Start Searching the Answers
The Internet has many places to ask questions about anything imaginable and find past answers on almost everything.
As defined in GAAP, substantial doubt about a company’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the company will be unable to meet its obligations as they become due within one year after the date that the …
Indicators of a Going Concern Problem Indicators of a potential going concern problem are: Negative trends. Can include declining sales, increasing costs, recurring losses, adverse financial ratios, and so forth.
[Proposed] ISA 570 (Redrafted), “Going Concern” requires the auditor to include an Emphasis of Matter paragraph in the auditor’s report on financial statements to highlight the existence of a material uncertainty regarding an entity’s ability to continue as a going concern.
The auditor cannot predict such future events or conditions. Accordingly, the absence of any reference to a material uncertainty about the entity’s ability to continue as a going concern in an auditor’s report cannot be viewed as a guarantee as to the entity’s ability to continue as a going concern.
(a) Emphasis of Matter paragraph means a paragraph included in the auditor’s report that refers to a matter appropriately presented or disclosed in the financial report that, in the auditor’s judgement, is of such importance that it is fundamental to users’ understanding of the financial report.
The distinguishing factor between two paragraphs is that one (emphasis of matter) is about the matters already disclosed in the financial statements and the second (other matter) is about matters that are not disclosed in the financial statements.
How do you know when to put the paragraph before or after the opinion paragraph? If it changes the opinion it goes before, if the opinion is unchanged but needs explanation it goes after. Hope that helps! If it changes the opinion it goes before, if the opinion is unchanged but needs explanation it goes after.
4 The use of an emphasis of matter paragraph is not a substitute for issuing a qualified opinion or adverse opinion on compliance with the national financial reporting framework when disclosures as to compliance with IFRSs are misleading such that the financial statements fail to comply with the national financial …
A qualified opinion is a reflection of the auditor’s inability to give an unqualified, or clean, audit opinion. An unqualified opinion is issued if the financial statements are presumed to be free from material misstatements. … A qualified opinion is still acceptable to most lenders, creditors, and investors.
Unmodified opinion is the opinion where auditor expresses an opinion that financial statements are presented, in all material respects, in accordance with applicable financial reporting framework.
a disclaimer of opinion on the entity’s financial statements. In which of the following circumstances would a qualified opinion not be appropriate? The auditors lack independence with respect to the audited entity. … The financial statements fail to contain adequate disclosure of related-party transactions.
In which case would an unmodified opinion not be appropriate? A material related party transaction has occurred and has been accounted for appropriately, but it has not been adequately disclosed in the financial statements. An unmodified opinion, a qualified opinion, An adverse opinion, and disclaimer of opinion.
Under which of the following circumstances would an adverse opinion be most appropriate? An adverse opinion is required when serious GAAP problem exist (GAAP requires that property, plant and equipment be stated at cost les accumulated depreciation. )
The financial statements are prepared, in all material respects, in accordance with the requirements of the applicable financial reporting framework. When forming an opinion on the financial statements, the auditor is least likely to evaluate whether: Earnings forecasts by investors are met.
What is the general character of the three generally accepted auditing standards classified as general standards? Criteria for competence, independence, and professional care of individuals performing the audit.
A scope limitation sufficient to preclude an unmodified opinion always will result when management: refuses to acknowledge its responsibility for the fair presentation of the financial statements in conformity with GAAP. … What is the most likely source of the following statement as an emphasis of matter?
Which correctly describes the relationship between the PCAOB and the SEC? … The PCAOB is subject to oversight by the SEC, and only accounting firms registered with the PCAOB may prepare audit reports for SEC issuers.
Inherent limitations of internal control include collusion, human error, and management override.
An audit requires the CPA to gather sufficient and reliable evidence regarding the information provided in the financial statement. … A review of an organization’s financial statements provides a report issued by a CPA which expresses that the financial statements are free from material misstatement.
An inherent limitation to internal control is the fact that controls can be circumvented by management override.
The five components of the internal control framework are control environment, risk assessment, control activities, information and communication, and monitoring.
What are the objectives of internal control? Safeguard assets (protect from theft), encourage employees to follow company policies and laws/regulations (ex. workplace safety), promote operational efficiency, ensure accurate reliable accounting records.
Which of the following are considered control environment elements? Achievement of the objectives of internal control. Authorization, recording, and custody. Internal control is a function of management, and effective control is based upon the concept of charge and discharge of responsibility and duty.
Management is responsible for establishing internal controls. In order to maintain effective internal controls, management should: Maintain adequate policies and procedures; Communicate these policies and procedures; and.
Which of the following is an example of separation of duties in a good system of internal control? The individual who receives the inventory does not have access to the accounting records. their normal collection, even if longer than a year, is part of the normal operating cycle.
The five components of COSO – control environment, risk assessment, information and communication, monitoring activities, and existing control activities – are often referred to by the acronym C.R.I.M.E. To get the most out of your SOC 1 compliance, you need to understand what each of these components includes.
What are the 3 Types of Internal Controls?
The control objectives include authorization, completeness, accuracy, validity, physical safeguards and security, error handling and segregation of duties.