03Audit-Reports.ppt

2005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-1Audit ReportsChapter 3p.45p.452005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-2Learning Objective 1Describe the parts ofthe standard unqualifiedaudit report.p.46p.462005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-3Parts of the StandardUnqualified Audit Report1.Report title2.Audit report address3.Introductory paragraph4.Scope paragraph5.Opinion paragraph6.Name of CPA firm7.Audit report datep.46p.462005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-4Learning Objective 2Specify the conditionsrequired to issue thestandard unqualifiedaudit report.p.48p.482005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-5Conditions for StandardUnqualified Audit Report（共5条）1.All financial statements are included.2.The three general standards have beenfollowed in all respects on the engagement.3.Sufficient evidence has been accumulatedto conclude that the three standards offield work have been met.p.48p.482005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-6Conditions for StandardUnqualified Audit Report4.The financial statements are presented inaccordance with GAAP.5.There are no circumstances requiring theaddition of an explanatory paragraph ormodification of the wording of the report.p.48p.482005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-7Four Categoriesof Audit Reports（四类）Standard unqualifiedQualifiedUnqualified withexplanatory paragraphor modified wordingAdverse or disclaimerp.49p.49图图图图3-23-22005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-8Learning Objective 3Describe the five circumstanceswhen an unqualified report withan explanatory paragraphor modified wording isappropriate.p.49p.492005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-9Unqualified Reportwith Explanation1.Lack of consistent application of GAAP2.Substantial doubt about going concern3.Auditor agrees with a departure frompromulgated accounting principles4.Emphasis of a matter5.Reports involving other auditorsp.49p.492005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-101.Consistency VersusComparabilityChanges that affect consistency and requirean explanatory paragraph if they are material:1.Changes in accounting principles2.Changes in reporting entities3.Corrections of errors involving principlesp.50p.502005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-111.Consistency VersusComparabilityChanges that affect comparabilitybut not consistency:1.Changes in an 1.Changes in an estimateestimate2.2.Error correctionsError corrections not involving principles not involving principles3.3.Variations in format and presentationVariations in format and presentationof financial informationof financial information4.4.ChangesChanges because of substantially because of substantiallydifferent transactions or eventsdifferent transactions or eventsp.50p.502005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-121.Consistency VersusComparabilityThe Auditing Standards Board has issueda proposal to the PCAOB to eliminatethe consistency explanatory paragraph.p.50p.502005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-132.Substantial DoubtAbout Going Concern1.Significant recurring operating lossesor working capital deficiencies2.Inability of the company to pay itsobligations as they come due3.Loss of major customers,the occurrenceof uninsured catastrophes4.Legal proceedings,legislation,that mightjeopardize the entitys ability to operatep.51p.512005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-143.Auditor Agrees with a Departurefrom a Promulgated PrincipleThe auditor must be satisfied and must stateand explain,in a separate paragraph orparagraphs in the audit report,that adheringto the principle would have produced amisleading result in that situation.p.52p.522005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-154.Emphasis of a MatterUnder certain circumstances,the CPA maywant to emphasize specific matters regardingthe financial statements,even though theCPA intends to express an unqualified opinion.p.52p.522005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-165.Reports InvolvingOther Auditors1.Make no reference in the audit report.3.Qualify the opinion.2.Make reference in the report(modified wording report).p.52p.522005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-17Learning Objective 4Identify the types of auditreports that can be issuedwhen an unqualifiedopinion is not justified.p.53p.532005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-18Departures from anUnqualified Opinion1.Scope limitation2.GAAP departure3.Auditor not independentp.53p.532005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-19Qualified OpinionA qualified opinion report canresult from a limitation on thescope of the audit or failure tofollow GAAP.p.53p.532005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-20Adverse OpinionIt is used only when the auditor believesthat the overall financial statements areso materially misstated or misleading thatthey do not present fairly the financialposition or results of operations and cashflows in conformity with GAAP.p.54p.542005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-21Disclaimer of OpinionIt is issued when the auditor is unableto be satisfied that the overall financialstatements are fairly presented.p.54p.542005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-22Learning Objective 5Explain how materiality affectsaudit reporting decisions.p.54p.542005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-23Materiality概念概念A misstatement in the financial statementscan be considered material if knowledge ofthe misstatement would affect a decisionof a reasonable user of the statements.p.54p.542005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-24Levels of Materiality（三种）（三种）Amounts are immaterial.Amounts are material but do not overshadowthe financial statements as a whole.Amounts are so material or so pervasive thatoverall fairness of the statements is in question.p.55p.552005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-25 Relationship of Materialityto Type of OpinionMaterialityLevelSignificance in Terms ofReasonable Users DecisionsType ofOpinionUsers decisions are unlikelyto be affected.1.ImmaterialUnqualifiedUsers decisions are likelyto be affected.2.MaterialQualifiedUsers decisions are likelyto be significantly affected.3.HighlymaterialDisclaimeror adversep.56p.56表表表表3-13-12005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-26Materiality Decisions2.Failure tofollow GAAPAudit reportUnqualifiedQualifiedopinion onlyAdversep.56p.562005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-27Materiality Decisions1.ScopelimitationAudit reportUnqualifiedQualified scopeand opinionDisclaimerp.56p.562005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-28Materiality DecisionsDollar amount compared with a baseMeasurabilityNature of the itemp.56p.562005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-29Learning Objective 6Draft appropriately modifiedaudit reports under a varietyof circumstances.p.57p.572005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-30Discussion of ConditionsRequiring DepartureAuditors scope has been restricted.Statements are not in conformity with GAAP.Auditor is not independent.p.57p.57p.58p.58p.60p.602005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-31Learning Objective 7Determine the appropriateaudit report for a givenaudit situation.p.60p.602005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-32Auditors Decision ProcessDetermine whether any condition existsrequiring a departure from a standardunqualified report.Decide the materiality for each condition.Decide the appropriate type of report.Write the audit report.p.60p.602005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-33Scope Restricted byClient or ConditionsImmaterialMaterialLevel of MaterialityExtremelyMaterialUnqualifiedreportQualified scope,additionalparagraph,and qualifiedopinion(except for)Disclaimerof opinionp.61p.61表表表表3-23-22005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-34Statements Not Prepared inAccordance With GAAPImmaterialMaterialLevel of MaterialityExtremelyMaterialUnqualifiedreportAdditional paragraphand qualified opinion(except for)Adverseopinionp.61p.61表表表表3-23-22005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-35The Auditor Is NotIndependentImmaterialMaterialLevel of MaterialityExtremelyMaterialDisclaimer of opinion(regardless of materiality)p.61p.61表表表表3-23-22005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-36Number of Paragraphsin the ReportStandard unqualified 3Unqualified with explanatory paragraph4Unqualified shared report with other auditors3Qualified opinion only4Qualified scope and opinion4Disclaimer scope limitation3Adverse4p.62p.62表表表表3-33-32005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-37Learning Objective 8Understand combined reportingon financial statements andmanagements report oninternal control overfinancial reporting.p.62p.622005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-38Sarbanes-Oxley ActThis Act requires the auditor of a publiccompany to attest to managementsreport on the effectiveness ofinternal control over financial reporting.2005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-39Sarbanes-Oxley ActCombined Report on Financial Statements and Managements Assessment of Internal Control Over Financial Reporting1.Introductory paragraph2.Definition paragraph3.Scope paragraph4.Inherent limitation paragraph5.Opinion paragraphp.63p.63图图图图3-123-122005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-40Learning Objective 9Discuss the impactof e-commerce onaudit reporting.2005 Prentice Hall Business Publishing,Auditing and Assurance Services 10/e,Arens/Elder/Beasley 3-41End of Chapter 3