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					  Chapter 3


Audit Reports



                1
            Phases of an Audit                      p. 160

Phase I       Plan & design an audit approach

Phase II      Tests of Controls
              Substantive Tests of Transactions

Phase III     Analytical Procedures – substantive
              Tests of Details of Balances

Phase IV      Complete the audit
              Issue Audit Report




                                                             2
Gavin

                 Briefly

 What are three Standards of Field Work ?




                                            3
       standards of field work
            performance of the audit


• Proper planning and supervision
• Sufficient understanding of the entity and
  its internal control
• Sufficient appropriate evidence
Alexandra



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




                                          5
Paragraphs in standard reporting
                 the auditor’s report


• introductory
• scope
• opinion




                                        6
7
8
Danielle


What audit report do we issue if
    everything if OK ?
    the financial statements are fairly presented
    there are no material misstatements


                                                    9
We have audited the accompanying balance sheet of Miller Motor
Co. as of Dec. 31, 2011 and 2009, and the related statements of
income, retained earnings and cash flows                       for the three year then ended Dec. 31,
2011. 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, 2011 and 2010, 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.


                                                                                                 10
The Book has helpful tables on
                  page 61
                  page 62




                                 11
                             All Std Reports are Unqualified
       Standard Report       Opinions


       Unqualified Opinion   Not all Unqualified Opinions
                             are Std Reports



                                 Qualified Opinion
GAAS problem
                                              or
We did not comply with
auditing standards (GAAS)        Disclaim an Opinion


GAAP problem                     Qualified Opinion

NOT fairly presented                          or
f/s do not conform to            Adverse Opinion
GAAP                                                           12
 Belen



State the first sentence of each paragraph.




                                              13
We have audited the accompanying financial statements balance
sheet of Miller Motor Co. as of Dec. 31, 2011 and 2010, and the
related statements of income, retained earnings and cash flows for the
three year then ended Dec. 31, 2011. 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, 2011 and 2010, and the
results of its operations and cash flows for the year then ended in conformity with GAAP
accounting principles generally accepted in the United Stated.
                                                                                              14
                             All Std Reports are Unqualified
       Standard Report       Opinions


       Unqualified Opinion   Not all Unqualified Opinions
                             are Std Reports



                                 Qualified Opinion
GAAS problem
                                              or
We did not comply with
auditing standards (GAAS)        Disclaim an Opinion


GAAP problem                     Qualified Opinion

NOT fairly presented                          or
f/s do not conform to            Adverse Opinion
GAAP                                                           15
Erin (with and I)
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




                                                                             16
                Unqualified Opinion                        Consistency
We have audited the accompanying balance sheet of Miller Motor Co. as of Dec. 31, 2011
    and 2010, and the related statements of income, retained earnings and cash flows for the
    three year then ended Dec. 31, 2011. 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, 2011 and 2010, 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 ]


                                                                                         18
 Erynn (with a Y)


What is the second standard of reporting?




                                            19
      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
Trevor

Where in the independent auditor’s
report do we address 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


                                                              21
                Unqualified Opinion                         Consistency
We have audited the accompanying balance sheet of Miller Motor Co. as of Dec. 31, 2011
    and 2010, and the related statements of income, retained earnings and cash flows for the
    three year then ended Dec. 31, 2011. 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, 2011 and 2010, 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 ]



                                                                                           22
Mara


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

 but there is a fourth paragraph following the
 opinion paragraph

                                                23
                    unqualified           Auditing           Accounting
                   std                 Qual      Disc       Qual      Adv
We audited         OK       OK          OK      modify       OK       OK

Accordance         OK       OK         modify   eliminate    OK       OK
with GAAS
Explanatory para                        yes       yes        yes      yes

Fairly Present     OK       OK         modify    none       modify   modify
conform w/ GAAP
additional para          Consistency              Yes
                         Go Concern
                          Emphasis




                                                                            24
Nathan


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

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


                                                25
              Unqualified Opinion Going Concern
We have audited the accompanying balance sheet of Miller Motor Co. as of Dec. 31, 2011 and
    2010, and the related statements of income, retained earnings and cash flows for the three
    year then ended Dec. 31, 2011. 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, 2011 and 2010, 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 ]

                                                                                           26
Nicolas M

the client faces a huge environmental liability
they will probably incur a loss
they cannot estimate the amount of the loss

Although they have discussed this matter in a
footnote, you wish to emphasize the matter


                                              27
          Unqualified Opinion Emphasis of Matter
We have audited the accompanying balance sheet of Miller Motor Co. as of Dec. 31, 2011 and
    2010, and the related statements of income, retained earnings and cash flows for the three
    year then ended Dec. 31, 2011. 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, 2011 and 2010, 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 liability ]


                                                                                           28
                    unqualified           Auditing           Accounting
                   std                 Qual      Disc       Qual      Adv
We audited         OK       OK          OK      modify       OK       OK

Accordance         OK       OK         modify   eliminate    OK       OK
with GAAS
Explanatory para                        yes       yes        yes      yes

Fairly Present     OK       OK         modify    none       modify   modify
conform w/ GAAP
additional para          Consistency              Yes
                         Go Concern
                          Emphasis




                                                                            29
         Rule 203 departure
• Example on page 51 discusses Rule 203
 Justified Departures from GAAP

• Page 94 Rule 203: Rules of Conduct




                                          30
                             All Std Reports are Unqualified
       Standard Report       Opinions


       Unqualified Opinion   Not all Unqualified Opinions
                             are Std Reports



                                 Qualified Opinion
GAAS problem
                                              or
We did not comply with
auditing standards (GAAS)        Disclaim an Opinion


GAAP problem                     Qualified Opinion

NOT fairly presented                          or
f/s do not conform to            Adverse Opinion
GAAP                                                           31
                    unqualified           Auditing           Accounting
                   std                 Qual      Disc       Qual      Adv
We audited         OK       OK          OK      modify       OK       OK

Accordance         OK       OK         modify   eliminate    OK       OK
with GAAS
Explanatory para                        yes       yes        yes      yes

Fairly Present     OK       OK         modify    none       modify   modify
conform w/ GAAP
additional para          Consistency              Yes
                         Go Concern
                          Emphasis




                                                                            32
Failure to comply with GAAS
       scope limitation




                              33
Melissa M


Which audit reports do we choose from if
     there is a scope limitation
     insufficient evidence
     there is a GAAS problem


                                           34
• Qualified

• Disclaimer




               35
  you are unable to perform all the auditing
  procedures that you would like …. because
  you accepted the engagement late you can not
  observe beginning inventory
the client had an outside service organization
  perform a physical inventory on 1/1/11
the bank that requested the audit is aware of the
  situation and is comfortable with the situation

                                                    36
Madeline


What opinion do we issue
     there is a scope limitation




                                   37
          Scope Limitation - Qualified Opinion
We have audited the accompanying balance sheet of Miller Motor Co. as of Dec. 31, 2011 and
  2010, and the related statements of income, retained earnings and cash flows for the three
  year then ended Dec. 31, 2011. 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.

                           Problem Problem Problem




                                                                                     38
          Scope Limitation - Qualified Opinion
We have audited the accompanying balance sheet of Miller Motor Co. as of Dec. 31, 2011 and
   2010, and the related statements of income, retained earnings and cash flows for the three
   year then ended Dec. 31, 2011. 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.
Except as discussed in the following paragraph, 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.


 [ explanatory paragraph discussing the limitation on our ability to conduct the
                     audit and acquire sufficient evidence ]

In our opinion, except for the effects of such adjustments, if any, that might have been
    determined to be necessary had we been able to ……, the financial statements referred to
    above present fairly, in all material respects, the financial position of Miller Motor Co. as of
    Dec. 31, 2011 and 2010, 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. 39
Melissa O

 you are unable to perform all the auditing
 procedures that you would like …. because
 you accepted the engagement late you can not
 observe beginning inventory …. inventory is
 very material
 the client hasn’t taken a physical inventory in
 years

                                                   40
                 Scope Limitation - Disclaimer
We have audited the accompanying balance sheet of Miller Motor Co. as of Dec. 31, 2011 and
  2010, and the related statements of income, retained earnings and cash flows for the three
  year then ended Dec. 31, 2011. 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.

                           Problem Problem Problem




                                                                                     41
                        Scope Limitation - Disclaimer
We were engaged to audit the accompanying balance sheet of Miller Motor Co.
   as of Dec. 31, 2011 and 2010, and the related statements of income, retained earnings and
   cash flows for the three year then ended Dec. 31, 2011. 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.



                                     [ eliminate Scope paragraph ]

 [ explanatory paragraph discussing the limitation on our ability to conduct the
                     audit and acquire sufficient evidence ]

Since the Company did not …………… the scope of our work was not sufficient to to
   enable us to express an opinion, and we do not express an opinion on these
   financial statements.




                                                                                                      42
             Independence


• Ultimate scope limitation




                              43
             Not Independent - Disclaimer p. 60

We are not independent with respect to Miller Motor Co. and the accompanying
  balance sheet of as of Dec. 31, 2011 and the related statements of income, retained
  earnings and cash flows were not audited by us. Accordingly, we do not express an
  opinion or any other form of assurance on these financial statements.




                                                                            44
Departure from GAAP
    misstatement




                      45
Nicholas S


What opinions do we choose from if
     the opinion paragraph isn’t true
\\




     there is a GAAP problem


                                        46
• Qualified

• Adverse




              47
Denise

the company refuses to adopt ASC 605-25-25
  Accounting Standards Codification 605-25-25
  Revenue Recognition for Multiple-Element Arrangements


They argue that the amounts are immaterial
     very immaterial

what opinion will you issue
                                                      48
                               Unqualified Opinion
We have audited the accompanying balance sheet of Miller Motor Co. as of Dec. 31,
2011 and 2010, and the related statements of income, retained earnings and cash flows
for the three year then ended Dec. 31, 2011. 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, 2011 and 2010, 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.
                                                                                                    50
David

the client forgot to depreciate their building
    they refuse to correct the error before
    issuing financial statements
    although material, you can accurately
    estimate the effects of this misstatement

                                                 51
We have audited the accompanying balance sheet of Miller Motor Co. as of Dec. 31,
  2011 and 2010, and the related statements of income, retained earnings and cash
  flows for the three year then ended Dec. 31, 2011. 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, 2011 and 2010,
    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.52
       Departure from GAAP- Qualified Opinion
We have audited the accompanying balance sheet of Miller Motor Co. as of Dec. 31, 2011 and
  2010, and the related statements of income, retained earnings and cash flows for the three
  year then ended Dec. 31, 2011. 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.


     [ explanatory paragraph discussing the departure from GAAP, material
                           misstatement, error, etc ]

In our opinion, except as discussed in the preceeding paragraph ……, the financial
    statements referred to above present fairly, in all material respects, the financial position of
    Miller Motor Co. as of Dec. 31, 2011 and 2010, 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.                                                                      53
Fabiola

 after you tell the client what opinion you are
 going to issue and they read your
 explanatory paragraph
   they will most likely agree to correct the
   financial statements
   what opinion will you issue if they
   correct their financial statements
                                                54
Andrew F

the client does not have the expertise to
  implement

715-30-25 Defined Benefit Plans Recognition
  you can’t estimate the amounts
     it is too complicated
             but you are sure it is very material
                                                    55
We have audited the accompanying balance sheet of Miller Motor Co. as of Dec. 31,
  2011 and 2010, and the related statements of income, retained earnings and cash
  flows for the three year then ended Dec. 31, 2011. 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, 2011 and 2010,
    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.56
      Departure from GAAP- Adverse Opinion
We have audited the accompanying balance sheet of Miller Motor Co. as of Dec. 31, 2011 and
  2010, and the related statements of income, retained earnings and cash flows for the three
  year then ended Dec. 31, 2011. 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.


     [ explanatory paragraph discussing the departure from GAAP, material
                           misstatement, error, etc ]

In our opinion, because of the matters discussed in the preceeding paragraph ……, the
    financial statements referred to above DO NOT present fairly, in all material respects, the
    financial position of Miller Motor Co. as of Dec. 31, 2011 and 2010, 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.                                            57
Kevin K


What is the third standard of reporting?




                                           58
      3rd standard of reporting


When the auditor determines that informative
 disclosures are not reasonably adequate, the
 auditor must so state in the auditor’s report
Evan

Where in the independent auditor’s
report do we address the third standard
of reporting ?
 When the auditor determines that informative disclosures
 are not reasonably adequate, the auditor must so state in
 the auditor’s report


                                                             60
Andrew K
 The audit client supplies contractors. It
 deals primarily with home builders in Las
 Vegas. ASC 825-10-50 requires footnote
 disclosures when credit risk is concentrated
 in a certain geographic area or among a
 certain class of customer.
 The company fails to disclose these credit
 risks.

                                            61
We have audited the accompanying balance sheet of Miller Motor Co. as of Dec. 31,
  2011 and 2010, and the related statements of income, retained earnings and cash
  flows for the three year then ended Dec. 31, 2011. 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, 2011 and 2010,
    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.62
       Departure from GAAP- Qualified Opinion
We have audited the accompanying balance sheet of Miller Motor Co. as of Dec. 31, 2011 and
  2010, and the related statements of income, retained earnings and cash flows for the three
  year then ended Dec. 31, 2011. 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.


     [ explanatory paragraph discussing the departure from GAAP, material
                           misstatement, error, etc ]

In our opinion, except as discussed in the preceeding paragraph ……, the financial
    statements referred to above present fairly, in all material respects, the financial position of
    Miller Motor Co. as of Dec. 31, 2011 and 2010, 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.                                                                      63
                             All Std Reports are Unqualified
       Standard Report       Opinions


       Unqualified Opinion   Not all Unqualified Opinions
                             are Std Reports



                                 Qualified Opinion
GAAS problem
                                              or
We did not comply with
auditing standards (GAAS)        Disclaim an Opinion


GAAP problem                     Qualified Opinion

NOT fairly presented                          or
f/s do not conform to            Adverse Opinion
GAAP                                                           64
                    unqualified           Auditing           Accounting
                   std                 Qual      Disc       Qual      Adv
We audited         OK       OK          OK      modify       OK       OK

Accordance         OK       OK         modify   eliminate    OK       OK
with GAAS
Explanatory para                        yes       yes        yes      yes

Fairly Present     OK       OK         modify    none       modify   modify
conform w/ GAAP
additional para          Consistency              Yes
                         Go Concern
                          Emphasis




                                                                            65
AAM Section 10,000


ACCOUNTANTS REPORTS
           These examples are for illustrative purposes only. They are included as conveniences for users of this manual who may want
           points of departure when drafting reports to meet their individual needs. This manual is a non authoritative kit of practice aids and
           accordingly, does not include extensive explanation or discussion of authoritative pronouncements. Users of this manual are urged
           to refer directly to applicable authoritative pronouncements when appropriate.
           These examples illustrate the body of various reports. For comment on addressing and dating of the report, see section 10,100.
           Examples which are assembled from illustrative reporting language set forth in Statements on Auditing Standards (SAS) and
           Statements on Standards for Accounting and Review Services (SSARS) include citation of the particular source and its location in
           AICPA Professional Standards.

                                                           TABLE OF CONTENTS
           Section ..................................................................................................................................Paragraph
           10,100 Format of Accountants' Reports ........................................................................................01-.10
                            Addressing the Report..............................................................................................01-.05
                              Dating the Report ..................................................................................................06-.10
           10,210 Unqualified Opinions.....................................................................................................010-.240
                            Auditor's Standard Report-Comparative Financial Statements ......................................010
                              Auditor's Standard Report-Single Year Financial Statements......................................020
                              Report on a Single Statement Audit (Balance Sheet Only Presented)..........................030
                              Report on Balance Sheet Only Audit When Other Financial Statements are Also
                                Presented ................................................................................................................031
                            Reference to Other Auditors-Successor Auditor's Report When Predecessor's
                                Report (Unqualified) Is Not Presented                                                                                     .040
                            Reference to Other Auditors in Report                                                                                         .050
                            Reference to Other Auditors-Successor Auditor's Unqualified Report When
                                Predecessor's Report That Included an Explanatory Paragraph Is Not Presented..... .060
                            Reference to Other Auditors-Successor Auditor's Report When Prior Year
                                Financial Statements Have Been Restated Following Issuance of the
                                Predecessor's Report                                                                                                      .070
                            Reference to Other Auditors-Prior Year Financial Statements Restated Following
                                a Pooling of Interests                                                                                                    .080
                            Reference to Other Auditors-Successor Auditor Report When Prior Period
                                Financial Statements Were Audited by a Predecessor Auditor Who Has Ceased
                                Operations                                                                                                                .083
                            Reference to Other Auditors-Successor Auditor Report When Prior Period
                                Financial Statements Were Audited by a Predecessor Auditor Who Has Ceased
                                Operations Have Been Restated                                                                                             .084
                              Reference to Other Accountants-Report on Nonpublic Entity Presented With
                                Prior Period Financial Statements Reviewed by a Predecessor Accountant Who
                                Has Ceased Operations                                                                                                     .085
           AICPA Audit and Accounting Manual                                                                                                     Contents        66
10,210      Unqualified Opinions-continued
                Reference to Other Accountants-Report on Nonpublic Entity Presented With
                    Prior Period Financial Statements Compiled by a Predecessor Accountant Who
                    Has Ceased Operations                                                                                                                     .086
                Change in Accounting Principles or Method of Accounting                                                                                       .090
                Uncertainty - Litigation                                                                                                                      .100
                Going Concern Uncertainty                                                                                                                     .110
               Liquidation Basis Accounting-Uncertainty Re or in
                  Settlement of Obligations                                                                                                                   .120
               Liquidation Basis of Accounting-Single Year Financial Statements                                                                               .130
               Liquidation Basis of Accounting-Comparative Financial Statements                                                                               .140
               Comparative Financial Statements-Unqualified Opinion on the Current Year's
                  Financial Statements With Disclaimer' of Opinion on the Prior Year's Statements
                  of Income, Retained Earnings, and Cash Flows                                                                                                .150
               Comparative Financial Stotements-Subseqt;ent Restatement of Prior-Period
                  Financial Statements to Conform With Generally Accepted Accounting Principles                                                               .160
                Comparative Financial Statements-Current Year's Statements Audited and Prior
                  Year's Statements Reviewed........................................................................................................          .170
                Comparative Financial Statements-Current Year's Statements Audited and Prior
                  Year's Statements Compiled........................................................................................................          .180
                Comparative Financial Statements-Current Year's Statements Audited and
                    Disclaimer on Prior Year's Unaudited Statements......................................................................                     .190
                U.S.-Style Report Modified to Report on Financial Statements Prepared in
                    Conformity With Accounting Principles Generally Accepted in Another Country
                    That Are Intended for Use Only Outside the United States.........................................................                         .200
                Report on Financial Statements Prepared in Conformity With the Accounting
                    Principles Generally Accepted in Another Country That Will Have More Than,
                    Limited Distribution in the United States...................................................................................              .210
                Correction of on Error, Not Involving an Accounting Principle.......................................................                          .220
                Subsequent Event Prior to Issuance of Auditor's Report .................................................................                      .230
                Reissued Report Due to Subse uent Discovery of Facts Existing at the Date of the
                    Auditor's Report.......................................................................................................................   .240
  10,220 Adverse Opinions .................................................................................................. .01
                 Departures From GAAP ................................................................................................................ .01
  10,230 Disclaimers of Opinion                                                                                                                        .01.03
                 Beginning Inventory Not Observed (First, Examination)                                                                                 .01
                 Inability to Obtain Sufficient Competent Evidential Matter Due to a Scope
                    Limitation                                                                                                                         .02
                   Scope Limitatioir Inventory and GAAP Departure Capitalized Lease
                    Obligation I                                                                                                                       .03
  l0,240 Qualified Opinions                                                                                                                            010-.080
                 Scope Limitation---4nvestment in Foreign Affiliate (Assuming Effects Are Such That
                    Qualification Rather Than Disclaimer Is Appropriate)                                                                                      .010
                 Departure from GAAP@, Leases Not Capitalized                                                                                                 .020
                 Departure from GAAP-Leases Not Capitalized-Pertinent Facts Disclosed in
                    Note                                                                                                                                      .030
                  Inadequate Disclosure Omission of Disclosures                                                                                               .040
                  Inadequate Disclosur&--Omission of Statement of Cash Flows                                                                                  .050   67
Megan

              Briefly

 What are four standards of reporting ?



                                          68
       standards of reporting
              Reporting Results


• Whether financial statements were
  presented in accordance with GAAP
• Circumstances when GAAP not
  consistently observed
• Adequate informative disclosures
• Expression of an opinion
Vincent


What is the first standard of reporting ?




                                            70
       1st standard of reporting


The auditor must state in the auditor’s report
 whether the financial statements are
 presented in accordance with generally
 accepted accounting principles
Julian
Where in the independent auditor’s
report do we address the first standard of
reporting ?

   the report shall state whether the financial
   statements are presented in accordance with
   generally accepted accounting principles

                                                  72
                                Unqualified Opinion
We have audited the accompanying balance sheet of Miller Motor Co.
 as of Dec. 31, 2011 and 2010, and the related statements of income,
 retained earnings and cash flows for the three year then ended Dec. 31, 2011. 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, 2011 and 2010, and
                                                  conformity with
   the results of its operations and cash flows for the year then ended in
   accounting principles generally accepted in the United Stated.
                                                                                                  73
Erika

               Briefly


  What issues are addressed in the
  fourth standard of reporting ?


                                     74
         4th standard of reporting
  expression of opinion
or assertion that an opinion cannot be expressed.
  And the reasons therefor

clear cut indication of the character of the auditor’s
  work

degree of responsibility the auditor is taking
                                                  75
                4th standard of reporting
The auditor must either express an opinion regarding the
  financial statements, taken as a whole, or state that an opinion
    cannot be expressed, in the auditor’s report.
When the auditor cannot express an overall opinion, the auditor should state the reasons
    therefor in the auditor’s report.
In all cases where the auditor’s name is associated with financial statements, the auditor
    should clearly indicate the character of the auditor’s work, if any,
and the degree of responsibility the auditor is taking, in the auditor’s report
Lyndsay (with an A)

  Where in the independent auditor’s
  report do we “express an opinion”




                                       77
                                Unqualified Opinion
We have audited the accompanying balance sheet of Miller Motor Co.
 as of Dec. 31, 2011 and 2010, and the related statements of income,
 retained earnings and cash flows for the three year then ended Dec. 31, 2011. 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, 2011 and 2010, and
                                                  conformity with
   the results of its operations and cash flows for the year then ended in
   accounting principles generally accepted in the United Stated.
                                                                                                  78
Roger

  Where does the independent
  auditor’s report “contain a clear-cut
  indication of the auditor’s work?”




                                          79
                                Unqualified Opinion
We have audited the accompanying balance sheet of Miller Motor Co.
 as of Dec. 31, 2011 and 2010, and the related statements of income,
 retained earnings and cash flows for the three year then ended Dec. 31, 2011. 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, 2011 and 2010, and
                                                  conformity with
   the results of its operations and cash flows for the year then ended in
   accounting principles generally accepted in the United Stated.
                                                                                                  80
Rodney

  Where does the independent
  auditor’s report state “the degree of
  responsibility the auditor is taking?”




                                           81
                                Unqualified Opinion
We have audited the accompanying balance sheet of Miller Motor Co.
 as of Dec. 31, 2011 and 2010, and the related statements of income,
 retained earnings and cash flows for the three year then ended Dec. 31, 2011. 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, 2011 and 2010, and
                                                  conformity with
   the results of its operations and cash flows for the year then ended in
   accounting principles generally accepted in the United Stated.
                                                                                                  82
                                    Unqualified Opinion
We have audited the accompanying balance sheet of Miller Motor Co.
 as of Dec. 31, 2011 and 2010, and the related statements of income,
 retained earnings and cash flows for the three years ended Dec. 31, 2011. 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, 2011 and 2010, and the results of its
                                     in conformity with accounting
    operations and cash flows for the year then ended
 principles generally accepted in the United Stated.
We also have audited, in accordance with the standards generally
 accepted in the United States., the effectiveness of Miller Motor
 Co.’s internal control over financial reporting as of December 31, 2011, based on criteria established in
    Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
    Commission and our report dated March 26, 2011 expressed an unqualified opinion thereon.
                                Unqualified Opinion
We have audited the accompanying balance sheet of Miller Motor Co.
 as of Dec. 31, 2011 and 2010, and the related statements of income,
 retained earnings and cash flows for the three year then ended Dec. 31, 2011. 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, 2011 and 2010, and
                                                  conformity with
   the results of its operations and cash flows for the year then ended in
   accounting principles generally accepted in the United Stated.
                                                                                                  84

				
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