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1、(本科）会计专业英语教案Chapter 17教学目标知识目标：Learn how to preparation an auditing reporting. Know the standard audit report and what parts a standard report contain.能力目标：Know departure from generally accepted accounting principles Describe Scope limitations素质目标：Contrast the types of audit opinions教学重点Know the sta
2、ndard audit report and what parts a standard report contain.Know departure from generally accepted accounting principlesContrast the types of audit opinions教学难点Learn how to preparation an auditing reporting教学手段结合理论与案例小组讨论教学学时2课时教 学 内 容 与 教 学 过 程 设 计注 释Chapter 17 Audit Report理论知识Topic 1: An overview
3、of Audit ReportThe auditors report is a disclaimer thereof, issued by an independent external auditor as a result of an internal or external audit, as an assurance service in order for the user to make decisions based on the results of the audit.An auditors report is considered an essential tool whe
4、n reporting financial information to users, particularly in business. Since many third-party users prefer, or even require financial information to be certified by an independent external auditor, many auditors rely on auditor reports to certify their information in order to attract investors, obtai
5、n loans, and improve public appearance. Some have even stated that financial information without an auditors report is essentially worthless for investing purposes.The typical audit report contains three paragraphs, which cover the following topics: The responsibilities of the auditor and the manage
6、ment of the entity. The scope of the audit. The auditors opinion of the entitys financial statements.1. The Standard Audit Report A standard audit report is the most common report issued. It contains an unqualified opinion stating that the financial statements present fairly in all material respects
7、, the financial position, results of operations, and cash flows of the entity in conformity with generally accepted accounting principles. The standard unqualified report is used when the following conditions have been met: All statements are included in the financial statements. Sufficient evidence
8、 has been accumulated and the auditor has conducted the engagement in accordance with auditing standards. The financial statements are presented in accordance with accounting standards. There are no circumstances requiring the addition of an explanatory paragraph or modification of the wording of th
9、e report. Regardless of the auditor, the following eight parts of the standard audit report remain the same. Report title. Such as “audit report”, “independent auditors report”, or “report of independent auditor”.Audit report addresses. The report is usually addressed to the stockholders of the comp
10、any.Introductory paragraph. The first paragraph of the report does two things a simple statement that the CPA firm has done an audit and identify the entity being audited a list of the financial statements and specify the date and period covered by the financial statements.Statement of respective re
11、sponsibilities of management and auditors. The report must contain a statement that management is responsible for the presentation of the financial statements. This responsibility includes designing, implementing and maintaining internal controls, selecting appropriate accounting policies and making
12、 reasonable accounting estimates. The report must also state that the auditor is responsible for expressing an opinion on the financial statements. The report should explain that the auditor adhered to auditing standards on auditing and that the auditor planned and performed the audit so as to obtai
13、n reasonable assurance that the financial statements are free from material misstatements.Scope paragraph. The scope paragraph is a factual statement about what the auditor did in the audit. It states that the auditor followed general accepted auditing standards and describes important aspects of th
14、e audit. Opinion paragraph. The final paragraph in the standard report states the auditors conclusions based on the results of the audit examination.Name and address of CPA firm. The name identifies the CPA firm or practitioner that has performed the audit. The location where the auditor practices m
15、ust be included. This is usually the city where the auditor has the office. The report must contain the auditors signature.Audit report date. The appropriate date for the report is the one on which the auditor has completed the most important auditing procedures in the field. This date is important
16、to users because it indicates the last day of the auditors responsibility for the review of significant events that occurred after the date of the financial statements. 2. Departures from the Audit ReportCircumstance may arise when it is inappropriate for the auditor to issue a standard report Depar
17、tures from the standard report fall into one of two categories: standard report with explanatory language; other types of opinions Standard report with explanatory language. The distinguishing characteristic of this category of reports is that the opinion paragraph continues to express an unqualifie
18、d opinion because the financial statements are in conformity with accounting standards. However, some circumstance exists that requires the auditor to add an explanatory paragraph or other explanatory language to the standard report. For example, when an entity elects to make a change in accounting
19、principles such as changing depreciation methods and the entity can justify the change and make appropriate disclosures in the footnotes, the auditor is required to add an explanatory paragraph to the standard report to call the readers attention to this circumstance. Other types opinions. The secon
20、d category of departures results when either of the following circumstances occurs: the financial statements contain a material departure from accounting standards; a the auditor has been unable to obtain sufficient competent evidence regarding one or more of managements assertions, and as a result
21、does not have a reasonable basis for an unqualified opinion on the financial statements as a whole. Three main types of audit reports are issued under these conditions: adverse opinion; disclaimer of opinion and qualified opinion. Adverse opinion. An adverse opinion is used only when the auditor bel
22、ieves the overall financial statements are so materially misstated or misleading that they do not present fairly the financial position or results of operations and cash flows in conformity with generally accepted accounting principles. This is not a common occurrence and thus the adverse opinion is
23、 rarely employed. Disclaimer of opinion. A disclaimer is issued whenever the auditor has been unable to satisfy himself or herself that the overall financial statements are fairly presented. The necessity for disclaiming an opinion may arise because of a severe limitation on the scope of the audit e
24、xamination. It prevents the auditor from expressing an opinion on the financial statements as a whole. Qualified opinion. A qualified opinion report can result from a limitation on the scope of the audit or failure to follow generally accepted accounting principles. A qualified opinion report can be
25、 used only when the auditor believes that the overall financial statements are fairly stated. A disclaimer or an adverse report must be used if the auditor believes the condition being reported upon is highly material. For this reason, the qualified opinion is considered the least severe type of rep
26、ort disclosing departures from an unqualified report.3. Preparation of audit report When the CPA issues an unqualified report, the report should begin with the phrase “in our opinion” in the opinion paragraph and profession al language such as present fairly in all material respects, etc. should use
27、 If the CPA prepares an audit report with a qualified opinion, an explanatory paragraph detailing the reasons for expressing this opinion should be added before the opinion paragraph. The CPA should use professional language such as “except for the matters mentioned above”, “with the exception of th
28、e impact of the matters mentioned above”, “except for the previously disclosed matters awaiting determination”, etc. in the opinion paragraph. If the CPA prepares an audit report with an adverse opinion, an explanatory paragraph detailing the reasons for expressing language such as “due to the impac
29、t of the matters mentioned above”, “due to the impact of the matters mentioned in the preceding paragraph”, etc. in the opinion paragraph.A disclaimer of opinion should be expressed when the CPA cannot obtain the necessary audit evidence due to a severely limited audit scope impose by the client, th
30、e entity or other circumstances. The impact of such a limitation is so material that the CPA is unable to express an audit opinion on the financial statements as a whole. If the CPA prepares an audit report with a disclaimer of o opinion, an explanatory paragraph detailing the reasons for expressing
31、 this opinion should be added before the opinion paragraph. The CPA should use professional language such as “because of the material limitation of the audit scope”, “ because of the impossibility of performing the necessary audit procedures”, “ because of the impossibility of obtaining the necessar
32、y audit evidence”, “we are not able to express an opinion on the financial statements mentioned above as a whole”, etc. in the opinion paragraph.The CPA should not issue an audit report with a disclaimer of opinion when a qualified or an adverse opinion should be expressed.Topic 2: Unqualified Opini
33、onAuditors express an unqualified opinion on the clients financial statements when they have no material exceptions as to the fairness of the application of accounting principles, and there have been no unresolved restrictions on the scope of their engagement. The unqualified opinion is, of course,
34、the most desirable report from the clients point of view. The client usually will make any necessary adjustments to the statements to enable the auditors to issue this type of opinion. Under certain circumstances auditors add explanatory language to their audit report, even when issuing an unqualifi
35、ed opinion. Adding the additional language is not regarded as a qualification; rather, the language merely draws attention to a significant situation. Auditors add explanatory language to (1) indicate that a part of the audit was performed by other auditors, (2) point out an uncertainty about the co
36、mpanys ability to continues as a going concern , (3)describe an inconsistency in the application of accounting principles, (4) emphasize a matter, and (5) describe a justified departure from officially recognized accounting principles.Topic 3：Qualified OpinionA qualified opinion expresses the audito
37、rs reservations or uncertainty about fair presentation in some areas of the financial statements. The opinion states that except for the effects of some deficiency in the financial statements, or some limitation in the scope of the auditors examination, the financial statements are presented fairly.
38、 All qualified reports include a separate explanatory paragraph before the opinion paragraph disclosing the reasons for the qualification. The opinion paragraph of a qualified report includes the appropriate qualifying language and a reference to the explanatory paragraph.Qualified audit reports sho
39、uld be carefully worded to assure that the financial statement users understand that the auditors are qualifying their opinion. If the report includes ambiguous language, it will be difficult for the users to evaluate the degree of responsibility the auditors are taking. Qualified reports should alw
40、ays include precisely worded qualifying language that includes a phrase such as “except for” or “with the exception of”. The materiality of the exception governs the use of the qualified opinion. The exception must be sufficiently significant to warrant mentioning in the auditors report, but it must
41、 not be so significant as to necessitate a claimer of opinion or an adverse opinion. Consequently, the propriety of a qualified opinion in the event of a significant exception is a matter for careful professional by the auditors.1. Departure from generally accepted accounting principlesAuditors must
42、 consider the materiality of the effects any departure from GAAP to determine the appropriate type of audit report. When the effects of the departures are immaterial, an unqualified opinion may be issued; when the effects are material, the auditors must issue either a qualified opinion or an adverse
43、 opinion. Accordingly, the auditors must use professional judgment to determine the effects of the departure on the financial statements, considering: Dollar magnitude of the effects The significance of the item to the particular client The number of financial statement accounts and disclosures affe
44、cted The effect of the departure on the financial statements taken as a wholeFollowing is an example of the explanatory and opinion paragraphs of an audit report qualified for a departure from generally accepted accounting principles. The introductory and scope paragraphs would contain standard work
45、ing. (Sony Corporation) has not presented segment information for each of the three years in the period ended March 31, 2012 the presentation of segment information concerning operations in different industries, and foreign operations and export sales is required by accounting principles generally a
46、ccepted in the united states of America for a complete presentation of the consolidated financial statements. In our opinion, except for the omission of segment information as discussed in the third paragraph of this report, the financial statements audited by us present fairly , in all material res
47、pects the financial position of Sony Corporation and its consolidated subsidiaries at March 31,2011 and 2012, and the results of its operations and their cash flows for each of the three years in the period ended March 31, 2012, in conformity with accounting principles generally accepted in the unit
48、ed states of America.2. Scope limitationsThe scope of the auditors examination has been restricted. When the auditor has not accumulated sufficient evidence to conclude whether financial statements are stated in accordance with GAAP, a scope restriction exists. There are two major causes of scope li
49、mitations: limitations imposed by the client and those caused by circumstances beyond either the clients or auditors control. An example of a client restriction is managements refusal to permit the auditor to confirm material receivables or to physically examine inventory. An example of a restriction caused by circumstances is when the engagement is not agreed upon until after the c