AU书本课后答案CH03.docx

AU书本课后答案CH03.docx

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AU书本课后答案CH03

Chapter3

AuditReports

ReviewQuestions

3-1Auditor'sreportsareimportanttousersoffinancialstatementsbecausetheyinformusersoftheauditor'sopinionastowhetherornotthefinancialstatementsarefairlystatedorwhethernoconclusioncanbemadewithregardtothefairnessoftheirpresentation.Usersespeciallylookforanydeviationfromthewordingofthestandardunqualifiedreportandthereasonsandimplicationsofsuchdeviations.Havingstandardwordingimprovescommunicationsforthebenefitofusersoftheauditor’sreport.Whentherearedeparturesfromthestandardwording,usersaremorelikelytorecognizeandconsidersituationsrequiringamodificationorqualificationtotheauditor’sreportoropinion.

3-2Theunqualifiedauditreportconsistsof:

1.ReporttitleAuditingstandardsrequirethatthereportbetitledandthatthetitleincludesthewordindependent.

2.AuditreportaddressThereportisusuallyaddressedtothecompany,itsstockholders,ortheboardofdirectors.

3.IntroductoryparagraphThefirstparagraphofthereportdoesthreethings:

first,itmakesthesimplestatementthattheCPAfirmhasdoneanaudit.Second,itliststhefinancialstatementsthatwereaudited,includingthebalancesheetdatesandtheaccountingperiodsfortheincomestatementandstatementofcashflows.Third,itstatesthatthestatementsaretheresponsibilityofmanagementandthattheauditor'sresponsibilityistoexpressanopiniononthestatementsbasedonanaudit.

4.Scopeparagraph.Thescopeparagraphisafactualstatementaboutwhattheauditordidintheaudit.Theremainderbrieflydescribesimportantaspectsofanaudit.

5.Opinionparagraph.Thefinalparagraphinthestandardreportstatestheauditor'sconclusionsbasedontheresultsoftheaudit.

6.NameofCPAfirm.ThenameidentifiestheCPAfirmorpractitionerwhoperformedtheaudit.

7.Auditreportdate.Theappropriatedateforthereportistheendoffieldwork,whentheauditorhasgatheredsufficientappropriateevidencetosupporttheopinion.

Thesamesevenpartsarefoundinaqualifiedreportasinanunqualifiedreport.Therearealsooftenoneormoreadditionalparagraphsexplainingreasonsforthequalifications.

3-3Thepurposesofthescopeparagraphintheauditor'sreportaretoinformthefinancialstatementusersthattheauditwasconductedinaccordancewithgenerallyacceptedauditingstandards,ingeneraltermswhatthosestandardsmean,andwhethertheauditprovidesareasonablebasisforanopinion.

Theinformationinthescopeparagraphincludes:

1.Theauditorfollowedgenerallyacceptedauditingstandards.

2.Theauditisdesignedtoobtainreasonableassuranceaboutwhetherthestatementsarefreeofmaterialmisstatement.

3.Discussionoftheauditevidenceaccumulated.

4.Statementthattheauditorbelievestheevidenceaccumulatedwasappropriateforthecircumstancestoexpresstheopinionpresented.

3-4Thepurposeoftheopinionparagraphistostatetheauditor'sconclusionsbasedupontheresultsoftheauditevidence.Themostimportantinformationintheopinionparagraphincludes:

1.Thewords"inouropinion"whichindicatethattheconclusionsarebasedonprofessionaljudgment.

2.Arestatementofthefinancialstatementsthathavebeenauditedandthedatesthereoforareferencetotheintroductoryparagraph.

3.Astatementaboutwhetherthefinancialstatementswerepresentedfairlyandinaccordancewithgenerallyacceptedaccountingprinciples.

3-5Theauditor'sreportshouldbedatedFebruary17,2012,thedateonwhichtheauditorconcludedthatheorshehadsufficientappropriateevidencetosupporttheauditor’sopinion.

3-6Anunqualifiedreportmaybeissuedunderthefollowingfivecircumstances:

1.Allstatements—balancesheet,incomestatement,statementofretainedearnings,andstatementofcashflows—areincludedinthefinancialstatements.

2.Thethreegeneralstandardshavebeenfollowedinallrespectsontheengagement.

3.Sufficientappropriateevidencehasbeenaccumulatedandtheauditorhasconductedtheengagementinamannerthatenableshimorhertoconcludethatthethreestandardsoffieldworkhavebeenmet.

4.ThefinancialstatementsarepresentedinaccordancewithappropriateaccountingstandardssuchasgenerallyacceptedaccountingprinciplesorIFRS.Thisalsomeansthatadequatedisclosureshavebeenincludedinthefootnotesandotherpartsofthefinancialstatements.

5.Therearenocircumstancesrequiringtheadditionofanexplanatoryparagraphormodificationofthewordingofthereport.

3-7Theintroductory,scopeandopinionparagraphsaremodifiedtoincludereferencetomanagement’sreportoninternalcontroloverfinancialreporting,andthescopeoftheauditor’sworkandopiniononinternalcontroloverfinancialreporting.Theintroductoryandopinionparagraphsalsorefertotheframeworkusedtoevaluateinternalcontrol.Twoadditionalparagraphsareaddedbetweenthescopeandopinionparagraphsthatdefineinternalcontrolanddescribetheinherentlimitationsofinternalcontrol.

3-8Whenadherencetogenerallyacceptedaccountingprincipleswouldresultinmisleadingfinancialstatementsthereshouldbeacompleteexplanationinaseparateparagraph.Theseparateparagraphshouldfullyexplainthedepartureandthereasonwhygenerallyacceptedaccountingprincipleswouldhaveresultedinmisleadingstatements.Theopinionshouldbeunqualified,butitshouldrefertotheseparateparagraphduringtheportionoftheopinioninwhichgenerallyacceptedaccountingprinciplesarementioned.

3-9Anunqualifiedreportwithanexplanatoryparagraphormodifiedwordingisthesameasastandardunqualifiedreportexceptthattheauditorbelievesitisnecessarytoprovideadditionalinformationabouttheauditorthefinancialstatements.Foraqualifiedreport,eitherthereisascopelimitation（condition1）orafailuretofollowgenerallyacceptedaccountingprinciples（condition2）.Undereithercondition,theauditorconcludesthattheoverallfinancialstatementsarefairlypresented.

Twoexamplesofanunqualifiedreportwithanexplanatoryparagraphormodifiedwordingare:

1.Theentitychangedfromonegenerallyacceptedaccountingprincipletoanothergenerallyacceptedaccountingprinciple.

2.Asharedreportinvolvingtheuseofotherauditors.

3-10WhenanotherCPAhasperformedpartoftheaudit,theprimaryauditorissuesoneofthefollowingtypesofreportsbasedonthecircumstances.

1.Noreferenceismadetotheotherauditor.Thiswilloccuriftheotherauditorauditedanimmaterialportionofthestatement,theotherauditorisknownorcloselysupervised,oriftheprincipalauditorhasthoroughlyreviewedtheotherauditor'swork.

2.Issueasharedopinioninwhichreferenceismadetotheotherauditor.ThistypeofreportisissuedwhenitisimpracticaltoreviewtheworkoftheotherauditororwhenaportionofthefinancialstatementsauditedbytheotherCPAismaterialinrelationtothetotal.

3.Thereportmaybequalifiediftheprincipalauditorisnotwillingtoassumeanyresponsibilityfortheworkoftheotherauditor.AdisclaimermaybeissuedifthesegmentauditedbytheotherCPAishighlymaterial.

3-11Eventhoughtheprioryearstatementshavebeenrestatedtoenhancecomparability,aseparateexplanatoryparagraphisrequiredtoexplainthechangeingenerallyacceptedaccountingprinciplesinthefirstyearinwhichthechangetookplace.

3-12Changesthataffecttheconsistencyofthefinancialstatementsmayinvolveanyofthefollowing:

a.Changeinaccountingprinciple

b.Changeinreportingentity

c.Correctionsoferrorsinvolvingaccountingprinciples.

Anexampleofachangethataffectsconsistencywouldbeachangeinthemethodofcomputingdepreciationfromstraightlinetoanacceleratedmethod.Aseparateexplanatoryparagraphisrequirediftheamountsarematerial.

Comparabilityreferstoitemssuchaschangesinestimates,presentation,andeventsratherthanchangesinaccountingprinciples.Forexample,achangeintheestimatedlifeofadepreciableassetwillaffectthecomparabilityofthestatements.Inthatcase,noexplanatoryparagraphforlackofconsistencyisneededbecausethesamemethodofdepreciationisusedinbothyears,buttheinformationmayrequiredisclosureinthestatements.

3-13Thethreeconditionsrequiringadeparturefromanunqualifiedopinionare:

1.Thescopeoftheaudithasbeenrestricted.Oneexampleiswhentheclientwillnotpermittheauditortoconfirmmaterialreceivables.Anotherexampleiswhentheengagementisnotagreeduponuntilaftertheclient'syear-endwhenitmaybeimpossibletophysicallyobserveinventories.

2.Thefinancialstatementshavenotbeenpreparedinaccordancewithgenerallyacceptedaccountingprinciples.Anexampleiswhentheclientinsistsuponusingreplacementcostsforfixedassets.

3.Theauditorisnotindependent.Anexampleiswhentheauditorownsstockintheclient'sbusiness.

3-14AqualifiedopinionstatesthattherehasbeeneitheralimitationonthescopeoftheauditoradeparturefromGAAPinthefinancialstatements,butthattheauditorbelievesthattheoverallfinancialstatementsarefairlypresented.Thistypeofopinionmaynotbeusediftheauditorbelievestheexceptionsbeingreporteduponareextremelymaterial,inwhichcaseadisclaimeroradverseopinionwouldbeused.

AnadverseopinionstatesthattheauditorbelievestheoverallfinancialstatementsaresomateriallymisstatedormisleadingthattheydonotpresentfairlyinaccordancewithGAAPthefinancialposition,resultsofoperations,orcashflows.

3-14（continued）

Adisclaimerofopinions