Question

AS 3101: The Auditor's Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion

Spring 2018

In June 2017, Public Company Accounting Oversight Board (PCAOB) issued Auditing Standard (AS) 3101, “The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion”, as an effort to harmonize auditor’s report with International Standard of Auditing (ISA) 700 (revised), “Forming an Opinion and Reporting on Financial Statements”, issued by the International Auditing and Assurance Standards Board (IAASB). The auditor’s report to be issued according to AS 3101 will be similar to that prescribed by ISA 700 (revised).   

Requirements:

1.     In this assignment, students should try to understand the original pronouncement AS 3101 and provide thorough summary on its requirements. The students should write the paper from their own understanding and explain the content of AS 3101 using their own explanation and wordings. Major point will be deducted if, while reading the paper, the instructor feels that the students simply reword the original pronouncement without in-depth understanding. Citation from the original text should only be used when necessary. In such case, proper reference must be provided.

2.     The paper must be clear and well-written, and is no more than two pages long using Calibri 11, single or double space.

​This paper is due on Monday 02/26/2018 at 12:00 pm.

Answer 1

SUMMARY OF CONTENT-

1. ​ the auditor report contain either an expression of opinion on the financial statement or an assertion that an opinion cannot be expressed. This standard establishes requirements regarding the content of the auditor's written report when the auditor expresses an unqualified opinion on the financial statements (the "auditor's unqualified report)
2. The auditor is in a position to express an unqualified opinion on the financial statements when the auditor conducted an audit in accordance with the standards of the Public Company Accounting Oversight Board ("PCAOB") and concludes that the financial statements, taken as a whole, are presented fairly, in all material respects, in conformity with the applicable financial reporting framework.

THE AUDITOR'S UNQUALIFIED REPORT INCLUDE-

• the basic elements-
• 1. title
• 2. addressee
• 3.opinion on the financial statement-The first section of the auditor's report must include the section title "Opinion on the Financial Statements" and the following elements:

1. The name of the company whose financial statements were audited;
2. A statement identifying each financial statement and any related schedule(s) that has been audited;The date of, or period covered by, each financial statement and related schedule, if applicable, identified in the report;
3. A statement indicating that the financial statements, including the related notes and any related schedule(s), identified and collectively referred to in the report as the financial statements, were audited; and
4. An opinion that the financial statements present fairly, in all material respects, the financial position of the company as of the balance sheet date and the results of its operations and its cash flows for the period then ended in conformity with the applicable financial reporting framework. The opinion should also include an identification of the applicable financial reporting framework.

BASIS FOR OPTION

the elements are-

1. A statement that the financial statements are the responsibility of the company's management;
2. A statement that the auditor's responsibility is to express an opinion on the financial statements based on the audit;
3. A statement that the audit was conducted in accordance with the standards of the PCAOB;
4. A statement that PCAOB standards require that the auditor plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud;

SIGNATURE, TENURE ,LOCATION AND DATES

the elements are-

1. The signature of the auditor's firm;
2. A statement containing the year the auditor began serving consecutively as the company's auditor;
3. the city , state and date from which the auditors report has been issued.

CRITICAL AUDIT MATTERS

. The auditor must determine whether there are any critical audit matters in the audit of the current period's financial statements. A critical audit matter is any matter arising from the audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex auditor judgment. Critical audit matters are not a substitute for the auditor's departure from an unqualified opinion (i.e., a qualified opinion, adverse opinion, or disclaimer of opinion on the financial statements as described in AS 3105).