[jeff]

Welcome to the Q1 2016 CPA Exam Study Group for AUD.

Some BLITZ videos to help your exams: https://www.another71.com/ninja-blitz

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[FAR_WARS]

D. Describe the appropriate revision to the financial statements in the accountant’s disclaimer of opinion.

The statements are “unaudited” so we can just add the suggested changes to our disclaimer. However, I am still confused as to why we are “disclaiming an opinion” if the statements are unaudited. Perhaps you can do this for PCAOB interim stmts?

FAR- 80
BEC- 75
AUD- 78
REG- ?

[FAR_WARS]

D. Completed an audit and reported on the financial statements that, without the CPA’s consent, were part of a prospectus including unaudited financial statements.

Since we did not consent, we remain unassociated with the stmts.

FAR- 80
BEC- 75
AUD- 78
REG- ?

[Pandarama]

My bad. I worded it wrong. I shouldn't say “event”. Far_wars stated it the way I intended my wording, for the subsequent item to “exist”.

BEC - 80
AUD - 64, 75 - credit lost, 90!!
REG - 73, 74, 83
FAR - 61, 72, 85

Feels good finishing on my best note. Time to watch the mailbox.

[Pandarama]

@peter – 1. the materiality limit is a threshold you set. If the dollar amount or occurrences go over the limit, then you start looking into those areas more and there is more concern. When there's fraud that involves management, the threshold is $0 and it is never acceptable. Financial records should be available upon request… the auditor shouldn't have to wait a long period of time in order to get the items they request. It is also really important for companies to keep their minutes accurate and up-to-date so that they are properly reflecting what's going on and stakeholders to the company can check up on things; if the company records are incomplete, then it looks like they might be hiding things.

2. D?

3. Pretty sure its A or B but honestly I'm torn between the two.

BEC - 80
AUD - 64, 75 - credit lost, 90!!
REG - 73, 74, 83
FAR - 61, 72, 85

Feels good finishing on my best note. Time to watch the mailbox.

[Pete]

If an accountant concludes that unaudited financial statements of an issuer on which the accountant is disclaiming an opinion also lack adequate disclosure, the accountant should suggest appropriate revision. If the client does not accept the accountant’s suggestion, the accountant should
A. Accept the client’s inaction because the statements are unaudited and the accountant has disclaimed an opinion.
B. Express an adverse opinion and describe the appropriate revision in the report.
C. Refer to the appropriate revision and issue a modified report expressing limited assurance.
D. Describe the appropriate revision to the financial statements in the accountant’s disclaimer of opinion.

Answer (D) is correct.
PCAOB auditing standards apply to engagements involving issuers. Under these standards, inadequate disclosure is a departure from U.S. GAAP. When an accountant who is associated with the unaudited statements of an issuer suggests revision because of such a departure and the client declines to provide the necessary disclosures, the disclaimer should be modified to describe the departure. The description should refer specifically to the nature of the departure and, if practicable, state the effects on the financial statements or include the necessary information for adequate disclosure (PCAOB Interim Auditing Standards).

[Pete]

A CPA is considered not associated with unaudited financial statements of a public entity when (s)he
A. Performed a review of an issuer’s unaudited financial statements that are presented in a quarterly report to the shareholders.
B. Received all input data from the client, analyzed it, and returned it to the client for processing by an independent computer service company.
C. Assisted in the preparation of the unaudited financial statements for an issuer.
D. Completed an audit and reported on the financial statements that, without the CPA’s consent, were part of a prospectus including unaudited financial statements.

Answer (D) is correct.
PCAOB auditing standards apply to engagements involving issuers. Under these standards, a CPA is associated with unaudited financial statements of a public entity when (s)he prepares or assists in preparing them or consents to the use of his or her name with them. If neither condition is met, the CPA is not associated with the unaudited statements in the prospectus (PCAOB Interim Auditing Standards).

[Pete]

if the group auditor refers to the component auditor, that will be considered departure from a unmodified report

Which of the following circumstances would not be considered a departure from the auditor’s unmodified report?
A. The financial statements are affected by a departure from a generally accepted accounting principle.
B. The auditor’s opinion is based in part on the report of another auditor.

Answer (B) is incorrect.
The group engagement partner may decide not to assume responsibility for the audit of a component auditor. In these circumstances, the group engagement partner refers to the component auditor’s audit in the auditor’s report on the group statements.

C. The auditor is asked to report only on the balance sheet, and the auditor can comply with relevant standards.
D. The auditor wishes to emphasize a particular matter regarding the financial statements.

the correct answer is c

[FAR_WARS]

D. The auditor wishes to emphasize a particular matter regarding the financial statements

is incorrect? Wow they sure get picky with the wording in that an emphasis of matter paragraph will change an unmodified REPORT, but not an unmodified OPINION.

FAR- 80
BEC- 75
AUD- 78
REG- ?

[Pete]

yeah i think the answer is needed that the pure report not even referring or emphasizing

[amandafaith15]

Which of the following statements is correct regarding the auditor's responsibilities for supplementary information required by the FASB?

A.Because the supplementary information is a required part of the basic financial statements, the auditor should apply normal auditing procedures.

B.The omission of, but not deficiencies in, supplementary information should be disclosed in the opinion paragraph of the auditor's report.

C.Because the supplementary information is not a required part of the basic financial statements, the auditor should apply only certain limited procedures.

D.The omission of supplementary information ordinarily requires the auditor to issue an adverse opinion, but mere deficiencies require an “except for” qualified opinion.

The correct answer is C.

AU-C 730.05 specifies that the auditor should compare the information for consistency with (1) management's responses to inquiries (regarding the methods of preparing the information), (2) the basic financial statements, and (3) other knowledge obtained during the audit of the basic financial statements.

The question says that the information is required by FASB, but the correct answer has the phrase “because the supplementary information is not a required part of the basic financial statements” This has me very confused… I understand that when there is supplementary information you only perform limited procedures to check for consistency, but because the answer choice said that it was NOT required, when the question said it IS required I immediately eliminated it. Can anyone help me understand?

REG -73 (8/2015) 81 (10/2015)
AUD - 73 (11/2015) 84 (1/2016)
BEC - 84 (2/2016)
FAR - 77 (6/2016)

[FAR_WARS]

When FASB requires supplementary information, it is not presented within the BASIC financial statements. It is presented either in a document containing the audited statements. or completely separate from the financial statements.

FAR- 80
BEC- 75
AUD- 78
REG- ?

[Pete]

I just read a post that if an auditor finds a material misstatement and a company correct it, the report is issued will be “unmodified !!

that's one

https://www.another71.com/cpa-exam-forum/topic/audit-opinion-question

[payaza2000]

@peter

Hi Peter I agree with everything that was stated in the link to the post you pasted. Because if an Auditor says to make Adjusting Entries to F/S that are materially misstated, than those Adjusting Entries (ideally) will be restating them so they are no longer materially misstated.

The question that I am not sure I agree with (and hopefully someone) can answer is what determines if the F/S are either qualified or adverse if the Material Misstatement is occurring as a result of misapplication of the Financial Reporting Framework?

FAR 5/6/2015- 84
REG 8/3/2015 - 87
AUD 10/25/2015- 69 1/20/2016 -75
BEC 2/26/2016- 80

Thank you God

[FAR_WARS]

material and not pervasive = Qualified
material and pervasive = Adverse

Pervasive if:
-Not confined to specific elements, accounts, or items of financial statements
-Confined, but a substantial proportion of financial statements
-Omitted Disclosures fundamental to users’ understanding of financial statements

FAR- 80
BEC- 75
AUD- 78
REG- ?

[FAR_WARS]

edit: double post

FAR- 80
BEC- 75
AUD- 78
REG- ?

[Author]

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