Wiley Practitioner's Guide to GAAS 2017 - Covering all SASs, SSAEs, SSARSs, and Interpretations

Wiley Practitioner's Guide to GAAS 2017

Contents

Preface

About the Author

Organization and Key Changes

AU-C 200: Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Generally Accepted Auditing Standards

AU-C Original Pronouncements

Technical Alert

AU-C 200 Definitions of Terms

Objectives of AU-C Section 200

Requirements

Management's Responsibilities

Auditor's Responsibilities

Ethical Requirements

Professional Skepticism and Judgment

Complying With Gaas

GAAS and the GAAS Hierarchy

AU-C 210: Terms of Engagement

AU-C Original Pronouncement

Applicability

AU-C 210 Definitions of Terms

Objectives

Fundamental Requirements

Engagement Acceptance

Illustration

AU-C 220: Quality Control for an Engagement Conducted in Accordance with Generally Accepted Auditing Standards

AU-C Original Pronouncements

Applicability

AU-C 220 Definitions of Terms

Objectives of AU-C Section 220

Requirements

Quality Control Standards

System of Quality Control

Elements of Quality Control

Independence2

Acceptance and Continuance of Client Relationships

Assignment of Engagement Teams

Engagement Performance

AU-C 230: Audit Documentation

AU-C Original Pronouncements

AU-C 230 Definitions of Terms

Objectives of AU-C Section 230

Requirements

Requirement for Audit Documentation

Form, Content, and Extent of Audit Documentation

Ownership and Confidentiality

Standardization of Audit Documentation

Preparation of Audit Documentation

Quality of Audit Documentation

Audit Documentation Deficiencies

Documentation Requirements in Other Sections

Interpretations

AU-C Illustrations

AU-C 240: Consideration of Fraud in a Financial Statement Audit

AU-C Original Pronouncements

AU-C 240 Definitions of Terms

Objectives of AU-C Section 240

Requirements

Description and Characteristics of Fraud

Basic Requirement

Professional Skepticism

Engagement Team Discussion about Fraud (Brainstorming)

Obtaining Information Needed to Identify Fraud Risks

Identifying Fraud Risks

Assessing Identified Risks

Responding to the Results of the Assessment

Evaluating Audit Evidence

Communication about Possible Fraud to Management and Those Charged with Governance

Documentation

Antifraud Programs and Controls

AU-C Illustrations

AU-C 250: Consideration of Laws and Regulations in an Audit of Financial Statements

AU-C Original Pronouncement

AU-C 250 Definition of Term

Objectives of AU Section 250

Requirements

Auditor's Responsibilities

Categories of Laws and Regulations

Audit Procedures

Response to Identified or Suspected Noncompliance with Laws and Regulations

Evaluation of Detected or Suspected Noncompliance with Laws and Regulations

Reporting Identified or Suspected Noncompliance

Documentation

AU-C 260: The Auditor's Communication with Those Charged with Governance

AU-C Original Pronouncements

AU-C Definitions of Terms

Objectives of AU-C Section 260

Requirements

Auditor's General Responsibility

Those Charged with Governance

Matters to Be Communicated

Communication Process

Qualitative Aspects of Accounting Practices

Other AU-C Sections

AU-C 265: Communicating Internal Control Related Matters Identified in an Audit

AU-C Original Pronouncements

Technical Alert

AU-C Definitions of Terms

Objectives

Requirements

Determining Whether Deficiencies in Internal Control Have Been Identified

Determination of Deficiency Severity

Risk Factors

Indicators of Material Weakness

Communication of Internal Control Related Matters

Interpretations

AU-C 265 Illustrations

AU-C 300: Planning an Audit

AU-C Original Pronouncements

Objective of AU-C Section 300

Requirements

Preliminary Engagement Activities

Matters to Consider in Developing an Audit Strategy

AU-C 315: Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement

AU-C Original Pronouncements

Technical Alert

Definitions of Terms

Objectives of AU-C Section 315

Overview

Requirements

Risk Assessment Procedures

Understanding the Entity and Its Environment, Including Internal Control

Assessing the Risk of Material Misstatement

Documentation

Examples of Matters to Consider When Obtaining an Understanding of the Entity and Its Environment

The Economy

The Client's Industry

The Client's Business: New Client

The Client's Business: Continuing Client

Using a Risk-Based, Top-Down Approach to Evaluate Internal Control

Effect of IT on Internal Control

Illustrations

AU-C 320: Materiality in Planning and Performing an Audit

AU-C Pronouncement

Definition of Term

Objective of AU-C Section 320

Overview

Materiality and Audit Risk

Requirements

Determining Materiality and Performance Materiality

Determining the Base

Nature of a Materiality Benchmark

Revision of Materiality

Documentation Requirements

AU-C 330: Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained

AU-C Original Pronouncement

Definitions of Terms

Objective of AU-C Section 330

Overview

Requirements

Overall Responses

Designing the Nature, Timing, and Extent of Further Audit Procedures

Tests of Controls

Substantive Procedures

Evaluating the Sufficiency and Appropriateness of the Audit Evidence Obtained

Documentation

Testing at Interim Dates

Designing Audit Procedures

Tests of Internal Control Operating Effectiveness

Types of Tests

Examples of Evidential Matter That May Support the Specific Assertions Embodied in Financial Statements

AU-C 402: Audit Considerations Relating to an Entity Using a Service Organization

AU-C Original Pronouncements

Technical Alert

Definitions of Terms

Objectives of AU-C Section 402

Overview

Scope

Requirements

Types of Service Auditor's Reports

Reports on Controls Placed in Operation (Type 1)

Report on Controls Placed in Operation and Tests of Operating Effectiveness (Type 2)

Considerations in Using a Service Auditor's Report

AU-C 450: Evaluation of Misstatements Identified during the Audit

AU-C Original Pronouncement

Definitions of Terms

Objectives of AU-C Section 450

The Nature and Causes of Misstatements

Requirements

Accumulation of Misstatements

Communication and Correction of Misstatements to Management

Evaluating the Effect of Uncorrected Misstatements

The Qualitative Characteristics of Misstatements

Prior Period Misstatements

Misstatement Worksheet

Documentation Requirements

AU-C 500: Audit Evidence

AU-C Original Pronouncements

Definitions of Terms

Objective

Scope

Requirements

General Guides to Appropriateness of Evidence

Using a Management's Specialist

General Guides to Sufficiency of Evidence

Audit Procedures for Obtaining Audit Evidence

Interpretations

AU-C 501: Audit Evidence-Specific Considerations for Selected Items

AU-C Original Pronouncement

Definitions of Terms

Objectives of Au Section 501

Requirements-Investments in Securities and Derivative Instruments

Required Risk Assessment in Planning

Assessing Inherent Risk for an Assertion about a Derivative Instrument or a Security

Control Risk Assessment

The Effect of a Service Organization on Audit Approaches and Procedures for Securities and Derivative Instruments

Designing Auditing Procedures

Importance of Identifying and Testing Controls

Designing Substantive Procedures Based on Risk Assessment

Completeness Assertion for Derivatives

Valuation

Additional Considerations Related to Gathering Evidential Matter about Hedging Activities

Special Skill or Knowledge Might Be Needed to Plan or Perform Auditing Procedures Related to Derivatives or Securities

Illustrations-Investments in Securities and Derivative Instruments

Requirements-Inventory Existence and Condition

Timing and Extent of Inventory Observation

Inventory Held by a Third Party

Steps in the Observation of Inventory

Planning the Physical Inventory

Taking the Physical Inventory

Outside Inventory-Taking Firm

Inventory Observation Checklist

AU-C Illustrations-Inventory Observation

Requirements-Litigation, Claims, and Assessments Involving the Entity

Accounting Considerations

Audit Procedures other than Inquiry of Lawyers

Inquiry of Client's Lawyer

Evaluation of Lawyer's Response

Refusal of Attorney to Respond

Lawyer on Board of Directors

Litigation Not Investigated by Lawyer

Litigation with Insurance Company

Reliance on House or Inside Counsel

Review of Interim Financial Information

AU-C Illustration-Litigation, Claims, and Assessments

Requirements-Segment Reporting

AU-C 505: External Confirmations

AU-C Original Pronouncement

Definitions of Terms

Objective of Au-C Section 505

Requirements

Related AU-C 330 Requirements

Results of Confirmation Procedures

Management's Refusal to Allow Confirmations

Designing the Confirmation Request

The Respondent

Timing of Confirmation Request

Confirming Prior to Year-End

Use of Negative Form of Confirmation Request

Steps in Confirmation of Accounts Receivable

Control of Confirmations

Nonresponse to Confirmation Requests

Nondelivery of Confirmation Request

Confirmation Responses Not Expected

Evaluating the Results

Confirmation Checklist

AU-C Illustrations

AU-C 510: Opening Balances-Initial Audit Engagements, Including Reaudit Engagements

AU-C Original Pronouncement

Applicability

Definitions of Terms

Objectives of AU-C Section 510

Requirements

Illustrations

AU-C 520: Analytical Procedures

AU-C Original Pronouncement

AU-C Definition of Term

Objectives of AU-C Section 520

Overview

How to Use Analytical Procedures

Requirements

Analytical Procedures

Substantive Tests

Overall Review

Documentation

Permanent File for Analytical Procedures

AU-C Illustrations

AU-C 530: Audit Sampling

AU-C Original Pronouncement

AU-C Definitions of Terms

Objectives of AU-C Section 530

Overview

Requirements

Examined 100%

Sample Selection

Stratification

Unexamined Sample Items

Sample Size: Substantive Test

Sample Size: Test of Controls

Projection of Misstatements

Aggregation of Misstatements

Qualitative Aspects

Relating Balance Sheet and Income Statement Sampling

Nonsampling Techniques

Distinguishing Sampling from Other Audit Tests

Nonstatistical Audit Sampling Techniques

Introduction

Methods of Sample Selection

Tests of Controls

Substantive Tests

Statistical Audit Sampling Techniques

Introduction

Calculating Sample Size

Risk and Confidence in Substantive Tests of Details

Statistical Evaluation of a Sample in Substantive Tests of Details

Calculating Confidence Limits

Equal-Probability Sampling: Attributes Evaluation

Dollar Value Evaluation

Equal-Probability Sampling: Variables Evaluation

AU-C 540: Auditing Accounting Estimates, Including Fair Value Accounting Estimates and Related Disclosures

AU-C Original Pronouncement

Definitions of Terms

Objective of AU-C Section 540

Overview

Requirements

Risk Assessment Procedures

Engaging a Specialist

Management's Intent and Ability

Use of Collateral in Evaluating Fair Value

Auditor's Responsibility

Identifying Circumstances That Require Material Accounting Estimates

Evaluating Reasonableness

Testing the Entity's Estimates and Disclosures

Illustration

Responding to the Assessed Risks of Material Misstatement

Disclosures

Written Representations

Communication with Audit Committees

Documentation

Management's Responsibilities

AU-C 550: Related Parties

AU-C Original Pronouncements

Definitions of Terms

Objectives of AU Section 550

Requirements

Accounting Considerations

Audit Procedures

Written Representations

Illustration

AU-C 560: Subsequent Events and Subsequently Discovered Facts

AU-C Original Pronouncement

Definitions of Terms

Objectives of AU-C Section 560

Overview

Requirements

Subsequent Events

Accounting Considerations

Application Techniques

Subsequently Discovered Facts Known to the Auditor before the Report Release Date

Subsequently Discovered Facts Known to the Auditor after the Report Release Date

Reissuance of Predecessor Auditor's Report

Illustration

AU-C 570: The Auditor's Consideration of an Entity's Ability to Continue as a Going Concern

AU-C Original Pronouncement

AU-C Definition of Term

Objectives of AU-C Section 570

Requirements

Auditor's Responsibility

Procedures Required

Specific Procedures

Indications of Going Concern Problems

Consideration of Management's Plans

Plans to Dispose of Assets

Plans to Borrow Money or Restructure Debt

Plans to Reduce or Delay Expenditures

Plans to Increase Ownership Equity

Consideration of Management Forecasts

Prospective Financial Information

Auditor Conclusions-Substantial Doubt Exists

Effects on the Auditor's Report

Auditor Conclusions-Substantial Doubt Has Been Alleviated

Inadequate Disclosure

Eliminating a Going Concern Explanatory Paragraph from a Reissued Report

Documentation Requirements

Illustration

Interpretations

Interpretation No. 1, ``Definition of Substantial Doubt about an Entity's Ability to Continue as a Going Concern´´ (Issued January 2015)

Interpretation No. 2, ``Definition of Reasonable Period of Time´´ (Issued January 2014; Issued January 2015)

Interpretation No. 3, ``Interim Financial Information´´ (Issued January 2015)

Interpretation No. 4, ``Consideration of Financial Statements Effects´´ (Issued January 2015)

AU-C 580: Written Representations

AU-C Original Pronouncement

AU-C Definition of Term

Objectives of AU-C Section 580

Requirements

Reliance on Management Representations

Obtaining Written Representations

Tailoring the Representation Letter

Materiality Considerations

Addressing and Dating the Letter

Signing the Letter

Doubt about Reliability of Written Representation

Requested Representation Letter Not Provided

Representations Required by Other AU-C Sections

Auditor's Relationship with a Small or Nonpublic Client

Explicitly Addressing Materiality in the Written Representations

Au-C 580 Illustrations

AU-C 585: Consideration of Omitted Procedures after the Report Release Date

AU-C Original Pronouncement

Definition of Term

Overview

Professional Disagreements

No Substitute for Omitted Procedures

Distinction from Section 560

Objectives of AU Section 585

Scope

Requirements

Importance of Omitted Procedures

Applying Omitted Procedures

Inability to Apply Omitted Procedures

Determining Importance of Omitted Procedures

Illustration

AU-C 600: Special Considerations-Audits of Group Financial Statements (Including the Work of Component Auditors)

AU-C Original Pronouncements

Technical Alert

Introduction

AU-C 600 Definitions of Terms

Objectives of AU-C Section 600

Overview

Requirements

Identifying Components

Interpretations

Interpretation No. 1, ``Auditor of Participating Employer in a Governmental Pension Plan,´´ of AU-C Section 600, Special Considerations-Audits of Group Financial Statements (Including the Work of Component Auditors) (Issued April 2014)

Illustrations

Appendix A. Understanding the Group, Its Components, and Their Environments-Examples of Matters about Which the Group Engagement Team Obtains an Understanding

Appendix B. Examples of Conditions or Events That May Indicate Risks of Material Misstatement of the Group Financial Statements

Appendix C. Required and Additional Matters Included in the Group Engagement Team's Letter of Instruction

Exhibit A. Illustrations of Auditor's Reports on Group Financial Statements

Exhibit B. Illustrative Component Auditor's Confirmation Letter

Exhibit C. Sources of Information

AU-C 610: Using the Work of Internal Auditors

AU-C Original Pronouncement

Objectives of AU-C Section 610

Applicability of AU-C Section 610

Definitions of Terms

Overview

Section 315 and Understanding Internal Control

Responsibility of the External Auditor

Uses of the Internal Audit Function

Requirements

Effect of Use of Internal Auditors' Work on the Audit

Determining Whether Internal Audit Can Be Used to Obtain Evidence

Deciding to Use the Internal Audit Function

Procedures When Using the Internal Audit Function

Determining Whether Internal Audit Can Be Used to Provide Direct Assistance

Evaluating and Testing Effectiveness of Internal Auditors' Work

Documentation

Illustrations

AU-C 620: Using the Work of an Auditor's Specialist

AU-C Original Pronouncement

AU-C Definitions of Terms

Objectives of AU-C Section 620

Requirements

Qualifications of a Specialist

Agreement with the Specialist

Work of a Specialist

Relationship to Client

Evaluating Findings

Effect on Audit Report

Report Reference to Specialist

Examples of Use of a Specialist

Specialist Related to Client

Specialist Employed by CPA Firm

Tests of Data Used by the Specialist

Need to Refer to Audit Guides

AU-C Interpretations

The Use of Legal Interpretations as Audit Evidence to Support Management's Assertion That a Transfer of Financial Assets Has Met the Isolation Criterion in Paragraphs 7-14 of Financial Accounting Standards Board Codification 860-10-40 (December 2001); Revised March 2006, June 2009, October 2011; Effective for Audits of Financial Statements for Periods Ending on or after December 15, 2012

Illustrations

AU-C 700: Forming an Opinion and Reporting on Financial Statements

AU-C Original Pronouncement

Technical Alert

AU-C Definitions of Terms

Objectives of AU-C Section 700

Requirements: Forming an Opinion

Requirements: Auditor's Standard Report

Components of Auditor's Standard Report

Addressee

Requirements: Reports on Comparative Financial Statements

General

Change of Opinion

Reissuance of Predecessor Auditor's Report

Predecessor Auditor's Report Not Presented

Interpretations

Interpretation No. 1, ``Reporting on Financial Statements Prepared on a Liquidation Basis of Accounting´´ (Issued December 1984; Revised June 1993 and February 1997; Revised October 2000; Revised June 2009; Revised October 2011, Effective for Audits of Financial Statements for Periods Ending on or after December 15, 2012; Revised May 2014; Revised September 2014)

Interpretation No. 2, ``Sustainability Financial Statements under Federal Financial Accounting Standards-Auditor Reporting´´ (Issued October 2015)

AU-C 700 Illustrations (Source: AU-C 700.58)

AU-C 705: Modifications to the Opinion in the Independent Auditor's Report

AU-C Original Pronouncements

AU-C Definitions of Terms

Objective of AU-C Section 705

Requirements

Types of Modified Opinions

Modified Opinion Format

Disclaimer of Opinion

Inability to Obtain Sufficient Appropriate Audit Evidence

Adverse Opinions

Departure from the Applicable Financial Reporting Framework

AU-C 705 Illustrations (Source: AU-C 705.A32)

AU-C 706: Emphasis-of-Matter Paragraphs and Other-Matter Paragraphs in the Independent Auditor's Report

AU-C Original Pronouncement

AU-C Definitions of Terms

Objectives of AU-C Section 706.04

Requirements

Emphasis-of-Matter and Other-Matter Paragraphs

Emphasis-of-Matter Paragraph

Other Matters in the Auditor's Report

Communication

AU-C 706 Illustrations

AU-C 708: Consistency of Financial Statements

AU-C Original Pronouncement

AU-C Definition of Term

Objectives of AU-C Section 708

Requirements

Consistency Implication of Auditor's Standard Report

Periods to Which Consistency Standard Relates

Changes Affecting Consistency

Changes Not Affecting Consistency

First-Year Audits

AU-C 720: Other Information in Documents Containing Audited Financial Statements

AU-C Original Pronouncements

AU-C Effective Date and Summary of Changes

AU-C Definitions of Terms

Objective of AU-C Section 720

Requirements

Illustration

AU-C 725: Supplementary Information in Relation to Financial Statements as a Whole

AU-C Original Pronouncements

AU-C Definition of Term

Objective of AU-C Section 725

Requirements

Opinion on Supplementary Information

Interpretation

Supplementary Information in Relation to the Financial Statements as a Whole: Auditing Interpretations of Section 725 (Issued July 2011; Revised October 2011)

AU-C 725 Illustrations

AU-C 730: Required Supplementary Information

AU-C Original Pronouncements

AU-C Definitions of Terms

Objectives of AU-C Section 730

Requirements

Procedures

Coordination with Other Audit Areas

Reporting on Supplementary Information

AU-C 730 Illustrations

AU-C 800: Special Considerations-Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks

AU-C Original Pronouncements

AU-C Definitions of Terms

Objectives of AU-C Section 800

Scope

Requirements

Precondition for an Audit

Components of Auditor's Standard Report

AU-C 800 Illustrations (Source: AU-C 800.A36)

AU-C 805: Special Considerations-Audits of Single Financial Statements and Specific Elements, Accounts, or Items of a Financial Statement

AU-C Original Pronouncement

AU-C Definitions of Terms

Objectives of AU-C Section 805

Scope

Requirements

Examples and Other Services

Application of GAAS

Financial Reporting Framework

Scope of Audit and Level of Materiality

The Auditor's Report

Interpretation

Special Considerations-Audits of Single Financial Statements and Specific Elements, Accounts, or Items of a Financial Statement: Auditing Interpretations of Section 805

Illustrations of Auditor's Reports on a Single Financial Statement and a Specific Element of a Financial Statement (Source: Au-C 805.25)

AU-C 806: Reporting on Compliance with Aspects of Contractual Agreements or Regulatory Requirements in Connection with Audited Financial Statements

AU-C Original Pronouncements

AU-C Definitions of Terms

Objective of AU-C Section 806

Scope

Requirements

Agreements Requiring Compliance Reports

Request for Assurance

Separate Auditor's Report

Assurance Given in Auditor's Report on the Financial Statements

AU-C 806 Illustrations (Source: AU-C 806.A8)

AU-C 810: Engagements to Report on Summary Financial Statements

AU-C Original Pronouncement

Definitions of Terms

Objectives of Au-U Section 810

Scope

Requirements

Engagement Acceptance

Procedures

AU-C 810 Illustrations (Source: AU-C 810.A22)

AU-C 905: Alert That Restricts the Use of the Auditor's Written Communication

AU-C Original Pronouncement

AU-C Definition of Term

Objectives of AU-C Section 905

Requirements

Reports Required to Be Restricted

Required Restricted-Use Report Language

Adding Other Specified Parties

Limiting Report Distribution

Inclusion of a Separate Restricted-Use Communication and a Separate General-Use Communication in the Same Document

Combined Communication Covering Both Restricted-Use and General-Use Subject Matter or Presentations

AU-C 905 Illustrations

AU-C 910: Financial Statements Prepared in Accordance with a Financial Reporting Framework Generally Accepted in Another Country

AU-C Original Pronouncement

Technical Alert

Au-C Definitions of Terms

Objectives of AU-C Section 910

Scope

Requirements

Terms of Engagement

Compliance with Foreign Auditing Standards

Reporting

AU-C 910 Illustrations (Source: AU-C 910.A11)

AU-C 915: Reports on Application of Requirements of an Applicable Financial Reporting Framework

AU-C Original Pronouncements

Applicability

AU-C Definitions of Terms

Objective of AU-C Section 915

Requirements

Engagement Acceptance

Applicability to Proposals

Engagement, Acceptance, Planning, and Performance

Reporting Standards

Documentation

AU-C 915 Illustration (Source: AU-C 915.A8)

AU-C 920: Letters for Underwriters and Certain Other Requesting Parties

AU-C Original Pronouncements

Applicability

AU-C Definitions of Terms

Objectives of AU-C Section 920

Scope

Requirements: General

Engagement Acceptance

Representation Letter

Reports to Other Parties

Communications with Underwriter

Draft Comfort Letter

Auditor of the Group Financial Statements

Shelf Registration

Issuance of Letters or Reports under Other Standards

Requirements: Format and Contents of Comfort Letters

Dating of Comfort Letter

Addressee

Introductory Paragraph

Independence

Compliance as to Form with SEC Requirements

Requirements: Commenting in a Comfort Letter on Information Other Than Audited Financial Statements

General

Knowledge of Internal Control

Unaudited Interim Financial Information

Capsule Financial Information

Pro Forma Financial Information

Financial Forecasts

Subsequent Changes

Tables, Statistics, and Other Financial Information

Requirements: Other Matters

Concluding Paragraph

Disclosure of Subsequently Discovered Matters

AU-C 920 Illustrations

AU-C 925: Filings with the US Securities and Exchange Commission under the Securities Act of 1933

AU-C Original Pronouncement

AU-C Definitions of Terms

Objectives of AU-C Section 925

Requirements

Accountant's Responsibility

Accountant's Report: Review of Interim Financial Information

Subsequent Events Procedures

Response to Subsequent Events and Subsequently Discovered Facts: Audited Financial Statements

Response to Subsequent Events and Subsequently Discovered Facts: Unaudited Financial Statements or Unaudited Interim Financial Information

AU-C 925 Illustration

AU-C 930: Interim Financial Information

AU-C Original Pronouncement

AU-C Definition of Term

Objective of AU-C Section 930

Scope

Requirements: Review Procedures

Understanding with Client

Techniques for Application

Engagement Letter

Knowledge of the Entity's Business and Internal Control

Required Review Procedures

Inquiries Concerning Litigation, Claims, and Assessments

Inquiries Concerning Going Concern Issues

Extension of Interim Review Procedures

Timing of Review Procedures and Coordination with the Audit

Written Representations from Management

Evaluating the Results of Interim Review Procedures

Subsequent Discovery of Facts Existing at the Date of Report

Other Information

Successor Auditors

Additional Guidance

Documentation

Requirements: Communication With Management and Those Charged With Governance

Required Communications

Reportable Conditions

Communications to Management

Lack of Appropriate Management Response

Oral Communication

Lack of Appropriate Response from Those Charged with Governance

Fraud or Illegal Acts

Significant Deficiencies or Material Weaknesses

Requirements: Auditor's Report

Description of Interim Financial Information

Date of Report and Addressee

Form of Auditor's Review Report

Reference to Report of Another Auditor

Modification of the Review Report

Client Representation about Auditor's Review

Requirements: Interim Financial Information Accompanying Audited Financial Statements

Presentation of Interim Financial Information

The Auditor's Report

Interpretations

AU-C 930 Illustrations

Illustrative Management Representation Letters for a Review of Interim Financial Information (AU-C 930.A56)

Illustrations of Auditor's Review Reports on Interim Financial Information (Source: AU-C 930.A57)

Illustrations of Example Modifications to the Auditor's Review Report Due to Departures from the Applicable Financial Reporting Framework (AU-C 930.A58)

AU-C 935: Compliance Audits

AU-C Original Pronouncements

Technical Alert

AU-C 935 Definitions of Terms

Objectives of AU-C Section 935

Scope

Requirements

Application of AU-C Sections to a Compliance Audit

Sources of Information Regarding Compliance Requirements

Suggested Audit Procedures

Management's Responsibilities

The Compliance Audit Process Flow

Material Noncompliance Risks

Reporting Requirements

Documentation

Reissuance of the Compliance Report

AU-C Illustrations

AU-C 940: An Audit of Internal Control over Financial Reporting That Is Integrated with an Audit of Financial Statements

AU-C Original Pronouncement

Technical Alert

AU-C 940 Definitions of Terms

AU-C 940 Objectives

Scope

Requirements

Required Conditions for Engagement Acceptance

Evidence Supporting Management's Assessment

Integrating the Controls Examination with the Financial Statement Audit

Risk Assessment

Using the Work of Others

Planning the Engagement

Use a Top-Down Approach

Testing Controls

Evaluating Control Deficiencies

Forming an Opinion

Reporting Requirements

Adverse Opinions

Other Topics

Illustrations

Illustrative Auditor's Reports (AU-C 940.A165)

Illustrative Written Communication of Significant Deficiencies and Material Weaknesses (AU-C 940.A156)

Illustrative Management Report (AU-C 940.A157)

AT-C: Preface

Technical Alert

AT-C Organization

Organization of Each Section

Structure of the Clarified Attestation Standards

Significant Changes

At-C Preface

Attestation Engagement Purpose and Premise

Responsibilities of the Responsible Party

Responsibilities of the Practitioner

Performance Requirements

Reporting

Appendix

Definitions of Terms

AT-C 105: Concepts Common to All Attestation Engagements

Original Pronouncement

Applicability and Written Assertion

Objectives

Definitions of Terms

Requirements

Quality Control

Compliance with Relevant AT-C Sections

Report Format Dictated by Law or Regulation

Professional Requirements in the Attestation Standards

Preconditions for an Attestation Engagement

Change in Terms of Engagement

Using the Work of an Other Practitioner

Quality Control

Professional Skepticism and Professional Judgment

Interpretations

Responding to Requests for Reports on Matters Relating to Solvency (Issued May 1988; Amended February 1993; Revised January 2001; Revised November 2006; Revised December 2012; Revised April 2016, Effective for Practitioners' Reports Dated on or after May 1, 2017)

Applicability of Attestation Standards to Litigation Services (July 1990; Revised January 2001; Revised April 2016, Effective for Practitioners' Reports Dated on or after May 1, 2017)

Providing Access to or Copies of Engagement Documentation to a Regulator (May 1996; Revised January 2001; Revised January 2002; Revised December 2012; Revised April 2016, Effective for Practitioners' Reports Dated on or after May 1, 2017)

AT-C 205: Examination Engagements

Overview

Objectives

Definitions of Terms

Requirements

Independence

Terms of Engagement

Written Assertion

Planning the Engagement

Risk Assessment Procedures

Materiality

Risks of Material Misstatement

Responding to Risk of Material Misstatement

Tests of Controls

Other Procedures

Analytical Procedures

Procedures Regarding Estimates

Sampling

Fraud, Laws, and Regulations

Responding to Fraud or Noncompliance

Evaluating the Reliability of the Entity's Information

Using the Work of a Practitioner's Specialist

Using Internal Auditors

Direct Assistance

Considering Subsequent Events and Subsequently Discovered Facts

Written Representations

Other Information

Forming an Opinion

The Report

Illustration: Practitioner's Examination Report on Subject Matter; Unmodified Opinion

Restricted Use Paragraph

Modified Opinions

Communicating with the Responsible and Engaging Partners

Documentation

Interpretations

Reporting on Attestation Engagements Performed in Accordance with Government Auditing Standards (December 2004; Revised January 2008)

Reporting on the Design of Internal Control (Issued December 2008; Revised December 2012; Revised April 2016, Effective for Practitioners' Reports Dated on or after May 1, 2017)

Illustrations (At-C 205.A121)

AT-C 210: Review Engagements

Original Pronouncement

Applicability

Definitions of Terms

Objectives of Section 215

Requirements

Terms of Engagement

Written Assertion

Planning the Engagement

Materiality

Procedures

Analytical Procedures

Inquiries

Fraud, Laws, and Regulations

Responding to Fraud or Noncompliance

Evaluating the Reliability of the Entity's Information

Using the Work of a Practitioner's Specialist or Internal Auditor

Evaluating the Results of Procedures

Considering Subsequent Events and Subsequently Discovered Facts

Written Representations

Other Information

Forming a Conclusion

The Report

Restricted Use Paragraph

Modified Opinions

Documentation

Illustrations-Illustrative Practitioner'S Review Reports

AT-C 215 Agreed-Upon Procedures Engagements

Original Pronouncement

Applicability

Definitions of Terms

Objectives of AT-C Section 215

Requirements

Independence

Preconditions

Terms of Engagement

Requesting a Written Assertion

Procedures

Involvement of a Practitioner's External Specialist

Involvement of Internal Auditors or Other Practitioners

The Practitioner's Report

Restrictions on the Performance of Procedures

Adding Specified Parties

Knowledge of Outside Matters

Interpretation

Third-Party Due Diligence Services Related to Asset-Backed Securitizations: SEC Release No. 34-72936

Illustrations

Exhibit-Illustrative Practitioner's Agreed-Upon Procedures Reports (AT-C 215.A48)

AT-C 305: Prospective Financial Information

Original Pronouncement

Applicability

Definitions of Terms

Objectives-Examination Engagements

Objectivies-Agreed-Upon Procedures Engagements

Requirements: Examination of Prospective Financial Statements

Preconditions for an Examination Engagement

Training and Proficiency

Requesting a Written Assertion

Procedures

Written Representations

Report

Modified Opinions

Modification of Standard Examination Report

Requirements: Applying Agreed-Upon Procedures to Prospective Financial Statements

Preconditions for an Agreed-Upon Procedures Engagement

Illustration

AT-C 310: Reporting on Pro Forma Financial Information

Original Pronouncement

Applicability

Definition of Terms

Objectives of an Examination Engagement

Objectives of a Review Engagement

Requirements

Preconditions for Examination and Review Engagements

Procedures for Examinations and Review Engagements

Request for a Written Assertion

Request for a Written Representation

Form of Report on Pro Forma Financial Information

Practitioner's Examination Report on Pro Forma Financial Information: Unmodified Opinion

Practitioner's Review Report: Unmodified Conclusion

Illustrations

AT-C 315: Compliance Attestation

Original Pronouncement

Applicability

Definitions of Terms

Objectives of an Examination Engagement

Objectives of an Agreed-Upon Procedures Engagement

Requirements-Examination Engagements

Preconditions for Examination Engagements

Written Assertion-Examination Engagements

Reasonable Assurance-Examination Engagement

Procedures-Examination Engagements

Written Representations-Examination Engagements

Practitioner's Examination Report

Illustration

Modified Opinions

Requirements: Agreed-Upon Procedures Engagement

Preconditions for an Agreed-Upon Engagement

Understanding with Specified Parties

The Agreed-Upon Procedures Report

Illustrations

AT-C 320: Reporting on an Examination of Controls at a Service Organization Relevant to User Entities' Internal Control over Financial Reporting

Original Pronouncement

Applicability

Definitions of Terms

Objectives of At-C Section 320

Requirements

Management and Those Charged with Governance

Preconditions

Request to Change the Scope of the Engagement

Requesting a Written Assertion

Assessing the Suitability of the Criteria

Materiality

Obtaining an Understanding of the Service Organization's System and Assessing the Risk of Material Misstatement

Using the Work of the Internal Audit Function

Obtaining Evidence Regarding Management's Description of the Service Organization's System

Obtaining Evidence Regarding the Design of Controls

Obtaining Evidence Regarding the Operating Effectiveness of Controls

Evaluating the Reliability of Information Produced by the Service Organization

Nature and Causes of Deviations

Subsequent Events

Written Representations

The Service Auditor's Type 2 Report

Other Matters in the Report

Modified Opinions

Other Communication Responsibilities

Illustration

AT-C Section 395: (Designated for AT Section 701) Management's Discussion and Analysis (MD&A)-A Summary1,2

Original Pronouncement

Technical Alert

Applicability

Definition of Term

Objectives of At Section 395

Requirements: Examination

Acceptance

Performance

Reporting

Requirements: Review

Acceptance

Performance

Reporting

Illustrations

AT 20: Defining Professional Requirements in Statements on Standards for Attest Engagements

Original Pronouncement

Technical Alert

Defining Professional Requirements in Statements on Standards for Attestation Engagements

AT 50: SSAE Hierarchy

Original Pronouncement

Technical Alert

Attestation Standards

Attestation Interpretations

Other Attestation Publications

AT 101: Attest Engagements

Original Pronouncements

Technical Alert

Applicability

Definitions of Terms

Objectives of Section 101

Requirements

Attestation Standards

Relationship to Quality Control Standards

Attest Documentation

Establishing an Understanding with the Client

Representation Letter

Other Information in a Client-Prepared Document Containing the Practitioner's Attest Report

Subsequent Events

Interpretations

Defense Industry Questionnaire on Business Ethics and Conduct (Issued August 1987; Amended February 1989; Modified May 1989; Revised January 2001; Revised November 2006)

Responding to Requests for Reports on Matters Relating to Solvency (Issued May 1988; Amended February 1993; Revised January 2001; Revised November 2006)

Applicability of Attestation Standards to Litigation Services (July 1990; Revised January 2001)

Providing Access to, or Photocopies of, Working Papers to a Regulator (May 1996; Revised January 2001; Revised January 2002)

Attest Engagements on Financial Information Included in XBRL Instance Documents (September 2003)

Reporting on Attestation Engagements Performed in Accordance with Government Auditing Standards (December 2004; Revised January 2008)

Reporting on the Design of Internal Control (December 2008)

Including a Description of Tests of Controls or Other Procedures, and the Results Thereof, in an Examination Report (July 2010)

Illustrations: Examination Reports

Illustrations: Review Reports

AT 201: Agreed-Upon Procedures Engagements1,2

Original Pronouncement

Technical Alert

Applicability

Definitions of Terms

Objectives of At Section 201

Requirements

Standards

Subject Matter

Assertion

Acceptance of Engagement

Involvement of a Specialist

Involvement of Internal Auditors or Others

Elements of Practitioner's Report

Dating of Report

Adding Specified Parties

Restrictions on the Performance of Procedures

Representation Letter

Knowledge of Outside Matters

Change from Another Engagement (Attest or Nonattest) to an Agreed-Upon Procedures Engagement

Interpretation

Third-Party Due Diligence Services Related to Asset-Backed Securitizations: SEC Release No. 34-72936

Techniques for Application

Meaning of Independence

Engagement Letter

Communication with Specified Parties

Procedures to Be Performed

Representation Letter

Report on Agreed-Upon Procedures in a Document Containing Financial Statements

Illustrations

AT 301: Financial Forecasts and Projections

Original Pronouncement

Technical Alert

Applicability

Definitions of Terms

Objectives of At Section 301

Requirements: General

Partial Presentations

Requirements: Compilation of Prospective Financial Statements

Standards

Practitioner's Report

Requirements: Examination of Prospective Financial Statements

Standards

Accountant's Report

Modifications of Practitioner's Opinion

Modification of Standard Examination Report

Requirements: Applying Agreed-Upon Procedures to Prospective Financial Statements (See Also At Section 201)

General

Requirements: Other

Practitioner-Submitted Document

Client-Prepared Document

Interpretations

Illustrations

Appendices

Appendix B: Training and Proficiency, Planning and Procedures Applicable to Compilations

Appendix C: Training and Proficiency, Planning, and Procedures Applicable to Examinations

AT 401: Reporting on Pro Forma Financial Information

Original Pronouncement

Technical Alert

Applicability

Definition of Term

Objectives of At Section 401

Use of Pro Forma Information

Requirements

Conditions for Reporting and the Accountant's Objectives

Engagement Objectives

Procedures

Form of Report on Pro Forma Financial Information

Interpretations

Techniques for Application

Presentation of Pro Forma Financial Information

Nonaudit and Nonreview Clients

Most Recent Year Historical Financial Statements

Compiled Historical Financial Statements

Qualified Report on Historical Financial Statements

Illustrations

AT 501: An Examination of an Entity's Internal Control over Financial Reporting That Is Integrated with an Audit of Its Financial Statements

Original Pronouncement

Technical Alert

Applicability

Definitions of Terms

Objectives of At Section 501

Requirements

Required Conditions for Engagement Acceptance

Planning the Engagement

Testing Controls

Forming an Opinion

Evaluating Control Deficiencies

Reporting Requirements

Other Topics

Interpretations

Reporting under Section 112 of the Federal Deposit Insurance Corporation Improvement Act (Issued September 2010)

Illustrations

AT 601: Compliance Attestation

Original Pronouncement

Technical Alert

Applicability

Definitions of Terms

Objectives of At Section 601

Requirements: General (Applicable to Both Agreed-Upon Procedures and Examination Engagements)

General

Criteria

Prohibited Engagements

Using the Work of a Specialist

Management's Representations

Other Information in a Client-Prepared Document

Requirements: Agreed-Upon Procedures Engagement

Conditions for Acceptance

Understanding with Specified Parties

Understanding the Specified Compliance Requirements

Scope Restrictions

Subsequent Events

Practitioner's Report

Requirements: Examination Engagement

Conditions for Engagement Performance

Extent of Evidence

Assessment of Inherent Risk

Assessment of Control Risk

Engagement Procedures

Subsequent Events

Practitioner's Report

Report Modifications

Interpretations

Techniques for Application

Planning the Engagement-General

Agreed-Upon Procedures Engagement

Planning the Examination Engagement

Examination Procedures

Materiality

Illustrations

AT 701: Management's Discussion and Analysis (MD&A)-A Summary

Original Pronouncement

Technical Alert

Applicability

Definition of Term

Objectives of At Section 701

Requirements: Examination

Acceptance

Performance

Reporting

Requirements: Review

Acceptance

Performance

Reporting

Interpretations

Illustrations

AT 801: Reporting on Controls at a Service Organization

Original Pronouncement

Technical Alert

Applicability

Definitions of Terms

Objectives of At Section 801

Requirements

Management and Those Charged with Governance

Acceptance and Continuance

Assessing the Suitability of the Criteria

Obtaining an Understanding of the Service Organization's System

Obtaining Evidence Regarding Management's Description of the Service Organization's System

Obtaining Evidence Regarding the Design of Controls

Obtaining Evidence Regarding the Operating Effectiveness of Controls

Using the Work of the Internal Audit Function

Written Representations

Other Information

Subsequent Events

Documentation

Preparing the Service Auditor's Report

Other Communication Responsibilities

Illustrations

AR-C 60: General Principles for Engagements Performed in Accordance with Statements on Standards for Accounting and Review Services

Original Pronouncement

Technical Alert

Objectives and Limitations of SSARS Engagements

Fundamental Requirements

Conduct of the Engagement in Accordance with SSARS

Quality Control in a SSARS Engagement

Acceptance and Continuance of Client Relationships and Engagements

Appendix-Definitions of Terms for AR-C Sections 60 Through 90 (Source: AR-C 60-90)

AR-C 70: Preparation of Financial Statements

Original Pronouncement

Objectives and Limitations of Preparation Engagements

Technical Alert

Definitions of Terms

Determining the Type of Engagement

Requirements

Quality Control in a Preparation Engagement

Acceptance and Continuance of Client Relationships and Preparation Engagements

Independence

Engagement Terms

Preparing Financial Statements

Documentation Requirements

Illustration (AR-C 70.A20)

AR-C 80: Compilation Engagements

Original Pronouncements

Objectives and Limitations of Preparation Engagements

Technical Alert

Definitions of Terms

Requirements

Independence

Acceptance and Continuance of Client Relationships

Establishing an Understanding

Compilation Performance Requirements

Documentation in a Compilation Engagement

Reporting on the Financial Statements

Illustrations

Checklist for a Compilation Engagement

AR-C 90: Review of Financial Statements

Original Pronouncement

Objectives and Limitations of Review Engagements

Technical Alert

SSARS No. 21

Interpretation-Section 9090

Definitions of Terms

Requirements

Materiality

Independence

Acceptance and Continuance of Client Relationships

Establishing an Understanding with the Client

Communication with Management and Those Charged with Governance

Review Performance Requirements

Written Representations

Documentation in a Review Engagement

Reporting on the Financial Statements

Illustrations: Review Engagement

AR-C 120: Compilation of Pro Forma Financial Information

Original Pronouncements

Applicability

Technical Alert

Objectives of AR-C Section 120

Requirements

General Guidance

Acceptance and Continuance of Client Relationships

Illustrations

Appendix A: Cross-References to SASs, SSAEs, and SSARSs

Appendix B: List of AICPA Audit and Accounting Guides and AICPA Statements of Position-Auditing and Attestation1

Appendix C: Other Auditing Publications1

Index

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