LO2 Write a report on a review of interim financial information. The key objective of a review of interim financial statements is to assess whether accounting principles have been applied on a basis that is consistent with the annual report and the corresponding interim financial statements of the previous year. Review consists mainly of enquiry and analytical procedures and procedures should be performed at or near the date of the interim information. The extent of review procedures depends on the accountant’s professional judgment about problem areas in the system of internal control, the severity of unique accounting principles problems and the errors that have occurred in the past. The AICPA standard requires auditors to act when they learn interim information filed or to be filed with specified agencies is probably materially misstated as a result of a departure from GAAP. The required action is to (1) discuss the matter with management, (2) inform the company’s audit committee if management does not take appropriate and timely action, and (3) if the audit committee does not respond appropriately, decide whether to resign from the interim review engagement or resign as the company’s auditor. (Note this requirement only – affects Canadian companies falling within the jurisdiction of the SEC.) LO3 Describe the various reports on internal control and their connection with pubic reporting and reporting to a client’s audit committee. Here, the auditors verify the accuracy of the internal controls statement for public companies just as they verify the accuracy of financial statements. Furthermore, the financial statement auditor must be the auditor of internal control over financial reporting. When performing audits, any significant deficiencies in the design or operation of the internal control structure are referred to as reportable matters. Auditing standards do not require auditors to search for reportable matters, but they do require auditors to report the ones that come to their attention. Auditors issue a management letter which contains commentary and suggestions on a variety of matters in addition to internal control maters. This letter is not required by auditing standards, but generally offered as advice to management as part of an audit.
LO2 Write a report on a review of interim financial information. The key objective of a review of interim financial statements is to assess whether accounting principles have been applied on a basis that is consistent with the annual report and the corresponding interim financial statements of the previous year. Review consists mainly of enquiry and analytical procedures and procedures should be performed at or near the date of the interim information. The extent of review procedures depends on the accountant’s professional judgment about problem areas in the system of internal control, the severity of unique accounting principles problems and the errors that have occurred in the past. The AICPA standard requires auditors to act when they learn interim information filed or to be filed with specified agencies is probably materially misstated as a result of a departure from GAAP. The required action is to (1) discuss the matter with management, (2) inform the company’s audit committee if management does not take appropriate and timely action, and (3) if the audit committee does not respond appropriately, decide whether to resign from the interim review engagement or resign as the company’s auditor. (Note – this requirement only affects Canadian companies falling within the jurisdiction of the SEC.) LO3 Describe the various reports on internal control and their connection with pubic reporting and reporting to a client’s audit committee. Here, the auditors verify the accuracy of the internal controls statement for public companies just as they verify the accuracy of financial statements. Furthermore, the financial statement auditor must be the auditor of internal control over financial reporting. When performing audits, any significant deficiencies in the design or operation of the internal control structure are referred to as reportable matters. Auditing standards do not require auditors to search for reportable matters, but they do require auditors to report the ones that come to their attention. Auditors issue a management letter which contains commentary and suggestions on a variety of matters in addition to internal control maters. This letter is not required by auditing standards, but generally offered as advice to management as part of an audit.
SB7e_WYRNTK_Ch17.docx