...Abstract This paper focuses on the modifications and opinions of an audit report. An audit report is a crucial part in the auditing process. It is a guide for users of the financial information. Auditors issue opinions on the financial statements based on certain criteria. The main thing is if the financial statements are presented in accordance to GAAP. Also, modifications can occur after the opinion is issued. Modifications vary depending on the issue at hand. Changes in principles or a report involving other auditors are a few. More will be addressed in the paper. An audit report is different is many ways. Even for one company, the audit report may not be the same every year. Modifications and Opinions in Audit Reports Every publicly traded company gets audited. Pop Iuliana (2012) says, “The purpose of an audit is to improve the degree of trust of the users across the financial situations” (p.454). Companies must present their financial statements in accordance to Generally Accepted Accounting Principles (GAAP). The final stage of an audit is writing an audit report. An audit report “expresses an opinion over the audited financial situations so that any user of this information is able to take decisions based on it” (Iuliana, 2012, p. 453). A standard audit report contains eight parts. The eight parts are report title, audit report address, introductory paragraph, management’s responsibility, auditor’s responsibility, opinion...
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...What Is the Difference Between a Compilation, a Review and an Audit? Comparative Overview The level of service is determined by your needs as the client, and what your creditors and/or investors require. The higher the level of service required, the more time the CPA needs to complete the engagement and therefore the more costly the engagement. While privately held companies opt for compiled or reviewed statements, credit agreements with lenders often require audited statements. Compilation • Compiled financial statements represent the most basic level of service CPAs provide with respect to financial statements. • In a compilation engagement, the accountant assists management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements. • In a compilation, the CPA must comply with Statements on Standards for Accounting and Review Services (SSARSs), which require the accountant to have an understanding of the industry in which the client operates, obtain knowledge about the client, and read the financial statements and consider whether such financial statements appear appropriate in form and free from obvious material errors. • A compilation does not contemplate performing inquiry, analytical procedures, or other procedures ordinarily performed in a review; or obtaining an understanding...
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...Auditing and Assurance Standards Council Philippine Auditing Practice Statement 1003Ph GUIDANCE IN DEALING WITH REPORTS REQUIRED BY THE SEC RELATING TO INCREASE IN AUTHORIZED CAPITAL STOCK OF A CORPORATION PAPS 1003Ph PHILIPPINE AUDITING PRACTICE STATEMENT 1003Ph GUIDANCE IN DEALING WITH REPORTS REQUIRED BY THE SEC RELATING TO INCREASE IN AUTHORIZED CAPITAL STOCK OF A CORPORATION CONTENTS Paragraph Introduction………………………………………………………………… 1-2 Objective…………………………………………………………………… 3 Types of Engagements that May be Performed…………………………….. 4-14 Acceptance of an Engagement Relating to Increase in Authorized Capital Stock……………………………………………….. 15-16 Defining the Terms of an Engagement to Perform Agreed-Upon Procedures………………………………………………………………. 17-20 Reporting on Agreed-Upon Procedures Engagements……………………… 21-23 Wording of the Auditor’s Representation Letter to Accompany the Agreed-Upon Procedures Report……………………………………. 24-25 Effective Date……………………………………………………………….. 26 Appendix 1: Required SEC Procedures Relating to an Application for Increase in Authorized Capital Stock as Contained in SEC Memorandum Circular No. 6, Series of 2008 Appendix 2: Example Auditor’s Reports on Agreed-Upon Procedures Engagements Appendix 3: Illustrative Auditor’s Representation Letters 2 PAPS 1003Ph Philippine Auditing Practice Statements (PAPS or Statements) are issued by the Auditing Standards and Assurance Council...
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...Answer: (i) The draft audit report of Willis Sdn Bhd for the year ended 30 August 2010 has contains a disclaimer of audit opinion. A disclaimer opinion is used only when the auditor is unable to satisfy sufficient appropriate audit evidence on which to base the opinion, and where the possible effect on the financial statements of undetected misstatements could be both material and pervasive. This draft audit report produced by audit senior and as a result it shows the restriction imposed on management work to find necessary audit evidence, the limited of evidence to support the capitalization of intangible asset which is research and development costs. After identify the scope that has been imposed, it was a limitation on condition-imposed. The results of trials on the developing a new drug would be a crucial element for audit work, the development costs will effect to future economic benefit if the necessary results not shown, the correct accounting treatment is impossible to be concluded. In the audit report, there is no explanation for the limitation of condition-imposed. If the auditor modifies the audit opinion, the matter giving rise to the modification should be disclosed in a paragraph of the audit report. Otherwise, the report should explained that management restrict to carry out the results of drug trials, and this will make audit firm unable to obtain whether there are necessary adjustments of the intangible asset. There are uncertain to explain the...
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...principal auditor decides not to refer to the audit of another CPA who audited a subsidiary of the principal auditor's client. After making inquiries about the other CPA's professional reputation and independence, the principal auditor most likely would: a. Add an explanatory paragraph to the auditor's report indicating that the subsidiary's financial statements are not material to the consolidated financial statements. b. Document in the engagement letter that the principal auditor assumes no responsibility for the other CPA's work and Opinion. c. Obtain written permission from the other CPA to omit the reference in the principal auditor's report. d. Contact the other CPA and review the audit programs and audit documentation pertaining to the subsidiary. Explanation Choice "d" is correct. When the principal auditor decides not to make reference to the audit of the other auditor, in addition to satisfying himself or herself as to the other auditor's professional reputation and independence, he or she should visit the other auditor, discuss the audit procedures, and/or review the audit programs and audit documentation of the other auditor. Choice "a" is incorrect. The principal auditor may decide not to make reference to the other auditor e\€n when the portion of the financial statements audited by the other auditor is material. When the auditor takes this position, he or she should not state in his report that part of the audit was made by another auditor. Choice "b" is...
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...Gaviola, Harold Dave B. BSA-V Assignment in COMED421/0180/8:30-9:30PM PSA 401: Auditing in a Computer Information Systems Environment - The increasing availability of computer-based accounting systems that is capable of meeting both functional and economic circumstances of even the smallest entity impacts on the audits of those entities. Small entities’ accounting systems often make use of personal computers. Philippine Auditing Practice Statement 1001, “CIS Environments—Stand-Alone Personal Computers” gives additional guidance regarding the special considerations of such an environment. - Small entities are likely to use less sophisticated hardware and software packages than large entities (often “packaged” rather than developed “in house”). Nevertheless, the auditor has sufficient knowledge of the computer information system to plan, direct, supervise, and review the work performed. The auditor may consider whether specialized skills are needed in an audit. - Because of the limited segregation of duties, the use of computer facilities by a small entity may have the effect of increasing control risk. For example, it is common for users to be able to perform two or more of the following functions in the accounting system. • Initiating and authorizing source documents. • Entering data into the system. • Operating the computer. • Changing programs and data files. • Using or distributing output. • Modifying the operating systems. - The use of computer information...
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...rates in sales and profits to continue attracting capital from outside investors and creditors, Hirsch and his associates began using several creative accounting techniques to window dress USSC's financial statements. In 1985, the Securities and Exchange Commission (SEC), after a lengthy investigation, concluded that USSC management had deliberately and materially overstated the profits of the company for the period 1979-1982. USSC was ordered to revise and reissue its financial statements for those years, resulting in a $26 million reduction in its previously reported earnings. Additionally, Hirsch and other USSC executives were forced to repay large bonuses they had earned on the overstated profits. Ernst & Whinney, USSC's independent audit firm during the late 1970s and early 1980s, was criticized by the SEC for failing to discover the various methods used to manipulate the company's reported operating results. Among these schemes were recording shipments of product to sales employees as consummated sales transactions, improperly capitalizing litigation expenses in a patent account, and retaining the cost of retired assets in the company's financial records. The principal focus of the SEC investigation and its subsequent enforcement release for the...
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...Accountants’ Reports 1. (N95,62) Which of the following statements is a basic element of the auditor’s standard report? a. The disclosures provide reasonable assurance that the financial statements are free of material misstatement. b. The auditor evaluated the overall internal control structure. c. An audit includes assessing significant estimates made by management. d. The financial statements are consistent with those of the prior period. 2. (N95,68) The fourth standard of reporting requires the auditor’s report to contain either an expression of opinion regarding the financial statements taken as a whole or an assertion to the effect that an opinion cannot be expressed. The objective of the fourth standard is to prevent a. An auditor from expressing different opinions on each of the basic financial statements. b. Restrictions on the scope of the audit, whether imposed by the client or by the inability to obtain evidence. c. Misinterpretations regarding the degree of responsibility the auditor is assuming. d. An auditor from reporting on one basic financial statement and not the others. 3. (N95,78) March, CPA, is engaged by Monday Corp., a client, to audit the financial statements of Wall Corp., a company that is not March’s client. Monday expects to present Wall’s audited financial statements with March’s auditor’s report to 1st Federal Bank to obtain financing in Monday’s attempt to purchase Wall. In these circumstances, March’s auditors report would usually...
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...Andy Mandel 5/21/13 1. a. In my opinion, on a scale of 0-100 where 0 is “absolutely will remain in existence” and 100 is “absolutely will fail”, the term “substantial doubt” to me would be the number 65. I chose this number because as an investor, I would consider this the threshold between possible and likely. In my mind, anything above 65 would create more than substantial doubt that the company is in trouble and would have to use extraordinary measures to fix their situation. b. After the auditor determines that substantial doubt exists about the client’s ability to continue as a going-concern, he should talk to management about what they plan on doing about it and how effective their plan will be if they can even be implemented. c. The auditor should focus on elements of management’s plan that would play a significant role in overcoming the adverse conditions causing the going-concern. Not only should the auditor look for these specific elements of management’s plan, but he should also consider how accurate management’s assertions about the effectiveness of their plan will be. For example, if the plan is to sell assets, the auditor should consider the marketability of the asset and what the company will likely get for its disposition. d. If the auditor still doubts the company’s ability to continue as a going-concern, he is to put an explanatory paragraph after the opinion paragraph using the words “substantial doubt” and “going concern”. e. If, after reviewing...
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...Lowes Company. The ethical behaviors required by the Lowes Company are to be followed by all employees of the Lowe’s Company both internal and external employees (Lowes, 2010). The rules of the policy include: compliance with laws, and regulations, conflict of interest, fair dealing, corporate opportunities and loyalty, confidential information, social networking media and collaborative networking technologies, payments to governmental officials or other persons, importance of accurate books and records and adherence to system of internal control to financial reporting , protection and proper use of company assets, public company reporting , insider trading, intellectual property, employee relations, compliance with code, amendment, modification, and...
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...challenges in financial reporting and auditing, and in the surrounding environment. For example, today’s financial reporting involves more complexity, more areas of judgment, and more qualitative disclosures; and users have higher expectations than ever before, with many saying “We want to hear more.” Perhaps most importantly, the global financial crisis has triggered questions concerning the quality of audits, their effectiveness, and the role of professional judgment and skepticism – which have given way to fundamental questions to the profession about relevance and trust. So why change the auditor’s report now? What we learned from research is a positive message: the auditor’s opinion is valued, and users want to hear more from the auditor – more pertinent, and more tailored, information about the specific audit performed on an entity’s financial statements. There is symbolic value in the current report, but little communicative value – and users see the potential for the auditor to provide more value and more transparency. So, now is the time to lay the foundation for the auditor’s report of the future. The Beginning of a New Era I am pleased – indeed proud – to announce that in July the IAASB published its Exposure Draft “Reporting on Audited Financial Statements: Proposed New and Revised International Standards on Auditing (ISAs).” The IAASB...
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...PORTFOLIO MANAGEMENT PLAN ROUGH DRAFT PROJ 587 ADVANCED PROGRAM MANAGEMENT DEVRY UNIVERSITY, KELLER GRADUATE SCHOOL OF MANAGEMENT MAR 29, 2015 TOPIC: Mortgage banking XYZ Company The purpose of this project is to develop and enhance our managerial skills in the area of portfolio management technique. This paper will focus on the portfolio managements plan utilized in the area of mortgage banking industry. Our team decided to create a pseudo company that will mimic similar companies like Chase Mortgage Banking etc. The three projects used in the development of this portfolio plan include: • Compliance Management Systems • Loan Origination Systems • Modification Assistance These projects can also be classified as programs for the purpose of this paper and it was meticulously selected due to it value and also it interconnectivity with each other as we manage the portfolio plan. OVERVIEW: Chase is the U.S. consumer and commercial banking business of JPMorgan Chase & Co. (NYSE: JPM), a leading global financial services firm with assets of $2.3 trillion and operations in more than 60 countries. They are the neighborhood banks for thousands of communities across the country. Chase serve approximately one of out of every six Americans through more than 5,500 bank branches; 18,000 ATMs; mortgage offices; online and mobile banking; as well as relationships with auto dealerships, schools and universities. • Serves 21 million households with consumer...
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...Figure 1: Dashboard Tab To start with, you have to go to the Settings Tab (Component Management and click “Add” for adding a domain, SharePoint Server or SQL Server. Provide the basic details like name or IP Address of server and login credentials of an administrative user. Once IP Address is identified, you can customize the auditing by selecting objects, object classes, operations, mailbox accesses, site URLs, databases, etc. you want to monitor. You have to provide the details of SQL Server to store the auditing logs at the last step. Once a server is added, you have to sit back, relax and just keep watching how your server is being monitored and audited by LepideAuditor Suite. Figure 2: Reports Tab You can see the reports in three different views – Grid, Graph, and Calendar. Almost every detail about a change will be displayed. For Active Directory and Group Policy, you have the option to rollback an unwanted...
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...Compilation of Financial Statements 2011 AR Section 80 Compilation of Financial Statements Issue date, unless otherwise indicated: December 2009 See section 9080 for interpretations of this section. Source: SSARS No. 19 .01 This section establishes standards and provides guidance on compilations of financial statements. The accountant is required to comply with the provisions of this section whenever he or she is engaged to report on compiled financial statements or submits financial statements to a client or to third parties. Establishing an Understanding .02 The accountant should establish an understanding with management regarding the services to be performed for compilation engagements1 and should document the understanding through a written communication with management. Such an understanding reduces the risks that either the accountant or management may misinterpret the needs or expectations of the other party. For example, it reduces the risk that management may inappropriately rely on the accountant to protect the entity against certain risks or to perform certain functions that are management's responsibility. The accountant should ensure that the understanding includes the objectives of the engagement, management's responsibilities, the accountant's responsibilities, and the limitations of the engagement. In some cases, the accountant may establish such understanding with those charged with governance. .03 An understanding with management and...
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...Audting and monitoring should be: 1. An ongoing process; 2. Thorough with regular reporting on it to senior officials, including the board; 3. Regular, periodic audits by qualified people focusing on programs with substantive exposure to government enforcement actions; and 4. Ensuring compliance with specific federal, state, and internal rules and policies. Ongoing monitoring is the program managers’ responsibility. They are the ones most familiar with their own operations and should be charged with identifying risk areas of their responsibility; developing appropriate internal controls, policies, and procedures; and monitoring them to verify they are being followed. Whereas monitoring should be done by program managers, the ongoing auditing of those operations needs to be performed by parties independent of those operations. This is to ensure objectivity in performing the audit reviews. The objectives of these reviews are also different from monitoring. Whereas monitoring is to ensure that policies and procedures are in place and are being followed, auditing is to determine whether the monitoring program is operating as it should and that policies, procedures, and controls adopted are adequate and their effectiveness is validated in reducing errors and risks. The compliance officer should not be directly involved in ongoing monitoring other than to identify potential areas of risk or concern and to track that appropriate follow-up was made in response to weaknesses...
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