substantive procedures and audit completion

lapping

involves the manipulation of accounts receivable to conceal stolen cash. It’s a classic example of misappropriation of assets'

have to keep running running running to keep fraud going

audit opinion: qualified due to GAAS or disclaimer of opinion

unable to obtain sufficient appropriate audit evidence regarding opening balances

audit opinion: qualified due to GAAP or adverse opinion

opening balance contain a misstatemetn that materially affects the current financial statements

audit opinion: qualified due to GAAO or adverse opinion

current periods accounting policies are not consistently applied regarding opening balances

audit opinion: modify current audit report accordingly

predicessor’s audit report includes a modification

remote loss contingency

disclose: no

accrue: no

remote gain contingency

disclose: no

accrue: no

reasonably possible loss contingency

disclose: yes

accrue: no

reasonable possible gain contingency

disclose: yes

accrue: no

probable and non-estimable loss contingency

disclose: yes

accrue: no

probable and non-estimable gain contingency

disclose: yes

accrue: no

probable and reasonably estimable loss contingency

disclose: yes

accrue: yes

probable and reasonably estimable gain contingency

disclose: yes

accrue: no

audit opinion:unmodified

if the litigation claims adn assessments are appropriatly accounted and disclosed

audit opinion: qualified due to GAAP or adverse opinion

if the litigation, claims and assessments are not appropriatly accounted adn disclosed

Audit opinon: qualified due to GAAS or disclaimer of opinion

entity’s external legal counsel refuses to respond appropriately to letter of inquiry and auditor is unable to obtain sufficient appropriate audit evidence via alternative audit procedures

Audit opinion: disclaimer of opinion or withdrawal

mgmt refuses to give the auditor permission to communicate or meet with the entity’s external legal counsel

audit opinion: unmodified opinion

estimates are reasonable and disclosed adn accounted properly

audit opinion: qualified due to GAAP or adverse opinion

estimates are not reasonable and/or not accounted and disclosed properly

audit opinion: pualified due to GAAS or disclaimer of opinion

unable to audit estimates due to lack of information

audit opinion: unmodified

misstatements are immaterial

audit opinion: qualified due to GAAP

misstatements are material but not pervasive

audit opinion: Adverse

misstatements are material and pervasive

negative confirmations

auditor can tolerate a high level of DR

provide less persuasive evidence than positive confirmations

evaluating accounting estimates

• determing if all accounting estimates that could be material to the financial statements have been developed

• are reasonable in the circumstance

• presented in conformity with financial reporting framework

• properly disclosed

test of details

can provide sufficient appropriate audit evidence on which to base an audit opinion

An auditor's written communication regarding significant deficiencies and material weaknesses identified during a financial statement audit should

include a statement that indicates the purpose of audit was for an opinion on financial statements not internal control

In the audit report on a public company’s financial statements, the principal auditor decides not to make reference to another auditor who audited a client's subsidiary. The principal auditor could justify this decision if, among other requirements, the principal auditor

•   Performs procedures to be satisfied as to the audit done by the other auditor