A. Interim Financial Information Accompanying Audited Financial Statements
Normally, there is no need to refer to the review in the audit report because interim financial information is not a required part of the financial statements. However, modifications to the audit report are necessary in the following circumstances:
1 . When interim financial information included in a note to the financial statements is not marked "unaudited, " the auditor would disclaim an opinion on the interim financial information .
2 . When interim financial information accompanies the audited financial statements, the auditor should include an other-matter paragraph in the auditor's report when all of the following conditions exist:
a. The interim financial information that has been reviewed is included in a document containing audited financial statements.
b. The interim financial information accompanying the audited financial statements does not appear to be presented in accordance with the applicable financial reporting framework.
c. The auditor's separate review report that refers to the departure from the applicable financial reporting framework is not presented with the interim financial information.
3. For issuers, quarterly information required by the SEC has not been reviewed, so a paragraph should be added to the auditor's report, indicating the auditor was unable to review such information.
4. For issuers, quarterly information required by the SEC is omitted, so a paragraph should be added to the auditor's report, indicating the company has not presented such information.
B. Interim Financial Information Presented in a Registration Statement
The Securities Act of 1 933 imposes certain responsibilities on an auditor who prepares a report that is used in connection with a registration statement.
1 . If an auditor's review report on interim financial information is presented (or incorporated by reference) in a registration statement, a prospectus that includes a statement about the independent auditor's involvement should clarify that the report is not considered to be a "report" or "part" of the registration statement within this context.
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Only obvious errors found when reading financial statements
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Limited
Nonissuers Issuers:
Interim FS
Same as compilation plus increased knowledge of client's business
Inquiries of internal personnel Analytical procedures
All are required or modify review report
Only errors discovered through inquiry and analytical procedures
One or more financial statements allowed if scope of inquiry and analytical procedures has not been restricted industry, and client's business
Inquiries of external parties and internal personnel
Must be designed to provide reasonable assurance of detection of material misstatements
One or more financial statements allowed if scope of audit is not limited and all necessary procedures are applied
Required
Required
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Becker Professional Education I CPA Exam Review Auditing 2
O PIN I O N W R ITI N G F O R M AT S U M M A RY- S P E C I AL C O N S I D E RAT I O N S
Single Financial Statement
Special Purpose Frameworks or Specific Element Summary Financial Statements Title Independent Auditor's Report Independent Auditor's Report Independent Auditor's Report
Addressee As required by circumstances As required by circumstances As required by circumstances Intro
Paragraph-Audited Audited Refer to auditor's report on FS
Service
Intro
Paragraph-List Non-GAAP Financial List Single Financial Statement Identify Summary FS and Financial
Statements Statement or Specific Element Audited FS
Intra
Paragraph-Single or Comparative Periods Single or Comparative Periods Single or Comparative Periods Period(s)
Management
Financial Statements Financial Statements Responsibility
Internal Controls Internal Controls Summary Financial Statements Paragraph
Opinion- Present fairly Opinion-Summary FS consistent Paragraph in accordance with special
in accordance with framework with audited FS purpose framework
Opinion Opinion-Present fairly in Paragraph accordance with GAAP
(if regulatory basis for general use)
Emphasis-a/- Describe purpose of presentation
Matter Paragraph
Describe basis of accounting (audit of incomplete presentation in accordance with
GAAP)
Other-Matter Describe audit report
Paragraph Alert the restricts use
(audit of specific element in (when required)
conjunction with FS audit) Auditor's Signature
CPA firm (manual or printed) CPA firm (manual or printed) CPA firm (manual or printed)
Auditor's Address City and state City a nd state City and state
Report Date No earlier than date of auditor's
Sufficient appropriate Sufficient appropriate
report or date sufficient evidence obtained evidence obtained
appropriate evidence obtained
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E N G A G E M E N T S U M M A RY
N O N I S S U E RS I S S U E R S
N o audit or
Compilation Review Review Review review
Service Compiled Review Review Review Unaudited
Worked on FS FS Financial information FS FS
Period Any date Any date Interim only Interim only Any date
Standards AICPA-SSARS AICPA-SSARS AICPA-SAS PCAOB PCAOB
Procedures Knowledge of Understanding with client Understanding with client Understanding with client None-however, industry Learn entity's business Learn entity's business Learn entity's business CPA must read
the financial
Understand Inquiry Inquiry Inquiry statements for
business Analytical procedures Analytical procedures Analytical procedures obvious errors Read the FS Review-other procedures Review-other procedures Review-other procedures
Client rep letter Client rep letter Client rep letter Professional judgment Professional judgment Professional judgment Acct. communicates results Acct. communicates results Acct. communicates results
Findings No assurance Limited assurance Limited assurance Limited assurance No assurance
(disclaimer) (disclaimer)
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Becker Professional Education I CPA Exam Review Auditing 2
F OR UN DER WR I TERS