12 what are the similarities and differences between

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12 What are the similarities and differences between examination reports on forecasts and audit reports on historical financial statements? on compilation reports on fore- casts? on compilation reports on historical financial statements? 13 What is the auditor’s responsibility for information reported in MD&A in the audit of a public company? R E V I E W C H E C K P O I N T S
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650 PART IV Other Professional Services FINANCIAL STATEMENTS FOR USE IN OTHER COUNTRIES Auditors practising in Canada are increasingly being asked to report on Canadian company financial statements intended for use in other countries, especially the United States. These financial statements might be used by foreign investors or by foreign parent companies for consolidation in foreign financial statements. For many years, American auditors have con- solidated financial statements of foreign companies and subsidiaries of U.S.-based multi- national companies in U.S. parent company financial statements. Non-American auditors have based these statements on U.S. GAAP, even though the same company’s statements may also be prepared on the basis of non-Amercan country’s GAAP for use in the country of origin. With increasing corporate globalization, many U.S. companies are now owned by non-Americans as well, and many U.S. company’s fi nancial statements must now be prepared on the basis of the accounting principles of other countries. In engagements requiring use of foreign standards, Canadian auditors are expected to follow the Canadian general and fi eld work auditing standards, just as they would in any audit. However, there may be differences in accounting that will change some of the audit objectives. For example, some South American countries permit or require general price-level adjusted measurements (because of high rates of inflation), and these management calculations applied to the Canadian company’s account balances will need to be audited. Likewise, some countries do not permit recognition of deferred taxes, so no deferred tax account balances will exist for audit. Clearly, the auditors must know the accounting principles applied in the country the fi nancial statements are intended for. The International Accounting Standards established by the International Accounting Standards Board is the place to begin. In addition to knowing the foreign accounting principles, the Canadian auditor may be expected to apply foreign auditing standards and procedures. Some countries have codified their auditing standards in professional literature, as Canada has, while others put their auditing standards in statutes and legal-like regulations. More auditing of compliance with laws, regulations, or other procedures than Canadian standards require may be necessary.
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  • Fall '12
  • Smith
  • Accounting, Accountant, Auditor's report, CICA Handbook

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