Class Notes (837,447)
United States (325,041)
Accounting (78)
ACCT 497 (21)
Lee Suman (21)
Lecture 24

ACCT 497 Lecture 24: ACCT 497 Day 24

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ACCT 497
Lee Suman

ACCT 497 Day 24 • Attorney’s Letter Request o • SOX o Management have to give a certificate that is signed by the CEO and CFO ▪ Indicate that the financial statement is signed off by them for the third party • Written Representations o Provided by (management to auditors) o Dated using date of auditors’ reports (audit completion date) o Broad purpose ▪ Impress upon management its (primary) responsibility for the financial statements ▪ May establish auditors’ defense if a question related to inquiries subsequently arises o (Qualify or disclaim an opinion) if not provided by the client • Contents of Written Representations o Information related to financial statements ▪ Management’s (responsibly) for F/S and internal control over financial reporting ▪ Appropriate disclosure, presentation, and reasonableness of items ▪ Statement that uncorrected misstatements are immaterial o Information provided to auditors by management o (F/S and ICFR) - for public entities • Written Representation o • Going-Concern Assessment o Auditors required to consider whether evidence obtained during audit raises questions about ability to continue as a (going concern) o If concerns exist, evaluate o (management’s plans) to mitigate ▪ If concerns do not remain: No effect on report or financial statements ▪ If concerns remain: Disclose in F/S and modify auditors’ report • Adjusting Entries o Accumulate dollar effects of identified (misstatements) o Evaluate materiality ▪ (Rollover) method considers the current period income effect(s) of misstatements ▪ (Iron curtain) method considers the aggregate effect of the adjustments on the entity’s balance sheet ▪ SAB 108 requires adjustments to be proposed if material under either approach o Recommend adjustment of all misstatements identified o Carry any (uncorrected misstatements) forward for consideration in future audits o Communicate all adjustments and misstatements to audit committee or individuals charged with governance • Audit Documentation Review o Audit supervisor ▪ Have all steps in (audit plan) been performed? ▪ Is referencing among documentation clear? ▪ Are explanations understandable? o Audit manager and partner ▪ Is the (overall scope) of the audit adequate? ▪ Do overall (conclusions) support the opinion? o Reviewing partner ▪ Is the quality of audit work and reporting consistent with (quality standards) of the firm? ▪ Engagement quality review Chapter 12: Report on Audited Financial Statements • Reports accompanying financial statements o • Types of opinions o Unmodified opinion ▪ F/S are in accordance with GAAP ▪ Standard report may be modified to disclose additional matters o Qualified opinion ▪ for” some matter, F/S are in accordance with GAAP o Adverse opinion ▪ F/S are not in accordance with GAAP o Disclaimer of opinion ▪ No opinion is issued by auditors • Components of the Standard (Unmodified) Report o Introductory paragraph ▪ F/S and years examined o Management’s responsibility section ▪ Management responsible for financial statements ▪ Management responsible for internal control o Auditor’s responsibility section ▪ Auditor responsible for issuing opinion on financial statements ▪ Audit conducted in accordance with GAAS ▪ Audit provides reasonable assurance o Opinion ▪ Are F/S presented in accordance with applicable financial reporting framework (GAAP)? • Introductory paragraph o We have audited the accompanying financial statements of Dunder-Mifflin, Inc., which comprise the balance sheet as of December 31, 2014, and the related statements of income, changes in shareholders’ equity, and cash flows for the year then ended, and the related notes to the financial statements. o Management’s Responsibility for the Financial Statements o Auditor’s Responsibility o Opinion Paragraph • Management’s Responsibility for the Financial Statements o Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. o Auditor’s Responsibility o Opinion Paragraph • Auditor’s Responsibility o Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perfor
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