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The Auditor's Report: Comprehensive Guidance and Examples
The AICPA's new online tool, The Auditor's Report: Comprehensive Guidance and Examples, provides expert guidance on developing the auditor's report in accordance with applicable AICPA Professional Standards, including the new clarified auditing standards. Offered in a convenient and efficient online format, subscribers to this online tool can download the sample auditor's reports for easy mark up and customization.

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The AICPA’s new online tool, The Auditor’s Report: Comprehensive Guidance and Examples provides guidance on developing the auditor’s reports in accordance with applicable AICPA Professional Standards. Offered in a convenient and efficient online format, subscribers to this online tool can download the sample auditor’s reports for easy mark up and customization. With the added automation, practitioners will save time and minimize the risk of omitting a crucial part of the report.

Supplemented with examples, this auditor’s report tool helps your firm be as efficient and effective as possible in clearly documenting the results of the audit. With the more explicit requirements applicable to the auditor’s report established by the new clarified auditing standards, this tool is an essential resource for auditors making the transition to the new auditing standards. Illustrative examples are provided throughout so auditors can easily apply the requirements for audits.

To provide you with the most useful and comprehensive look at the auditor’s report, The Auditor’s Report: Comprehensive Guidance and Examples, provides clear, expert guidance that plainly differentiates required content and format of the auditor’s report from optional content used to further communicate with the user of the financial statements. Following the narrative guidance, there are exhibits with sample auditor’s reports illustrating the practical application of the guidance.

This tool also includes industry examples for the following industries and areas: Circular A-133 audits, audits conducted under Governmental Auditing Standards, and audits of Healthcare entities, State and Local Government entities, Employee Benefit Plans, Property and Liability Insurance entities, Depository and Lending entities, Investment companies, Not for Profit entities, and Developmental Stage Companies.

Developed by subject matter experts, The Auditor’s Report: Comprehensive Guidance and Examples is brought to you by the organization you trust to deliver the tools you need. The AICPA anticipates making updates to this tool to incorporate future changes in AICPA Professional Standards and best practice recommendations, as necessary.

Online Subscription > AICPA Online Professional Library. Your subscription includes content updates and unlimited online access for 1 year. AICPA Online Professional Library - your source for the latest guidance, information, and standards on a variety of accounting & auditing, industry-specific, and practice management topics. Subscribe to the product, bundle, or library that best meets your organization's needs. Click here for more information.

Excerpt

Auditor’s Responsibility

When the auditor expresses a qualified or an adverse opinion, the auditor amends the description of the auditor’s responsibility to state that the auditor believes that the audit evidence obtained is sufficient and appropriate to provide a basis for the auditor’s qualified or adverse opinion.
If the auditor disclaims an opinion due to an inability to obtain sufficient appropriate audit evidence, the auditor amends the introductory paragraph to state that the auditor was engaged to audit the financial statements. The auditor also amends the description of the auditor’s responsibility and the description of the scope of the audit to state, “Our responsibility is to express an opinion on the financial statements based on conducting the audit in accordance with auditing standards generally accepted in the United States of America. Because of the matter(s) described in the basis for disclaimer of opinion paragraph, however, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.”

Basis for Modification Paragraph

When the auditor modifies the opinion on the financial statements, the auditor should, in accordance with paragraph .17 of AU-C section 705 includes a paragraph in the auditor's report that provides a description of the matter giving rise to the modification in addition to the specific elements required in the previous chapter. The auditor should place this paragraph immediately before the opinion paragraph in the auditor's report and use a heading that includes “Basis for Qualified Opinion,” "Basis for Adverse Opinion,” or “Basis for Disclaimer of Opinion,” as appropriate.
If the modification results from an inability to obtain sufficient appropriate audit evidence, the auditor should include in the basis for modification paragraph the reasons for that inability as explained in paragraph .21 of AU-C section 705.

Opinion Paragraph

When the auditor modifies the audit opinion, the auditor should use a heading that includes “Qualified Opinion,” "Adverse Opinion,” or “Disclaimer of Opinion,” as appropriate, for the opinion paragraph as described in paragraphs .23–.26 of AU-C section 705.
When the auditor disclaims an opinion due to an inability to obtain sufficient appropriate audit evidence, the auditor should state in the opinion paragraph that because of the significance of the matter(s) described in the basis for disclaimer of opinion paragraph, the auditor has not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion and accordingly, the auditor does not express an opinion on the financial statements.
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Special Purpose Frameworks

The auditor is required to evaluate whether the financial statements adequately refer to or describe the applicable financial reporting framework.  In an audit of special purpose financial statements, the auditor should evaluate whether the financial statements are suitably titled and include a summary of significant accounting policies in accordance with paragraph .15 of AU-C section 800. Terms such as balance sheet, statement of financial position, statement of income, statement of operations, and statement of cash flows, or similar unmodified titles, are generally understood to be applicable only to financial statements that are intended to present financial position, results of operations, or cash flows in accordance with GAAP. The following table contains sample financial statement titles.

Sample Statement Titles

GAAP Titles

Special Purpose Framework Titles

Balance Sheet

Statement of Assets, Liabilities, and Stockholders' Equity (Partners' Capital, Proprietor's Capital)-Income Tax Basis (Cash Basis, Modified Cash Basis, Regulatory Basis, Contractual Basis, etc.)

Statement of Income

Statement of Revenue and Expenses-Income Tax Basis (Cash Basis, Modified Cash Basis, Regulatory Basis, Contractual Basis, etc.)

Statement of Changes in Stockholders' Equity

Statement of Changes in Stockholders' Equity (Partners' Capital, Proprietor's Capital)-Income Tax Basis (Cash Basis, Modified Cash Basis, Regulatory Basis, Contractual Basis, etc.)

Statement of Income and Retained Earnings

Statement of Revenue, Expenses, and Retained Earnings (Partners' Capital, Proprietor's Capital)-Income Tax Basis (Cash Basis, Modified Cash Basis, Regulatory Basis, Contractual Basis, etc.)

Statement of Cash Flows

Statement of Cash Activity-Income Tax Basis (Cash Basis, Modified Cash Basis, Regulatory Basis, Contractual Basis, etc.)
(The statement of cash flows may not be a required statement for financial statements prepared in accordance with a special purpose framework)

In accordance with paragraphs .15–.17 of AU-C section 800, the auditor should evaluate if the financial statements adequately describe how the special purpose framework differs from GAAP. The description of how the special purpose framework differs from GAAP ordinarily would only include the material differences between GAAP and the special purpose framework. For example, if several items are accounted for differently under the special purpose framework than they would be under GAAP, but only the differences in how depreciation is calculated are material, a brief description of the depreciation differences is all that would be necessary, and the remaining differences would not be described. The differences would not  be quantified.

In the case of special purpose financial statements prepared in accordance with a contractual basis of accounting, the auditor should also evaluate whether the financial statements adequately describe any significant interpretations of the contract on which the financial statements are based.

 

Table of contents
Publisher

American Institute of CPAs

The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with more than 418,000 members in 143 countries, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting.

The AICPA sets ethical standards for the profession and U.S. auditing standards for private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination, and offers specialized credentials for qualified professionals who concentrate on personal financial planning; forensic accounting; business valuation; and information management and technology assurance. With The Chartered Institute of Management Accountants (CIMA), it offers the Chartered Global Management Accountant (CGMA) designation, which sets the global benchmark for quality and recognition in management accounting.

The AICPA and CIMA also make up the Association of International Certified Professional Accountants (the Association), which represents public and management accounting globally, advocating on behalf the public interest and advancing the quality, competency and employability of CPAs, CGMAs and other accounting and finance professionals worldwide.

The AICPA maintains offices in New York, Washington, DC, Durham, NC, and Ewing, NJ.

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