PresentationSummary.ppt

Chapter 3Audit Reports Presentation Outline The Standard Audit Report Section 404 of the Sarbanes-Oxley Act Conditions Requiring an Explanatory Paragraph or Modified Report Wording Other Opinion Possibilities Scope Limitation GAAP Departure Lack of Independence Other Information I. The Standard Audit Report The Seven Parts of the Auditor’s Standard Report Five Conditions for the Standard Report A. The Seven Parts of the Auditor’s Standard Report Report title – Must include the word independent. Audit report address – Customary to address to board of directors and stockholders to demonstrate independence. Introductory paragraph – States that an audit has been performed; identifies the financial statements and appropriate dates; states that the financial statements are the responsibility of the entity’s management. Scope paragraph – States that auditor followed GAAS or PCAOB standards and indicates that the audit only provides reasonable assurance. Opinion paragraph – Communicates the results of the audit. Name of CPA firm or practitioner. Audit report date showing last day of field work. Auditor is held accountable only through this date B. Five Conditions for the Standard Report All 4 of the basic financial statements are included. Three General Standards have been followed. Sufficient evidence has been accumulated and three Field Work Standards have been followed. Financial Statements are in accordance with U.S. GAAP. No circumstances require an explanatory paragraph or modified wording of the report. II. Section 404 of the Sarbanes-Oxley Act PCAOB Auditing Standard 2 The Time Period Covered The Audit Report A. PCAOB Auditing Standard 2 Section 404 requires the auditor of a public company to attest to management’s report on the effectiveness of internal control over financial reporting. PCOAB Auditing Standard 2 requires the audit of internal control to be integrated with the audit of the financial statements. B. The Time Period Covered Although the audit opin