Free Essay Show
Índice
In: Business and Management Submitted By jackjack0604 Definition “Prospective financial information” means information about future financial performance, future financial position, future cash flows, and future movements in equity based on assumptions about future events and courses of action. Prospective financial information includes prospective financial statements, the notes to the prospective financial statements, and any narrative relating directly to the prospective financial statements. Philippine Standard on Assurance Engagements (PSAE) 3400 (previously PSA 810), “The Examination of Prospective Financial Information” establishes standards and provides guidance on engagements to examine and report on prospective financial information including examination procedures for best-estimate and hypothetical assumptions. The general guidelines include the following: Acceptance of Engagement Before accepting an engagement to examine prospective financial information, the auditor would consider, amongst other things: * The intended use of the information. * Whether the information will be for general or limited distribution. * The nature of the assumptions, that is, whether they are best-estimate or hypothetical assumptions. * The elements to be included in the information. * The period covered by the information. Nature and Purpose of Prospective Financial Information Prospective financial information can include financial statements or one or more elements of financial statements and may be prepared: (a) As an internal management tool (b) For distribution to third parties in, for example: * A prospectus to provide potential investors with information about future expectations. * An annual report to provide information to shareholders, regulatory bodies and other interested parties. * A document for the information of lenders which may include, for example, cash flow forecasts. Approach and Assurance Regarding Prospective Financial Information In an engagement to examine prospective financial information, the auditor should obtain sufficient appropriate evidence as to whether: (a) Management’s best-estimate assumptions on which the prospective financial information is based are not unreasonable and, in the case of hypothetical assumptions, such assumptions are consistent with the purpose of the information; (b) The prospective financial information is properly prepared on the basis of the assumptions; (c) The prospective financial information is properly presented and all material misstatements are adequately disclosed, including a clear indication as to whether they are best-estimate assumptions or hypothetical assumptions; and (d) The prospective financial information is prepared on a consistent basis with financial statements, using appropriate accounting principles. * The auditor is not in a position to express an opinion as to whether the results shown in the prospective financial information will be achieved. * When reporting on the reasonableness of management’s assumptions the auditor provides only a moderate level of assurance. However, when in the auditor’s judgment an appropriate level of satisfaction is obtained, the auditor is not precluded from expressing positive assurance regarding the assumptions. Knowledge of the Business * The auditor should obtain a sufficient level of knowledge of the business to be able to evaluate whether all significant assumptions required for the preparation of the prospective financial information have been identified. * The auditor should consider the extent to which reliance on the entity’s historical financial information is justified. Period Covered The auditor should consider the period of time covered by the prospective financial information. The following are some factors that are relevant to the auditor’s consideration of the period of time covered by the prospective financial information: * Operating cycle * The degree of reliability of assumptions * The needs of users Examination of Procedures When determining the nature, timing and extent of examination procedures, the auditor’s considerations should include: (a) The likelihood of material misstatement; (b) The knowledge obtained during any previous engagements; (c) Management’s competence regarding the preparation of prospective financial information; (d) The extent to which the prospective financial information is affected by the management’s judgment; and (e) The adequacy and reliability of the underlying data. The auditor should obtain written representations from management regarding the intended use of the prospective financial information, the completeness of significant management assumptions and management’s acceptance of its responsibility for the prospective financial information. Presentation and Disclosure When assessing the presentation and disclosure of the prospective financial information, in addition to the specific requirements of any relevant statutes, regulations or professional standards, the auditor will need to consider whether: (a) The presentation of prospective financial information is informative and not misleading; (b) The accounting policies are clearly disclosed in the notes to the prospective financial information; (c) The assumptions are adequately disclosed in the notes to the prospective financial information. It needs to be clear whether assumptions represent management’s best-estimates or are hypothetical and, when assumptions are made in areas that are material and are subject to a high degree of uncertainty, this uncertainty and the resulting sensitivity of results needs to be adequately disclosed; (d) The date as of which the prospective financial information was prepared is disclosed. Management needs to confirm that the assumptions are appropriate as of this date, even though the underlying information may have been accumulated over a period of time; (e) The basis of establishing points in a range is clearly indicated and the range is not selected in a biased or misleading manner when results shown in the prospective financial information are expressed in terms of a range; and (f) Any change in accounting policy since the most recent historical financial statements is disclosed, along with the reason for the change and its effect on the prospective financial information. Report on Examination of Prospective Financial Information The report by an auditor on an examination of prospective financial information should contain the following: (a) Title; (b) Addressee; (c) Identification of the prospective financial information; (d) A reference to the ISAE or relevant national standards or practices applicable to the examination of prospective financial information; (e) A statement that management is responsible for the prospective financial information including the assumptions on which it is based; (f) When applicable, a reference to the purpose and/or restricted distribution of the prospective financial information; (g) A statement of negative assurance as to whether the assumptions provide a reasonable basis for the prospective financial information; (h) An opinion as to whether the prospective financial information is properly prepared on the basis of the assumptions and is presented in accordance with the relevant financial reporting framework; (i) Appropriate caveats concerning the achievability of the results indicated by the prospective financial information; (j) Date of the report which should be the date procedures have been completed; (k) Auditor’s address; and (l) Signature. * When the auditor believes that the presentation and disclosure of the prospective financial information is not adequate, the auditor should express a qualified or adverse opinion in the report on the prospective financial information, or withdraw from the engagement as appropriate. An example would be where financial information fails to disclose adequately the consequences of any assumptions which are highly sensitive. * When the auditor believes that one or more significant assumptions do not provide a reasonable basis for the prospective financial information prepared on the basis of best-estimate assumptions or that one or more significant assumptions do not provide a reasonable basis for the prospective financial information given the hypothetical assumptions, the auditor should either express an adverse opinion in the report on the prospective financial information, or withdraw from the engagement. * When the examination is affected by conditions that preclude application of one or more procedures considered necessary in the circumstances, the auditor should either withdraw from the engagement or disclaim the opinion and describe the scope limitation in the report on the prospective financial information. Engagements to Review Financial Statements Philippine Standard on Review Engagements (PSRE) 2400 “Engagements to Review Financial Statements” is directed towards the review of financial statements. Nature of Service Review involves limited investigations of much narrower scope than an audit and undertaken for the purpose of providing limited (negative) assurance that the statements are presented in accordance with PFRS. Objective of a Review Engagement The objective of a review of financial statements is to enable an auditor to state whether, on the basis of procedures which do not provide all the evidence that would be required in an audit, anything has come to the auditor’s attention that causes the auditor to believe that the financial statements are not prepared, in all material aspects, in accordance with an identified financial reporting framework. Procedures to be Performed * A review of financial statements consists principally of inquiry and analytical procedures. * If the auditor has reason to believe that the information subject to review may be materially misstated, the auditor should carry out additional or more extensive procedures as are necessary to be able to express negative assurance or to confirm that a modified report is required. Reporting Responsibility The review report should contain a clear written expression of negative assurance. The auditor should review and assess the conclusion drawn from the evidence obtained as the basis for the expression of negative assurance. The report on a review of financial statements should contain the following basic elements, ordinarily in the following layout: (a) Title; (b) Addressee; (c) Opening or introductory paragraph including: i. Identification of the financial statements on which the review has been performed; and ii. A statement of the responsibility of the entity’s management and the responsibility of the auditor, (d) Scope paragraph, describing the nature of a review, including: i. A reference to the Philippine Standard on Auditing applicable to review engagements; ii. A statement that a review is limited primarily to inquiries and analytical procedures; and iii. A statement that an audit has not been performed, that the procedures undertaken provide less assurance than an audit and that an audit opinion is not expressed; (e) Statement of negative assurance; (f) Date of the report; (g) Auditor’s address; and (h) Auditor’s signature. * The Unmodified Report An unmodified report is issued when the auditor believes, based on the evidence obtained that there is no material modifications that should be made to the financial statements in order for these financial statements to be in conformity with PFRS. * Modification of Review Report Material Misstatements If matters have come to the auditor’s attention that indicates the financial statements contain material misstatements, the report should describe those matters that impair a fair presentation of the financial statements, including, unless impracticable, a quantification of the possible effect/s on the financial statements, and either; * Express a qualification of the negative assurance; or * When the effect of the matter is material and pervasive to the financial statements that the auditor concludes that a qualification is not adequate to disclose the misleading or incomplete nature of the financial statements, give an adverse statement that the financial statements are not presented fairly, in all, material respects, in accordance with PFRS. Scope Limitation If there has been a material scope limitation, the report should describe the limitation and either: * Express a qualification of the negative assurance regarding the possible adjustments to the financial statements that might have been determined to be necessary had the limitation not existed; or * When the possible effect of the limitation is material and pervasive that the auditor concludes that no level of assurance can be provided, the auditor should not provide any assurance. Distinctions between Audit and Review Engagements Nature of Service | Audit | Review | Objective | To express an opinion on the fs | To enable the CPA to report whether anything has come to his attention that would indicate that the fs are not presented fairly. | Level of assurance provided by the CPA | High/Reasonable Assurance | Moderate/limited assurance | Type of report issued | Positive assurance (opinion) | Negative assurance | Basic procedures | Risk assessment procedures, tests of controls, and substantive tests | Inquiry and analytical procedures. It does not include assessing control risk, test of records and of responses to inquiries by obtaining corroborative evidence. | Independence requirement | Required | Required | Multiple Choice Questions 1. Professional standards prohibit one of the following types of engagements for prospective financial statements from being undertaken a. A compilation. b. A review. c. An examination. d. An agreed-upon procedures engagement. 2. Given one or more hypothetical assumptions, a responsible party may prepare, to the best of its knowledge and belief, financial statements that present an entity’s expected financial position, results of operations, and cash flows. Such prospective financial statements are known as e. Pro forma financial statements f. Financial projections g. Partial presentations h. Financial forecasts 3. Which of the following procedures is not included in a review engagement of a nonpublic entity? i. Inquiries of management j. Inquiries regarding events subsequent to the statement of financial position date k. Any procedures designed to identify relationships among data that appear to be unusual l. A study and evaluation of internal control 4. The concept of limited assurance is provided for in which of the following engagements? m. Audit n. Review o. Compilation p. Agreed-upon procedures 5. The statement that “nothing came to our attention which would indicate that the statements are not fairly presented” expresses which of the following? q. Disclaimer of opinion r. Negative assurance s. Negative confirmation t. Piecemeal opinion BIBLIOGRAPHY Cabrera, Ma. Elenita B., Public Accountancy Profession, GIC Enterprises & Co., Inc., M. Recto Avenue, Manila Philippines, 2013. Similar DocumentsPremium Essay Advance Financial Accounting... : 27666340 E-mail : Consultation : Monday 2:30 pm to 6:30 pm Role and Purpose This subject aims to introduce an analytical framework for carrying out business analysis and valuation by using financial statements for valuing different kind of businesses. It contributes to the achievement of the BBA Programme Outcomes by enabling students to identify and resolve ethical issues contained in the financial statements (Outcome 4), apply basic accounting and financial theories to analyze financial reports and to identify potential problems and risks (Outcome 7). By the end of this subject, students will become a professional user of financial statements to advance further into the field of business valuation as investment analysis. It requires students to present and communicate effectively in English for general business communication (Outcome 1). Learning Outcomes Upon completion of the subject, students will be able to: a. Develop the ability to critically assess a firm’s financial condition through analyzing financial statements; b. Apply analytical tools to make forecasts and value firms and projects using different valuation techniques; in certain business context such as credit analysis and equity valuation. c. Evaluate and compare corporate valuation decision in specific contexts such as securities analysis, credit assessment... Words: 1507 - Pages: 7 Premium Essay Auditing...Which of the following fraudulent activities most likely could be perpetrated due to the lack of effective internal controls in the revenue cycle? a. Fictitious transactions may be recorded that cause an understatement of revenues and overstatement of receivables. b. Claim received from customers for goods returned may be intentionally recorded in other customer’s accounts. c. Authorization of credit memos by personnel who receive cash may permit the misappropriation of cash. d. The failure to prepare shipping documents may cause an overstatement of inventory balances. 4. Accepting an engagement to examine an entity’s financial projection most likely would be appropriate if the projection were to be distributed to a. All employees who work for the entity. b. Potential stockholders who request a prospectus or a registration statement. c. A bank with which the entity is negotiating for a loan. d. All stockholders of record as of the report date. 5. In assessing control risk for purchases, an auditor... Words: 24671 - Pages: 99 Premium Essay Auditing Theory...of the following fraudulent activities most likely could be perpetrated due to the lack of effective internal controls in the revenue cycle? a. Fictitious transactions may be recorded that cause an understatement of revenues and overstatement of receivables. b. Claim received from customers for goods returned may be intentionally recorded in other customer’s accounts. c. Authorization of credit memos by personnel who receive cash may permit the misappropriation of cash. d. The failure to prepare shipping documents may cause an overstatement of inventory balances. 4. Accepting an engagement to examine an entity’s financial projection most likely would be appropriate if the projection were to be distributed to a. All employees who work for the entity. b. Potential stockholders who request a prospectus or a registration statement. c. A bank with which the entity is negotiating for a loan. d. All stockholders of record as of the report date. 5. In assessing control risk for... Words: 24670 - Pages: 99 Premium Essay Standard Accountin Auditing...Certified Public Accountants (Institut Akauntan Awam Bertauliah Malaysia) (3246-U) January 15, 2008 Circular No: Stu/02/01/08 To: ALL REGISTERED STUDENTS MICPA EXAMINATION ACCOUNTING AND AUDITING STANDARDS The Institute’s Examination Regulations and Syllabus state that: (a) Questions involving knowledge of accounting and auditing should be answered in accordance with the requirements of approved accounting standards, approved auditing standards/guidelines and the relevant legislation; Questions involving knowledge of new approved accounting standards, approved auditing standards/guidelines and exposure drafts will not be set until at least 6 months have elapsed since the last day of the month in which the statement became effective or was published. (b) The list of accounting standards, auditing standards and other technical pronouncements, which are currently examinable in the Institute’s examination, are set out below. I. Approved Accounting Standards The Companies Act 1965 requires that approved accounting standards are to be applied to the financial statements of all companies. Approved accounting standards are issued by the Malaysian Accounting Standards Board (MASB), which is established under the Financial Reporting Act 1997. For the purposes of the MICPA pronouncements are examinable : examination, the following accounting (i) (ii) (iii) MASB approved accounting standards and other pronouncements issued by MASB; Malaysian Accounting Standards...... Words: 1953 - Pages: 8 Premium Essay Adv Audit...An audit opinion on cash basis financial statements is an example of an opinion on financial statements that follow a special purpose financial reporting framework. True The balance sheet for an individual may be titled a "Statement of Financial Condition". True The auditors should take exception to assets presented at their estimated current values in personal financial statements. False Personal financial statements may be compiled or reviewed but they should not be audited. False A compilation of financial statements provides limited assurance regarding the fin. statements. False Compiled financial statements may omit note disclosures. True The auditors must issue a compilation report if they prepare a client's financial statements and submit them to a client who intends to use them for external purposes. True The auditors should not accept an engagement to issue a compilation report on financial information presented in a prescribed form. False Letters to underwriters should not contain negative assurances. False When a US-based organization prepares financial statements which are for use in another country, a U.S. report, modified to reflect the accounting principles of the other country, may be issued. True Assurance services improve the quality of information or its context for decision makers. True Attestation services are similar, but go beyond assurance services in scope of procedures and reporting. False Independence is required for the...... Words: 338 - Pages: 2 Premium Essay Cga Notes...CGA-CANADA AUDITING 2 EXAMINATION March 2005 Marks 30 Time: 4 Hours Question 1 Select the best answer for each of the following unrelated items. Answer each of these items in your examination booklet by giving the number of your choice. For example, if the best answer for item (a) is (1), write (a)(1) in your examination booklet. If more than one answer is given for an item, that item will not be marked. Incorrect answers will be marked as zero. Marks will not be awarded for explanations. Note: 11/2 marks each a. An attitude of “professional scepticism” is necessary if a CGA is to perform an audit engagement with due care. Which of the following best describes how a CGA may display an attitude of “professional scepticism” when performing an audit engagement? 1) 2) 3) 4) By assuming that management is dishonest in the absence of evidence to the contrary By not allowing clients’ staff to assist in the performance of an audit By rejecting all management assertions in the absence of supporting evidence By questioning all material assertions made by management b. Which of the following steps or modifications to an audit program is likely to be the most appropriate if an auditor assesses the risk of management fraud to be relatively high? 1) 2) 3) 4) c. Performing relatively less audit work at interim dates Placing greater reliance on management’s representations Performing less extensive tests of internal controls Assigning less...... Words: 7836 - Pages: 32 Premium Essay Assurance and Auditing...Which of the following statements best describes assurance services? a. Independent professional services that are intended to enhance the credibility of information to meet the needs of an intended user. b. Services designed to express an opinion on the fairness of historical financial statements based on the results of an audit. c. The preparation of financial statements or the collection, classification, and summarization of other financial information. d. Services designed for the improvement of operations, resulting in better outcomes. Assurance engagements performed by professional accountants are intended to enhance the credibility of information about a subject matter by evaluating whether the subject matter conforms in all material respects with suitable criteria, thereby improving the likelihood that the information will meet the needs of an intended user. The level of assurance provided by the professional accountant’s conclusion conveys the degree of confidence that the intended user may place in the credibility of the subject matter. 2. Which of the following is not an assurance service? a. Examination of prospective information b. Audit of historical financial statements c. Review of financial statements d. Compilation of financial information Services performed by professional accountants that are not assurance engagements include the following: 1. Agreed-upon procedures 2. Compilation of financial or other information 3. Preparation of tax...... Words: 452 - Pages: 2 Premium Essay Mba 210...a major federal financial assistance program in a compliance audit should issue either a qualified or adverse opinion, including the basis for the opinion. The auditor would express a disclaimer of opinion only in the event of scope limitations, which is not the case here. When the audit includes basic compliance requirements which are not applicable to a major federal program, the auditor expresses a positive opinion on the compliance with respect to the items actually tested and negative assurance on those aspects of compliance which were not tested. The auditor never expresses no assurance or reasonable assurance. It is the objective of the audit procedures performed to provide the auditor with reasonable assurance that any material noncompliance with requirements will be detected. In addition to having competence, technical knowledge, skills, and experience to perform the audit professionally, auditors must complete at least 24 hours of CPE relating to governmental auditing every two years. Individuals who work on GAGAS audits for 20% or more of their time must complete at least 80 hours of CPE relating to governmental auditing every two years. The engagement letter should contain information such as: * the objective of the audit (an expression of an opinion on the financial statements); * the fact that management is responsible for: * the financial statements, * establishing and maintaining effective internal control over financial reporting, ...... Words: 1477 - Pages: 6 Premium Essay Audit-Ocean...AUDIT PRACTICE & ASSURANCE SERVICES PROFESSIONAL 2 EXAMINATION - APRIL 2010 NOTES: SECTION A: Answer Question 1, and SECTION B: Answer any two from Questions 2, 3 and 4. (If you provide answers to more questions than required in Section B, you must draw a clearly distinguishable line through the answer not to be marked. Otherwise, only the first two questions to hand will be marked.) Time Allowed 3.5 hours, plus 20 minutes to read the paper. Examination Format This is an open book examination. Hard copy material may be consulted during this examination subject to the limitations advised on the Institute’s website. Reading Format During the reading time you may write notes on the examination paper but you may not commence writing in your answer booklet. Marks Marks for each question are shown. A mark of 50 or more is required to achieve a pass in this paper. Answers Start your answer to each question on a new page. You are reminded that candidates are expected to pay particular attention to their communication skills. Care must be taken regarding the format and literacy of the solutions. The marking system will take into account the content of the candidates’ answers and the extent to which the answers are supported with relevant legislation, case law or examples where appropriate. Answer Booklets List on the cover of each answer booklet, in the space provided the number of each question attempted. Additional instructions are shown on the...... Words: 8397 - Pages: 34 Premium Essay Buisness Plan Template...plan for controlling the business 2. Market Analysis 1. The characteristics of your target market (demographic, geographic, etc.) 2. The products or services you will offer to satisfy those needs 3. The Company 1. The needs your company will satisfy 2. The products or services you will offer to satisfy those needs 4. Marketing and Sales Activities 1. Marketing strategy 2. Sales strategy 3. Keys to success in your competitive environment 5. Product or Service Research and Development 1. Major milestones 2. Ongoing efforts 6. Organization and Personnel 1. Key managers and owners 2. Key operations employees 7. Financial Data 1. Funds required and their use 2. Historical financial summary 3. Prospective financial summary (including a brief justification for prospective sales levels) [pic] Market Analysis The Market Analysis section should reflect your knowledge of your industry, and present high-lights and analysis of your market research. Detailed market research studies, however, should be presented as appendices to your plan. Industry Description and Outlook 1. Description of your primary industry 2. Size of the industry 1. Historically 2. Currently... Words: 2938 - Pages: 12 Premium Essay The Audit...AUDITING • Accounting – preparing financial statements • Auditing – examining financial statements Financial Statements Consist of: • A statement of financial position • A statement of profit or loss • A cash flow statements • Notes to the financial statements • Statement of movement in reserves Together with the documents above, companies also produce director’s reports, chairman’s statements, graphs, forecasts and public relations material and combine the whole lot into their annual report. The annual report will also include the auditors’ report. For large companies this is often a glossy booklet designed to impress shareholders and potential investors. However, the audit report covers only the financial statements, not the other documents that might be included, but the auditor need to examine some of the other documents as well. Assurance Engagements An assurance engagement is when a professional examines information for which another party is preparing. 1. Audit engagement • Means external audit • It is a form of assurance engagement 2. Assurance engagement • Includes audit engagement • Generally means a professional being engaged to examine information prepared by others • Assurance Engagements will cover many engagements other than audit such as Risk assessment reports, Review of internal controls, System reliability reports, Value for money reviews, Social and environmental...... Words: 1419 - Pages: 6 Premium Essay Gleim Quiz...but not necessarily in all attest engagements. Furthermore, the assessment may not be at a low level. Answer (C) is incorrect. An attest engagement results in a conclusion about an assertion. Answer (D) is correct. When a CPA in the practice of public accounting performs an attest engagement, the engagement is subject to the Statements on Standards for Attestation Engagements (codified as AT 101 to AT 801). An attest engagement is one in which a practitioner is engaged to issue or does issue an examination, a review, or an agreed-upon procedures report on subject matter, or an assertion about the subject matter, that is the responsibility of another party. [2] Gleim #: 1.1.7 -- Source: CPA, adapted A CPA is required to comply with the provisions of Statements on Standards for Attestation Engagements (SSAE) when engaged to A. Review management’s discussion and analysis (MD&A) prepared pursuant to rules and regulations adopted by the SEC. B. Report on financial statements that the CPA generated through the use of computer software. C. Audit financial statements that the client prepared for use in another country. D. Provide the client with a financial statement format that does not include dollar amounts. Copyright 2012 Gleim Publications Inc. Printed for Evelyn McDowell Page 1 Gleim EQE Test Prep: Auditing and Systems (10 questions)... Words: 2351 - Pages: 10 Premium Essay David and Goliath...of this act, to promote the reliability of information that is used for guidance in financial transactions or for accounting for or assessing the financial status or performance of commercial, noncommercial, and governmental enterprises. The public interest requires that persons preparing financial statements accompanied by reports or professing special competence in accountancy or offering assurance as to the reliability or fairness of presentation of such information shall have demonstrated their qualifications to do so, and that persons who have not demonstrated and maintained those qualifications, including license holders not in public practice, shall not be permitted to hold themselves out as having that special competence or to offer that assurance; that the professional conduct of persons licensed as having special competence in accountancy be regulated in all aspects of the practice of public accountancy; that a public authority competent to prescribe and assess the qualifications and to regulate the professional conduct of practitioners of public accountancy be established; and the use of titles relating to the practice of public accountancy that are likely to mislead the public as to the status or competence of the persons using those titles be prohibited. L.1997,c.259,s.2. 45:2B-44 Definitions relative to the practice of accounting. 3. As used in this act: "Attest" means providing any of the following financial statement services: any audit or other engagement...... Words: 10216 - Pages: 41 Premium Essay Cost Structure Break Even Target Profile...CHAPTER 6 Audit Planning, Understanding the Client, Assessing Risks, and Responding Review Questions 6–1 In their investigation of a prospective client, the CPAs should assess the backgrounds and reputations of the prospect and its major shareholders, directors, and officers. Thus, inquiries are made of underwriters, bankers, and attorneys that conduct business with the prospective client. Also, the CPAs are required to make inquiries of the prospect’s predecessor auditors to obtain information that might enter into the acceptance decision, such as information regarding the integrity of management. The prospect’s financial reports, SEC filings, credit reports, and tax returns are used as sources of financial background information. 6–2 The audit committee of a board of directors must be composed of at least three independent directors. Independent directors are those who are outside directors (not officers or employees) who have no relationships that might impair their independence. This would include relationships such as performing consulting services for company management. In addition, the members must be financially literate; at least one member must be a financial expert. 6–3 An engagement letter is sent to the client by the auditors to make clear the nature of the engagement, any limitations on the scope of the audit, work to be performed by the client’s staff, and the basis for computing the auditors’ fee. The engagement...... Words: 9715 - Pages: 39 Premium Essay Auditing Chapter 6...CHAPTER 6 Audit Planning, Understanding the Client, Assessing Risks, and Responding Review Questions 6–1 In their investigation of a prospective client, the CPAs should assess the backgrounds and reputations of the prospect and its major shareholders, directors, and officers. Thus, inquiries are made of underwriters, bankers, and attorneys that conduct business with the prospective client. Also, the CPAs are required to make inquiries of the prospect’s predecessor auditors to obtain information that might enter into the acceptance decision, such as information regarding the integrity of management. The prospect’s financial reports, SEC filings, credit reports, and tax returns are used as sources of financial background information. 6–2 The audit committee of a board of directors must be composed of at least three independent directors. Independent directors are those who are outside directors (not officers or employees) who have no relationships that might impair their independence. This would include relationships such as performing consulting services for company management. In addition, the members must be financially literate; at least one member must be a financial expert. 6–3 An engagement letter is sent to the client by the auditors to make clear the nature of the engagement, any limitations on the scope of the audit, work to be performed by the client’s staff, and the basis for computing the auditors’ fee. The engagement...... Words: 9695 - Pages: 39 What is examination of prospective financial information?An examination of prospective financial information aims to issue an opinion on whether the prospective financial information was, or not, properly prepared on the basis of stated assumptions, including a negative assurance statement on which those assumptions provide, or not, a reasonable basis for the preparation of ... What is the level of assurance provided by the examination of prospective financial information?Auditor's Assurance – Prospective Financial Information Therefore per SAE 3400, the auditor can provide only a moderate level of assurance on the reasonableness of management's assumptions. Which of the following is a prospective financial statement for general use upon which an accountant may appropriately report?Which of the following is a prospective financial information for general use upon which an accountant may appropriately report? D. Financial forecast. 249. When an accountant compiles projected financial statements the accountant's report should include?An accountant's compilation report on a financial forecast should include a statement that: There will usually be differences between the forecasted and actual results. Which of the following is a conceptual difference between the attestation standards and generally accepted auditing standards? Which of the following is a prospective financial statement for general uses upon which an accountant may appropriately report?B) financial projections. Which of the following are prospective financial statements upon which an accountant may appropriately report for general use? A) Pro forma financial statements.
What are the two types of prospective financial statements?Prospective financial information can be in the form of a forecast, a projection or a combination of both, for example, a one year forecast plus a five year projection.
What is meant by prospective financial statements?Prospective financial statements—Either financial forecasts or financial projections including the summaries of significant assumptions and accounting policies.
Which of the following types of attestation engagements may an accountant undertake with respect to prospective financial statements?The three different types of attestation engagements that an accountant may undertake in connection with prospective financial statements are agreed-upon procedures, examinations, and compilations.
|
Which of the following prospective financial statements is are appropriate for general use
zusammenhängende Posts
Urheberrechte © © 2024 ketiadaan Inc.
