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Audit Reports. Chapter 3. Jody. Briefly What is the cover story Halvorson & Co., CPAs Machinetron, Inc. Phases of an Audit p. 160. Jody. Briefly What are three Standards of Field Work ?. standards of field work performance of the audit. Proper planning and supervision

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audit reports

Audit Reports

Chapter 3

slide2
Jody

Briefly

What is the cover story

Halvorson & Co., CPAs

Machinetron, Inc

slide4
Jody

Briefly

What are three Standards of Field Work ?

standards of field work performance of the audit
standards of field workperformance of the audit
  • Proper planning and supervision
  • Sufficient understanding of the entity and its internal control
  • Sufficient appropriate evidence
emily a
Emily A

What are the three paragraphs in the independent auditors’ standard report ?

slide10
Minh

What audit report do we issue if

everything if OK ?

the financial statements are fairly presented

there are no material misstatements

slide11
We have audited the accompanying balance sheet of Miller Motor Co. as of Dec. 31, 2012 and 2011, and the related statements of income, retained earnings and cash flowsfor the three year then ended Dec. 31, 2012. These statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States.Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,in all material respects, the financial position of Miller Motor Co. as of Dec. 31, 2012 and 2011, and the results of its operations and cash flows for the year then ended in conformity with accounting principles generally accepted in the United Stated.

slide12

The Book has helpful tables on

page 61 table 2

page 62 table 3

slide13

All Std Reports are Unqualified Opinions

Not all Unqualified Opinions are Std Reports

Standard Report

Unqualified Opinion

Everything OK

Qualified Opinion

or

Disclaim an Opinion

GAAS problem

We did not comply with auditing standards (GAAS)

Qualified Opinion

or

Adverse Opinion

GAAP problem

NOT fairly presented f/s do not conform to GAAP

katelyn m
Katelyn M

State the first sentence of each paragraph.

slide15
We have audited the accompanying financial statements balance sheet of Miller Motor Co. as of Dec. 31, 2012 and 2011, and the related statements of income, retained earnings and cash flowsfor the three year then ended Dec. 31, 2012. These statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with GAAS auditing standards generally accepted in the United States.Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,in all material respects, the financial position of Miller Motor Co. as of Dec. 31, 2012 and 2011, and the results of its operations and cash flows for the year then endedin conformity with GAAP accounting principles generally accepted in the United Stated.

daniel
Daniel

the company reports financial instruments using

ASU 2011-04 for 2011, the current year

( Accounting Standards Update 2011-04 is an amendment regarding Fair Value Measurement)

different accounting principles are used in 2011 relative to 2010 because ASU 2011-04 is new

unqualified opinion consistency
Unqualified Opinion Consistency

We have audited the accompanying balance sheet of Miller Motor Co. as of Dec. 31, 2012 and 2011, and the related statements of income, retained earnings and cash flows for the three year then ended Dec. 31, 2012. These statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Miller Motor Co. as of Dec. 31, 2012 and 2011, and the results of its operations and cash flows for the year then ended in conformity with accounting principles generally accepted in the United Stated.

[ explanatory paragraph discussing the change in accounting principles ]

ashley
Ashley

What is the second standard of reporting?

2 nd standard of reporting
2nd standard of reporting

The auditor must identify in the auditor’s report those circumstances in which such principles have not been consistently observed in the current period in relation to the preceding period

charlie
Charlie

Where in the independent auditor’s report do we address consistency (the second standard of reporting )?

The auditor must identify in the auditor’s report those circumstances in which such principles have not been consistently observed in the current period in relation to the preceding period

unqualified opinion consistency1
Unqualified Opinion Consistency

We have audited the accompanying balance sheet ofMiller Motor Co. as of Dec. 31, 2012 and 2011, and the related statements of income, retained earnings and cash flows for the three year then ended Dec. 31, 2012. These statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Miller Motor Co. as of Dec. 31, 2012 and 2011, and the results of its operations and cash flows for the year then ended in conformity with accounting principles generally accepted in the United Stated.

[ explanatory paragraph discussing the change in accounting principles ]

slide23
Mulu

what does it imply about GAAP when the first three paragraphs of the report have not been modified

but there is a fourth paragraph following the opinion paragraph

slide24

We Not Express an opinion

Do Not Present Fairly

chelsea w
Chelsea W

the financial statements are fairly presented but the company will probably go bankrupt

the financial statements clearly indicate the company is in trouble but…..

unqualified opinion going concern
Unqualified Opinion Going Concern

We have audited the accompanying balance sheet of Miller Motor Co. as of Dec. 31, 2012 and 2011, and the related statements of income, retained earnings and cash flows for the three year then ended Dec. 31, 2012. These statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Miller Motor Co. as of Dec. 31, 2012 and 2011, and the results of its operations and cash flows for the year then ended in conformity with accounting principles generally accepted in the United Stated.

[ explanatory paragraph expressing doubt as to the Company’s ability to continue operating as a going concern for the next year ]

alexandra h
Alexandra H

the client faces a huge environmental liability

they will probably incur a very large loss

they cannot estimate the amount of the loss

it will be material

Although this matter has been appropriately disclosed in a footnote, you wish to emphasize the matter

unqualified opinion emphasis of matter
Unqualified Opinion Emphasis of Matter

We have audited the accompanying balance sheet of Miller Motor Co. as of Dec. 31, 2012 and 2011, and the related statements of income, retained earnings and cash flows for the three year then ended Dec. 31, 2012. These statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Miller Motor Co. as of Dec. 31, 2012 and 2011, and the results of its operations and cash flows for the year then ended in conformity with accounting principles generally acceptedin the United Stated.

[ explanatory paragraph discussing the liability ]

slide29

We Not Express an opinion

Do Not Present Fairly

rule 203 departure
Rule 203 departure
  • Example on page 51 discusses Rule 203 Justified Departures from GAAP
  • Page 94 Rule 203: Rules of Conduct
slide31

All Std Reports are Unqualified Opinions

Not all Unqualified Opinions are Std Reports

Standard Report

Unqualified Opinion

Everything OK

Qualified Opinion

or

Disclaim an Opinion

GAAS problem

We did not comply with auditing standards (GAAS)

Qualified Opinion

or

Adverse Opinion

GAAP problem

NOT fairly presented f/s do not conform to GAAP

slide32

We Not Express an opinion

Do Not Present Fairly