conclusions for users' benefit. 3.2 Students may identify more than one description of the "most important" distinction between an opinion and a denial. All the following are valid, although (a) is intended to be the "Most important": a. An opinion (unqualified, qualified or adverse) is an explicit statement of the auditor's conclusions), while a denial is an (empty) assertion of "no conclusion." b. An (unqualified) opinion is the highest level of assurance, while a denial is the lowest level (no assurance).
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3air_im03 - 30 CHAPTER 3 Reports on Audited Financial...

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