MGT321H5 Lecture Notes - Accounting, Engagement Letter, Financial Statement

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Published on 7 Jan 2011
School
UTM
Department
Management
Course
MGT321H5
Professor
CLASS 10 – Special Reports
Last class – 25 page handout
See review section, p.1
Special considerationsaudits of single f/ss and specific elements, accounts or items of a f/s
Audit reports on financial information other than f/ss
-Auditing one assertion only – ex. Sales, lease payments agreement,
Report contains 3 paragraphs:
- introductory (agreement, statute, financial reporting framework),
- scope,
- opinion
- reservation
See example on p.2
Objective: to address appropriately the special considerations that are relevant to:
a) the acceptance of the engagement,
b) the planning and performance,
c) forming an opinion
See illustration on p.3
Special reportsaudit reports on compliance with agreements, statutes and regulations
Bus company example from class.
Standards remain the same,
Competence is a new matter introduced by this special report
When engaged to express an opinion on compliance, the auditor must:
Include in the introductory paragraph:
i) state that the compliance criteria has been audited,
ii) identify the provisions,
iii) describe any significant interpretations of provisions made by mgt
iv) if previously audited in past periods, describe any change in significant interpretations
v) any other relevant information
vi) state that such compliance is responsibility of mgt
vii) state that our responsibility is to express an opinion on this compliance based audit
Scope paragraph must state that:
i) audit was conducted in accordance to GAAP,
ii) planned and performed to obtain reasonable assurance whether compliance was achieved by the entity
iii) such audits include, examination (test basis), evaluating overall compliance, assessing accounting
principles used and significant estimates
Opinion paragraph expresses the auditor’s opinion, in all material respects
If there is a change in any significant interpretation, and the change is adequately disclosed, the auditor
may express an opinion without reservation.
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Document Summary

Special considerations audits of single f/s"s and specific elements, accounts or items of a f/s. Audit reports on financial information other than f/s"s. Objective: to address appropriately the special considerations that are relevant to: the acceptance of the engagement, the planning and performance, forming an opinion. Special reports audit reports on compliance with agreements, statutes and regulations. Competence is a new matter introduced by this special report. When engaged to express an opinion on compliance, the auditor must: Opinion paragraph expresses the auditor"s opinion, in all material respects . If there is a change in any significant interpretation, and the change is adequately disclosed, the auditor may express an opinion without reservation. www. notesolution. com. Review engagement report: includes: introduction, disclaimer paragraph ( a review does not constitute an audit, negative assurance paragraph. A review on compliance with a agreements and regulations is also possible (versus an audit on compliance)