审计学：一种整合方法（英文版 第17版）课件全套 CHAPTER 1 THE DEMAND FOR AUDIT -CHAPTER26-Internal and Governmental Financial Auditing

AuditingandAssuranceServicesSeventeenthEditionChapter1TheDemandforAuditandOtherAssuranceServicesCopyright©2020,2017,2014PearsonEducation,Inc.AllRightsReservedLearningObjectives(1of2)1.1 Describeauditing1.2 Distinguishbetweenauditingandaccounting1.3 Explaintheimportanceofauditinginreducinginformationrisk1.4 Listthecausesofinformationrisk,andexplainhowthisriskcanbereducedLearningObjectives(2of2)1.5 DescribeassuranceservicesanddistinguishauditservicesfromotherassuranceandnonassuranceservicesprovidedbyCPAs1.6 Differentiatethethreemaintypesofaudits1.7 Identifytheprimarytypesofauditors1.8 DescribetherequirementsforbecomingaCPALearningObjective1.1DescribeauditingNatureofAuditing(1of2)Auditingis:TheaccumulationandevaluationofevidenceaboutinformationtodetermineandreportonthedegreeofcorrespondencebetweentheinformationandestablishedcriteriaPerformedbyacompetent,independentpersonNatureofAuditing(2of2)Thedefinitionofauditingincludesthefollowingkeywordsandphrases:InformationandestablishedcriteriaAccumulatingandevaluatingevidenceCompetent,independentpersonReportingFigure1.1AuditofaTaxReturnLearningObjective1.2DistinguishbetweenauditingandaccountingDistinguishBetweenAuditingandAccountingAccountingistherecording,classifying,andsummarizingofeconomiceventsinalogicalmannerforthepurposeofprovidingfinancialinformationfordecisionmakingAuditorsfocusondeterminingwhetherrecordedinformationproperlyreflectstheeconomiceventsthatoccurredduringtheaccountingperiodLet’sDiscuss(1of5)WhataretheinformationandestablishedcriteriafortheauditofJonesCompany’staxreturnbyaninternalrevenueagent?WhataretheyfortheauditofJonesCompany’sfinancialstatementsbyaCPAfirm?Intheconductofauditsoffinancialstatements,itwouldbeaseriousbreachofresponsibilityiftheauditordidnotthoroughlyunderstandaccounting.However,manycompetentaccountantsdonothaveanunderstandingoftheauditingprocess.Whatcausesthisdifference?LearningObjective1.3ExplaintheimportanceofauditinginreducinginformationriskEconomicDemandforAuditingInformationriskreflectsthepossibilitythattheinformationuponwhichthebusinessriskdecisionwasmadewasinaccurateAlikelycauseoftheinformationriskisthepossibilityofinaccuratefinancialstatementsAuditingcanhaveasignificanteffectoninformationriskLearningObjective1.4Listthecausesofinformationrisk,andexplainhowthisriskcanbereducedCausesofInformationRiskReasonsthatincreasethelikelihoodofdecisionmakersreceivingunreliableinformation:RemotenessofinformationBiasesandmotivesoftheproviderVoluminousdataComplexexchangetransactionsReducingInformationRiskTherearethreemainwaystoreduceinformationrisk:UserverifiesinformationUsersharesinformationriskwithmanagementAuditedfinancialstatementsareprovidedFigure1.2RelationshipsAmongAuditors,Client,andExternalUsersLet’sDiscuss(2of5)Whatismeantbydeterminingthedegreeofcorrespondencebetweeninformationandestablishedcriteria?Whatarethecriteriaforanauditofacompany’sfinancialstatements?Let’sDiscuss(3of5)Distinguishamongthefollowingthreefactorsimpactingaloaninterestrate:risk-freeinterestrate,businessrisk,andinformationrisk.Whichoneoronesdoestheauditorreducebyperforminganaudit?Identifythethreemainwaysinformationriskcanbereduced.Whataretheadvantagesanddisadvantagesofeach?LearningObjective1.5DescribeassuranceservicesanddistinguishauditservicesfromotherassuranceandnonassuranceservicesprovidedbyCPAsAssuranceServicesAssuranceserviceisanindependentprofessionalservicethatimprovesthequalityofinformationfordecisionmakersItcanbedonebyCPAsorbyavarietyofotherprofessionalsProvisionsinSection404oftheSarbanes–OxleyActrequireCPAfirmstoprovideassuranceoninternalcontroloverfinancialreportingforlargerpubliccompaniesAttestationServicesAttestationserviceisatypeofassuranceserviceinwhichtheCPAfirmissuesareportaboutasubjectmatterorassertionthatismadebyanotherparty,including:AuditofhistoricalfinancialstatementsAuditofinternalcontroloverfinancialreportingReviewofhistoricalfinancialstatementsOtherattestationservicesthatmaybeappliedtoabroadrangeofsubjectmatterOtherAssuranceandNonassuranceServicesOtherassuranceservicesareservicesthatdonotmeetthedefinitionofattestationservicesCPAisnotrequiredtoissueawrittenreportNonassuranceservicesareservicesrenderedbyCPAfirmsthatgenerallyfalloutsidethescopeofassuranceservicessuchas:AccountingandbookkeepingservicesTaxservicesManagementconsultingservicesTable1.1(1of4)OtherAssuranceServiceExamplesOtherAssuranceServicesServiceActivitiesControlsoverandrisksrelatedtoinvestments,includingpoliciesrelatedtoderivativesAssesstheprocessesinacompany’sinvestmentpracticestoidentifyrisksandtodeterminetheeffectivenessofthoseprocessesMysteryshoppingPerformanonymousshoppingtoassesssalespersonneldealingswithcustomersandprocedurestheyfollowTable1.1(2of4)OtherAssuranceServiceExamples(continued)OtherAssuranceServicesServiceActivitiesAssessrisksofaccumulation,distribution,andstorageofdigitalinformationAssesssecurityrisksandrelatedcontrolsoverelectronicdata,includingtheadequacyofbackupandoff-sitestorageFraudandillegalactsriskassessmentDevelopfraudriskprofilesandassesstheadequacyofcompanysystemsandpoliciesinpreventinganddetectingfraudandillegalactsTable1.1(3of4)OtherAssuranceServiceExamples(continued)OtherAssuranceServicesServiceActivitiesOrganicingredientsProvideassuranceontheamountoforganicingredientsincludedinacompany’sproductsCompliancewithentertainmentroyaltyagreementsAssesswhetherroyaltiespaidtoartists,authors,andotherscomplywithroyaltyagreementsTable1.1(4of4)OtherAssuranceServiceExamples(continued)OtherAssuranceServicesServiceActivitiesISO9000certificationsCertifyacompany’scompliancewithISO9000qualitycontrolstandards,whichhelpensurecompanyproductsareofhighqualityCorporateresponsibilityandsustainabilityReportonwhethertheinformationinacompany’scorporateresponsibilityreportisconsistentwithcompanyinformationandestablishedreportingcriteriaLearningObjective1.6DifferentiatethethreemaintypesofauditsTypesofAuditsCPAsperformthreeprimarytypesofaudits:OperationalauditComplianceauditFinancialstatementauditTable1.2(1of2)ExamplesoftheThreeTypesofAuditTypeofAuditExampleInformationEstablishedCriteriaAvailableEvidenceOperationalauditEvaluatewhetherthecomputerizedpayrollprocessingforaChinesesubsidiaryisoperatingefficientlyandeffectivelyNumberofpayrollrecordsprocessedinamonth,costsofthedepartment,andnumberoferrorsmadeCompanystandardsforefficiencyandeffectivenessinpayrolldepartmentErrorreports,payrollrecords,andpayrollprocessingcostsTable1.2(2of2)ExamplesoftheThreeTypesofAudit(continued)TypeofAuditExampleInformationEstablishedCriteriaAvailableEvidenceComplianceauditDeterminewhetherbankrequirementsforloancontinuationhavebeenmetCompanyrecordsLoanagreementprovisionsFinancialstatementsandcalculations

bytheauditorFinancialstatement

AuditAnnualauditofApple’sfinancial

StatementsApple’sfinancialstatementsGenerallyacceptedaccounting

PrinciplesDocuments,records,

andoutsidesourcesof

EvidenceLearningObjective1.7IdentifytheprimarytypesofauditorsTypesofAuditorsThereareseveraltypesofauditorsinpracticetoday:CertifiedPublicAccountingFirmsGovernmentAccountabilityOfficeAuditorsInternalRevenueAgentsInternalauditorsLet’sDiscuss(4of5)Indicatethethreemaintypesofaudits.Whatarethesimilaritiesanddifferencesamongeachtypeofaudit?WhatarethemajordifferencesinthescopeoftheauditresponsibilitiesforCPAs,GAOauditors,IRSagents,andinternalauditors?Let’sDiscuss(5of5)Listfiveexamplesofspecificoperationalauditsthatcanbeconductedbyaninternalauditorinamanufacturingcompany.Whatknowledgedoestheauditorneedabouttheclient’sbusinessinanauditofhistoricalfinancialstatements?Explainhowthisknowledgemaybeusefulinperformingotherassuranceorconsultingservicesfortheclient.LearningObjective1.8DescribetherequirementsforbecomingaCPACertifiedPublicAccountantCPAisregulatedbystatelawthroughthelicensingdepartmentsofeachstateTherearethreerequirementsforbecomingaCPA:EducationUniformCPAexaminationExperienceFigure1.3ThreeRequirementsforBecomingaCPACopyrightThisworkisprotectedbyUnitedStatescopyrightlawsandisprovidedsolelyfortheuseofinstructorsinteachingtheircoursesandassessingstudentlearning.Disseminationorsaleofanypartofthiswork(includingontheWorldWideWeb)willdestroytheintegrityoftheworkandisnotpermitted.Theworkandmaterialsfromitshouldneverbemadeavailabletostudentsexceptbyinstructorsusingtheaccompanyingtextintheirclasses.Allrecipientsofthisworkareexpectedtoabidebytheserestrictionsandtohonortheintendedpedagogicalpurposesandtheneedsofotherinstructorswhorelyonthesematerials.AuditingandAssuranceServicesSeventeenthEditionChapter2TheCPAProfessionCopyright©2020,2017,2014PearsonEducation,Inc.AllRightsReservedLearningObjectives(1of2)2.1 DescribethenatureofCPAfirmsandwhattheydo2.2 DescribethestructureofCPAfirms2.3 UnderstandtheroleofthePublicCompanyAccountingOversightBoardandtheeffectsoftheSarbanes–OxleyActontheCPAprofession2.4 SummarizetheroleoftheSecuritiesandExchangeCommissioninaccountingandauditingLearningObjectives(2of2)2.5 DescribethekeyfunctionsperformedbytheAICPA2.6 UnderstandtheroleofinternationalauditingstandardsandtheirrelationtoU.S.auditingstandards2.7 UseU.S.auditingstandardsasabasisforfurtherstudy2.8 IdentifyqualitycontrolstandardsandpracticeswithintheaccountingprofessionLearningObjective2.1DescribethenatureofCPAfirmsandwhattheydoTypesofCPAFirmsExceptforcertaingovernmentalorganizations,theauditsofmostfinancialstatementsintheUnitedStatesaredonebyCPAfirmsThreesizecategoriesareusedtodescribeCPAfirms:BigFourinternationalfirmsNational/RegionalfirmsLocalfirms ActivitiesofCPAFirmsCPAfirmsprovideauditservices,aswellasotherattestationandassuranceservices.Additionalservicesinclude:AccountingandbookkeepingservicesTaxservicesManagementconsultingandriskadvisoryservicesBusinessvaluationForensicaccountingCorporateresponsibilityandsustainabilityreportingInformationtechnologyadvisoryservicesLearningObjective2.2DescribethestructureofCPAfirmsStructureofCPAFirmsCPAfirmsvaryinthenatureandrangeofservicesoffered,whichaffectstheorganizationandstructureofthefirms.Threemainfactorsinfluencetheorganizationalstructureofallfirms:TheneedforindependencefromclientsTheimportanceofastructuretoencouragecompetenceTheincreasedlitigationriskfacedbyauditorsOrganizationalStructuresTherearesixorganizationalstructuresavailabletoCPAfirms:ProprietorshipGeneralPartnershipGeneralCorporationProfessionalCorporationLimitedLiabilityCompanyLimitedLiabilityPartnershipTable2.1(1of2)StaffLevelsandResponsibilitiesStaffLevelAverageExperienceTypicalResponsibilitiesStaffassistant0-2yearsPerformsmostofthedetailedauditwork.Seniororin-chargeauditor2-5yearsCoordinatesandisresponsiblefortheperformanceofauditprocedures,includingsupervisingandreviewingstaffwork.Managerandseniormanager5-10yearsHelpsthein-chargeplanandmanagetheaudit,reviewsthein-charge’swork,andmanagesrelationswiththeclient.Amanagermayberesponsibleformorethanoneengagementatthesametime.Table2.1(2of2)StaffLevelsandResponsibilities(continued)StaffLevelAverageExperienceTypicalResponsibilitiesPartner10+yearsReviewstheoverallauditworkandisinvolvedinsignificantauditdecisions.Apartnerisanownerofthefirmandthereforehastheultimateresponsibilityforconductingtheauditandservingtheclient.Let’sDiscuss(1of7)StatethefourmajortypesofservicesCPAsperform,andexplaineach.IdentifythesixorganizationalstructuresavailabletoCPAfirms.WhyaremostCPAfirmsnotorganizedasgeneralpartnerships?LearningObjective2.3UnderstandtheroleofthePublicCompanyAccountingOversightBoardandtheeffectsoftheSarbanes–OxleyActontheCPAprofessionSarbanes–OxleyActandPublicCompanyAccountingOversightBoard(1of2)TheSarbanes–OxleyActisconsideredbymanytobethemostimportantlegislationaffectingtheauditingprofessionsincethe1933and1934SecuritiesActsTheprovisionsoftheActdramaticallychangedtherelationshipbetweenpubliclyheldcompaniesandtheirauditfirmsSarbanes–OxleyActandPublicCompanyAccountingOversightBoard(2of2)TheSarbanes–OxleyActestablishedthePublicCompanyAccountingOversightBoard(PCAOB)to:ProvideoversightforauditorsofpubliccompaniesEstablishauditing,attestation,andqualitycontrolstandardforpubliccompanyauditsPerforminspectionsofauditengagementsandthequalitycontrolsatauditfirmsperformingthoseauditsLet’sDiscuss(2of7)WhatmajorcharacteristicsoftheorganizationandconductofCPAfirmspermitthemtofulfilltheirsocialfunctioncompetentlyandindependently?WhatistheroleofthePublicCompanyAccountingOversightBoard(PCAOB)?HowdoesthePCAOBprovideoversightofauditfirms?LearningObjective2.4SummarizetheroleoftheSecuritiesandExchangeCommissioninaccountingandauditingSecuritiesandExchangeCommission(1of2)TheSECassistsinprovidinginvestorswithreliableinformationuponwhichtomakeinvestmentdecisionsTheSEChasconsiderableinfluenceinsettingGAAPanddisclosurerequirementsforfinancialstatementsTheSEChaspowertoestablishrulesforanyCPAassociatedwithauditedfinancialstatementssubmittedtothecommissionSecuritiesandExchangeCommission(2of2)ThereareseveralimportantreportsrequiredbytheSECthatareofspecialinteresttotheauditors:FormS-1Form8-KForm10-KForm10-QLearningObjective2.5DescribethekeyfunctionsperformedbytheAICPAAmericanInstituteofCertifiedPublicAccountants(1of2)MembershipintheAICPAisvoluntaryandisrestrictedtoCPAsNotallCPAsjoinandnotallmembersarepracticingasindependentauditorsTheAICPA:SetsprofessionalrequirementsforCPAsConductsresearchPublishesmaterialsonmanydifferentsubjectsrelatedtoaccounting,auditing,attestationandassuranceservices,managementconsultingservices,andtaxesAmericanInstituteofCertifiedPublicAccountants(2of2)TheAICPAsetsstandardsandrulesthatallmembersandotherpracticingCPAsmustfollow:AuditingstandardsPreparation,compilation,andreviewstandardsOtherattestationstandardsCodeofProfessionalConductLet’sDiscuss(3of7)DescribetheroleoftheSECinsocietyanddiscussitsrelationshipwithandinfluenceonthepracticeofauditing.WhatarethepurposesoftheAICPAStatementsonStandardsforAttestationEngagements?LearningObjective2.6UnderstandtheroleofinternationalauditingstandardsandtheirrelationtoU.S.auditingstandardsInternationalandU.S.AuditingStandardsInternationalStandardsonAuditing(ISAs)areissuedbytheInternationalAuditingandAssuranceStandardsBoard(IAASB)oftheInternationalFederationofAccountants(IFAC)TheIAASBworkstoimprovetheuniformityofauditingpracticesandrelatedservicesthroughouttheworldAICPAAuditingStandardsAuditingstandardsforprivatecompaniesandotherentitiesintheUnitedStatesareestablishedbytheAuditingStandardsBoard(ASB)oftheAICPAThesestandardsarereferredtoasStatementsonAuditingStandards(SASs)TheAICPAauditingstandardsarealsoreferredtoasU.S.generallyacceptedauditingstandards(GAAS)PCAOBAuditingStandardsStandardsissuedbythePCAOBapplyonlytotheauditsofU.S.publiccompaniesandotherSECregistrants,includingbrokersanddealersThePCAOBalsoconsidersinternationalauditingstandardswhendevelopingnewstandardsFigure2.1RelationofU.S.andInternationalAuditingStandardsLet’sDiscuss(4of7)DescribetheroleofInternationalStandardsonAuditing.WhatistherelationshipbetweenInternationalStandardsonAuditingandU.S.auditingstandards?LearningObjective2.7UseU.S.auditingstandardsasabasisforfurtherstudyOrganizationofU.S.AuditingStandards(1of2)Theprinciplesunderlyinganauditprovideaframeworktohelpauditorsfulfillthetwoobjectives:Obtainreasonableassuranceaboutwhetherthefinancialstatementsasawholearefreefrommaterialmisstatement,whetherduetofraudorerrorReportonthefinancialstatements,andcommunicateasrequiredbyGAAS,inaccordancewiththeauditor’sfindingsOrganizationofU.S.AuditingStandards(2of2)Theprinciplesarenotrequirementsanddonotcarryauthority,buttheyprovidestructurefortheCodification.Thestructureisorganizedaroundthefollowingprinciples:PurposeofanauditResponsibilitiesPerformanceReportingStandardsofPerformanceTheAICPAprinciplesandtheauditingstandardsshouldbeviewedbypractitionersasminimumstandardsofperformanceratherthanasmaximumstandardsoridealsAuditormustnotalwaysneedtofollowthemblindlyIfanauditorbelievesthattherequirementofastandardisimpracticalorimpossibletoperform,theauditorisjustifiedinfollowinganalternativecourseofactionLet’sDiscuss(5of7)WhatistheroleofthePublicCompanyAccountingOversightBoard?WhatrolesareplayedbytheAmericanInstituteofCertifiedPublicAccountantsforitsmembers?Describetherelationsamonginternationalauditingstandards,AICPAauditingstandards,andPCAOBauditingstandards.Let’sDiscuss(6of7)Distinguishbetweenauditingstandardsandgenerallyacceptedaccountingprinciples,andgivetwoexamplesofeach.LearningObjective2.8IdentifyqualitycontrolstandardsandpracticeswithintheaccountingprofessionQualityControl(1of2)QualitycontrolcomprisesthemethodsusedtoensurethatthefirmmeetsitsprofessionalresponsibilitiestoclientsandothersPublicaccountingfirmsmustbeenrolledinanAICPA-approvedpractice-monitoringprogram,alsoknownaspeerreview,formembersinthefirmtobeeligibleformembershipintheAICPAQualityControl(2of2)TheAICPAhasestablishedauditpracticeandqualitycentersasresourcecenterstoimproveauditpracticequality:TheCenterforAuditQuality(CAQ)isapublicpolicyorganizationaffiliatedwiththeAICPAservinginvestors,publiccompanyauditors,andthecapitalmarketsThePrivateCompaniesPracticeSectionprovidespracticemanagementinformationtofirmsofallsizesFigure2.2WaystheProfessionandSocietyEncourageCPAstoConductThemselvesataHighLevelLet’sDiscuss(7of7)WhatismeantbythetermqualitycontrolasitrelatestoaCPAfirm?Statewhatismeantbythetermpeerreview.Whataretheimplicationsofpeerreviewfortheprofession?CopyrightThisworkisprotectedbyUnitedStatescopyrightlawsandisprovidedsolelyfortheuseofinstructorsinteachingtheircoursesandassessingstudentlearning.Disseminationorsaleofanypartofthiswork(includingontheWorldWideWeb)willdestroytheintegrityoftheworkandisnotpermitted.Theworkandmaterialsfromitshouldneverbemadeavailabletostudentsexceptbyinstructorsusingtheaccompanyingtextintheirclasses.Allrecipientsofthisworkareexpectedtoabidebytheserestrictionsandtohonortheintendedpedagogicalpurposesandtheneedsofotherinstructorswhorelyonthesematerials.AuditingandAssuranceServicesSeventeenthEditionChapter3AuditReportsCopyright©2020,2017,2014PearsonEducation,Inc.AllRightsReservedLearningObjectives(1of2)3.1 DescribethepartsofthestandardunmodifiedopinionauditreportfornonpublicentitiesunderAICPAauditingstandards3.2 Specifytheconditionsrequiredtoissuethestandardunmodifiedopinionauditreport3.3 UnderstandreportingonfinancialstatementsandinternalcontrolunderPCAOBauditingstandards3.4 Describethefivecircumstanceswhenanemphasis-of-matterexplanatoryparagraphornonstandardwordingisappropriatetoincludeinanunmodifiedopinionauditreportLearningObjectives(2of2)3.5 Identifythetypesofauditreportsthatcanbeissuedwhenanunmodifiedopinionisnotjustified3.6 Explainhowmaterialityaffectsauditreportingdecisions3.7 Draftappropriatelymodifiedopinionauditreportsunderavarietyofcircumstances3.8 Determinetheappropriateauditreportforagivenauditsituation3.9 UnderstandtheuseofinternationalaccountingandauditingstandardsbyU.S.companiesLearningObjective3.1DescribethepartsofthestandardunmodifiedopinionauditreportfornonpublicentitiesunderAICPAauditingstandardsPartsofStandardUnmodifiedOpinionAuditReportTheauditor’sstandardunmodifiedopinionauditreportcontainseightdistinctparts:ReporttitleAuditorreportaddressOpinionsectionBasisforopinionManagement’sresponsibilityAuditor’sresponsibilitySignatureandaddressofCPAfirmAuditreportdateDisclosureofKeyAuditMattersInternationalauditingstandardsandPCAOBauditingstandardsrequirecommunicationof“keyauditmatters”or“criticalauditmatters”inthestandardunmodifiedauditreportTheAICPAreportingstandardsdonotrequirethecommunicationofkeyauditmattersKeyauditmatters,ifdisclosed,areincludedinasectionfollowingtheBasisforOpinionsectionLearningObjective3.2SpecifytheconditionsrequiredtoissuethestandardunmodifiedopinionauditreportConditionsforStandardUnmodifiedOpinionAuditReportStandardunmodifiedopinionauditreportisissuedwhen:AllstatementsandrequireddisclosuresareincludedinthefinancialstatementsSufficientappropriateevidencehasbeenaccumulatedFinancialstatementsarepresentedfairlyinaccordancewithGAAPorotherappropriateaccountingframeworkNocircumstancesrequiringtheadditionofanemphasis-of-matterparagraphormodificationofthewordingorauditor’sopinioninthereportFigure3.2CategoriesofAuditReportsLet’sDiscuss(1of6)Explainwhyauditors’reportsareimportanttousersoffinancialstatementsandwhyitisdesirabletohavestandardwording.Whatfourcircumstancesarerequiredforastandardunmodifiedopinionauditreporttobeissued?LearningObjective3.3UnderstandreportingonfinancialstatementsandinternalcontrolunderPCAOBauditingstandardsStandardUnmodifiedOpinionAuditReportforPublicCompaniesPCAOBrefertothestandardunmodifiedopinionauditreportasan“unqualifiedopinion”auditreport,whichrequires:TheauditfirmisregisteredwiththePCAOBstandardsandisindependentofthecompanyAstatementindicatingthatanauditisdesignedtoprovidereasonableassuranceThedisclosureofcriticalauditmattersThesignature,tenure,andcityandstateoftheauditfirmandtheauditreportdateCriticalAuditMattersPCAOBauditingstandardsdefineacriticalauditmatteras:Anymatterarisingfromtheauditofthefinancialstatementsthatwascommunicatedorrequiredtobecommunicatedtotheauditcommitteeandthat(1)relatestoaccountsordisclosuresthatarematerialtothefinancialstatementsand(2)involvedespeciallychallenging,subjective,orcomplexauditorjudgmentReportsonInternalControloverFinancialReportingPCAOBauditingstandardsrequiretheauditofinternalcontroltobeintegratedwiththeauditofthefinancialstatementsAuditormaychoosetoissueseparatereportsoracombinedreportThecombinedreportaddressesboththefinancialstatementsandmanagement’sreportoninternalcontroloverfinancialreportingLearningObjective3.4Describethefivecircumstanceswhenanemphasis-of-matterexplanatoryparagraphornonstandardwordingisappropriatetoincludeinanunmodifiedopinionauditreportEmphasis-of-MatterExplanatoryParagraph/NonstandardReportWording(1of2)Theunmodifiedopinionauditreportwithemphasis-of-matterparagraphornonstandardreportwording:MeetsthecriteriaofacompleteauditwithsatisfactoryresultsandfinancialstatementsthatarefairlypresentedButtheauditorbelievesitisimportanttodrawthereader’sattentiontocertainmattersortheauditorisrequiredtoprovideadditionalinformationEmphasis-of-MatterExplanatoryParagraph/NonstandardReportWording(2of2)Themostimportantcausesoftheadditionofanemphasis-of-matterparagraph/nonstandardreportwording:LackofconsistentapplicationofGAAPAuditoragreeswithadeparturefrompromulgatedaccountingprinciplesSubstantialdoubtaboutgoingconcernEmphasisofothermattersReportsinvolvingotherauditorsEmphasisofOtherMattersAuditormaywanttoemphasizespecificmattersregardingthefinancialstatementsundercertaincircumstances:MaterialrelatedpartytransactionsSubsequenteventsComparabilityofthefinancialstatementsMaterialuncertaintiesdisclosedinthefootnotesAmajorcatastrophethathashadorcontinuestohaveasignificanteffectontheentity’sfinancialposi