Professional Standards and Guidelines Types of Opinions GAAS Issue GAAP Issue
Standard/Guidlines Abbreviation Standard-Setting Body Public/Private Description Qualified/Disclaimer Qualified/Adverse
Audits Scope limitation Departure in GAAP
Cannot determine if
Provide GAAS for
Statements on Auditing Private material or whether Inappropriate
SAS AICPA nonissuers, and guidance
Standards (nonissuer) sr. mgmt was accounting
for other services
involved principles
Public Company Provide GAAS for issuers Suspected illagal
Accounting Oversight PCAOB AS PCAOB Public (issuer) and guidance for oher bribes has not been Inadequate
Board Auditing Standards services proven disclosures
Generally Accepted Provide guidance for Unreasonable
Governmental
Government Auditing GAGAS Government audits of government accounting
Accountability Office
Standards organizations estimates
Other Engagements
Provide guidance for
Statements on Standards
attestation engagements
for Attestation SSAE AICPA N/A
(Examination, review,
Engagements
agreed-upon procedures)
Provide guidance for
Statements on Standards
Private unaudited financial
for Accounting and SSARS AICPA
(nonissuer) statements or unauditing
Review Services
financial info
Statements Included in Basis for Opinion (Issuer) Auditor Responsibilities for Subsequent Events
RR Responsibility of management, Responsibility of auditors P review Post-BS transactions
AA Auditor is registered, in Accordance with PCAOB R review Representation Letter from management
PP Plan and Perform I Inquiry of legal counsel, mgmt, those charged with governance
MM free of Material Mistatement M Minutes- review minutes of SH, directors, other meetings
EE Examined the Evidence E Examine most recent interim FS and compare with audited FS
EE Evaluated the Estimates
Change in Opinion? Additional paragraph must include
DORCS
Client Refusal (to make adjustments or disclosures of subsequent
events) D Date of previous audit report
"DAR" them to fix it O Opinion previously issued
D Disassociate, R Reason for prior opinion
A Alert Agencies, and C Changes that have occurred
R Relying Parties S Statement that "opinion is different"
Changes in Auditors Report To Obtain a Reasonable Level of Assurance
Plan the work and properly supervise any
Private (nonissuer) Public (issuer) 1 assistants
Adverse Qualified Adverse Disclaimer Determine and apply appropriate materiality
Section Unmodified Qualified (GAAP/GAAS) (GAAP) Disclaimer (GAAS) Unqualified (GAAP/GAAS) (GAAP) (GAAS) 2 levels
Identify and assess risks of material
Title 3 misstatement
Adressee 4 Obtain sufficient appropriate audit evidence
Opinion Δ Δ Δ Δ Δ Δ
Additional Paragraphs
(Excluded unless added) EOM/OM/SDGC Explanatory ★ ★ ★
Basis for Opinion Δ Δ Δ Same/Δ Δ Opinion Type Report Modifications
KAM/CAM X X X X Without modification
Unmodified
Responsibilities of MGMT Add EOM paragraph
Responsibilities of Auditor Δ Modify Opinion
"Except for"
Legal and Regulatory
Qualified/Modified Modify Basis for Opinion
Requirements
Signature of Auditor Modify Opinion
Auditor's Address Adverse (GAAP) Modify Basis for Opinion
Date of the Report No KAM
(SDGC= Substantial Doubt about the entity's ability to continue as a Going Concern) Modify Opinion
Modify Basis for Opinion
Disclaimer (GAAS)
Before reissuing prior-period report, Group Engagement Must always by satisfied w/ CA's reputation & independence. If Group Eng
Modify Auditor's Responsibility
predecessor auditor should: Auditor decides to:
- Read the CY F/S Assume Responsibility Not Assume Responsibility
- Make reference to Component Auditor; CA
- Not make reference to Component report must not be restricted; magnitude of the
- Compare the prior-period vs CY F/S Auditor portion of the F/S audited by CA
- Determine the type of work to be done
- Letter of rep from successor auditor on F/S of component - Affects OPINION section only
- If other auditor's opinion is QUALIFIED, but not
- Review audit programs & working paper material: group partner doesn't need to make
- Letter of rep from mgmt of CA reference to the qualification
If successor auditor report is NOT
presented on comparative FS, successor
auditor should indicate that:
- PP F/S was audited by a predecessor
auditor (unnamed unless
merged/acquired audit firms) SEC Filers Non-SEC Filers
- Type of opinion expressed & reason for
modification, if modified Cutoff Date Issue Date Available-for-issue date
Req'd to
- Nature of any EOM, OM, or explanatory disclose
paragraphs cutoff date No Yes
Reissuance of between original issue date and reissue date (do not
- Date of predecessor audit report F/S recognize events that occured in between)
Yes, req'd to disclose date
through w/c subsequent events
Revised F/S have been evaluated in orig and
disclosure No requirement revised F/S
Type 1:
conditions
exist @ BS
date Recognize JE and disclosure
Type 2:
happened
after BS date Disclosure only
, Elements of Quality Control Five Components of Internal Control
H Human resources CPA Required to understand/have knowledge of
E Engagement/client acceptance and continuance C Control environment
L Leadership responsibilities R Risk assessment
P Performance of the engagement I Information and communication systems
M Monitoring M Monitoring
E Ethical Requirements E Existing control activities
Documentation Differences Control Activities in a Strong Internal Control System
Private (nonissuer) Public (issuer) P Prenumbering of documents
Keep WPs 5 years 7 years A Authorization of transactions
Complete WPs within ___ Independent checks to maintain asset
from report release date 60 days 45 days I accountability
D Documentation
Timely and appropriate financial
Partner Rotation Requirements (SEC Required) T performance reviews
Lead and Concurring Other I Information processing controls
Rotate Period 5 years 7 years P Physical controls for safeguarding assets
Cool off Period 5 years 2 years S Segregation of duties
Financial Statement Assertions Segregation of Duties
C Completeness A Authorization
O cutOff R Record keeping
V Valuation, allocation, and accuracy C Custody of related assets
E Existence and occurence C Control group/team
R Rights and obligations O Operators Weakness:
Anyone doing
UP Understandibility of Presentation and classification P Programmers
or supervising
A Analyst (system) another area
L Librarian
Summary of the Five Components of Internal Control
Component Description Key Points
- Integrity - Competence
- Participation of those
C Control Environment Sets the tone of the organization charged with governance - Assignment of responsibility
- Organizational structure - Management philosophy
- Human Resources Policies
Identification by management of the - Risks are generally related
R Risk Assessment risks relevant to the preparation of the to changes - Lying
financial statements - Cheating - Stealing
- Initiating, authorizing,
Methods used to classify and report
Information and Communications recording, processing, and
I transactions, and to communicate
Systems reporting entity transactions, - Communicating roles and
roles and responsibilties
conditions, and events responsibilities
- Regular management and
Procedures established to assess the
- Internal Audit Function supervisory activities
M Monitoring quality of internal control performance
- Other procedures such as
over time
- Present and functioning mailing customer statements
Policies and procedures established to - Authorization - Segregation of duties
E Existing Control Activities ensure that management objectives - Safeguarding of assets - Asset acountability
are carried out "PAID TIPS" - Prevent and/or detect (correct)
Included in an Engagement Letter:
- Objective of Audit
- Responsibilities of Auditor
- Responsibilities of MGMT
- Financial Accounting Framework
- Statement that some material misstatements may
not be expected from/content of any reports
- Timing of Audit
- Arrangements with prior Auditor
- MGMT provides written representation letter
- Use of specialists or internal auditors
Standard/Guidlines Abbreviation Standard-Setting Body Public/Private Description Qualified/Disclaimer Qualified/Adverse
Audits Scope limitation Departure in GAAP
Cannot determine if
Provide GAAS for
Statements on Auditing Private material or whether Inappropriate
SAS AICPA nonissuers, and guidance
Standards (nonissuer) sr. mgmt was accounting
for other services
involved principles
Public Company Provide GAAS for issuers Suspected illagal
Accounting Oversight PCAOB AS PCAOB Public (issuer) and guidance for oher bribes has not been Inadequate
Board Auditing Standards services proven disclosures
Generally Accepted Provide guidance for Unreasonable
Governmental
Government Auditing GAGAS Government audits of government accounting
Accountability Office
Standards organizations estimates
Other Engagements
Provide guidance for
Statements on Standards
attestation engagements
for Attestation SSAE AICPA N/A
(Examination, review,
Engagements
agreed-upon procedures)
Provide guidance for
Statements on Standards
Private unaudited financial
for Accounting and SSARS AICPA
(nonissuer) statements or unauditing
Review Services
financial info
Statements Included in Basis for Opinion (Issuer) Auditor Responsibilities for Subsequent Events
RR Responsibility of management, Responsibility of auditors P review Post-BS transactions
AA Auditor is registered, in Accordance with PCAOB R review Representation Letter from management
PP Plan and Perform I Inquiry of legal counsel, mgmt, those charged with governance
MM free of Material Mistatement M Minutes- review minutes of SH, directors, other meetings
EE Examined the Evidence E Examine most recent interim FS and compare with audited FS
EE Evaluated the Estimates
Change in Opinion? Additional paragraph must include
DORCS
Client Refusal (to make adjustments or disclosures of subsequent
events) D Date of previous audit report
"DAR" them to fix it O Opinion previously issued
D Disassociate, R Reason for prior opinion
A Alert Agencies, and C Changes that have occurred
R Relying Parties S Statement that "opinion is different"
Changes in Auditors Report To Obtain a Reasonable Level of Assurance
Plan the work and properly supervise any
Private (nonissuer) Public (issuer) 1 assistants
Adverse Qualified Adverse Disclaimer Determine and apply appropriate materiality
Section Unmodified Qualified (GAAP/GAAS) (GAAP) Disclaimer (GAAS) Unqualified (GAAP/GAAS) (GAAP) (GAAS) 2 levels
Identify and assess risks of material
Title 3 misstatement
Adressee 4 Obtain sufficient appropriate audit evidence
Opinion Δ Δ Δ Δ Δ Δ
Additional Paragraphs
(Excluded unless added) EOM/OM/SDGC Explanatory ★ ★ ★
Basis for Opinion Δ Δ Δ Same/Δ Δ Opinion Type Report Modifications
KAM/CAM X X X X Without modification
Unmodified
Responsibilities of MGMT Add EOM paragraph
Responsibilities of Auditor Δ Modify Opinion
"Except for"
Legal and Regulatory
Qualified/Modified Modify Basis for Opinion
Requirements
Signature of Auditor Modify Opinion
Auditor's Address Adverse (GAAP) Modify Basis for Opinion
Date of the Report No KAM
(SDGC= Substantial Doubt about the entity's ability to continue as a Going Concern) Modify Opinion
Modify Basis for Opinion
Disclaimer (GAAS)
Before reissuing prior-period report, Group Engagement Must always by satisfied w/ CA's reputation & independence. If Group Eng
Modify Auditor's Responsibility
predecessor auditor should: Auditor decides to:
- Read the CY F/S Assume Responsibility Not Assume Responsibility
- Make reference to Component Auditor; CA
- Not make reference to Component report must not be restricted; magnitude of the
- Compare the prior-period vs CY F/S Auditor portion of the F/S audited by CA
- Determine the type of work to be done
- Letter of rep from successor auditor on F/S of component - Affects OPINION section only
- If other auditor's opinion is QUALIFIED, but not
- Review audit programs & working paper material: group partner doesn't need to make
- Letter of rep from mgmt of CA reference to the qualification
If successor auditor report is NOT
presented on comparative FS, successor
auditor should indicate that:
- PP F/S was audited by a predecessor
auditor (unnamed unless
merged/acquired audit firms) SEC Filers Non-SEC Filers
- Type of opinion expressed & reason for
modification, if modified Cutoff Date Issue Date Available-for-issue date
Req'd to
- Nature of any EOM, OM, or explanatory disclose
paragraphs cutoff date No Yes
Reissuance of between original issue date and reissue date (do not
- Date of predecessor audit report F/S recognize events that occured in between)
Yes, req'd to disclose date
through w/c subsequent events
Revised F/S have been evaluated in orig and
disclosure No requirement revised F/S
Type 1:
conditions
exist @ BS
date Recognize JE and disclosure
Type 2:
happened
after BS date Disclosure only
, Elements of Quality Control Five Components of Internal Control
H Human resources CPA Required to understand/have knowledge of
E Engagement/client acceptance and continuance C Control environment
L Leadership responsibilities R Risk assessment
P Performance of the engagement I Information and communication systems
M Monitoring M Monitoring
E Ethical Requirements E Existing control activities
Documentation Differences Control Activities in a Strong Internal Control System
Private (nonissuer) Public (issuer) P Prenumbering of documents
Keep WPs 5 years 7 years A Authorization of transactions
Complete WPs within ___ Independent checks to maintain asset
from report release date 60 days 45 days I accountability
D Documentation
Timely and appropriate financial
Partner Rotation Requirements (SEC Required) T performance reviews
Lead and Concurring Other I Information processing controls
Rotate Period 5 years 7 years P Physical controls for safeguarding assets
Cool off Period 5 years 2 years S Segregation of duties
Financial Statement Assertions Segregation of Duties
C Completeness A Authorization
O cutOff R Record keeping
V Valuation, allocation, and accuracy C Custody of related assets
E Existence and occurence C Control group/team
R Rights and obligations O Operators Weakness:
Anyone doing
UP Understandibility of Presentation and classification P Programmers
or supervising
A Analyst (system) another area
L Librarian
Summary of the Five Components of Internal Control
Component Description Key Points
- Integrity - Competence
- Participation of those
C Control Environment Sets the tone of the organization charged with governance - Assignment of responsibility
- Organizational structure - Management philosophy
- Human Resources Policies
Identification by management of the - Risks are generally related
R Risk Assessment risks relevant to the preparation of the to changes - Lying
financial statements - Cheating - Stealing
- Initiating, authorizing,
Methods used to classify and report
Information and Communications recording, processing, and
I transactions, and to communicate
Systems reporting entity transactions, - Communicating roles and
roles and responsibilties
conditions, and events responsibilities
- Regular management and
Procedures established to assess the
- Internal Audit Function supervisory activities
M Monitoring quality of internal control performance
- Other procedures such as
over time
- Present and functioning mailing customer statements
Policies and procedures established to - Authorization - Segregation of duties
E Existing Control Activities ensure that management objectives - Safeguarding of assets - Asset acountability
are carried out "PAID TIPS" - Prevent and/or detect (correct)
Included in an Engagement Letter:
- Objective of Audit
- Responsibilities of Auditor
- Responsibilities of MGMT
- Financial Accounting Framework
- Statement that some material misstatements may
not be expected from/content of any reports
- Timing of Audit
- Arrangements with prior Auditor
- MGMT provides written representation letter
- Use of specialists or internal auditors
