Wiley Practitioner's Guide to GAAS 2022 E-Book

Joanne M. Flood

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Wiley Regulatory Reporting
• Sprache: Englisch

Seitenzahl: 2058

Veröffentlichungsjahr: 2022

Beschreibung

The most comprehensive and up-to-date guide to critical auditing standards, practices, and procedures for 2022 The American Institute of Certified Public Accountants (AICPA) sets the Generally Accepted Auditing Standards or GAAS under which U. S. audits are conducted in the United States. Auditors must comply with and understand every aspect of GAAS in order to comply with AICPA standards. As a result, it is crucial for CPAs to be up-to-date on all applicable guidelines, rules, and regulations. Wiley Practitioner's Guide to GAAS 2022 delivers a thorough description and analysis of not only auditing standards - SASs, but also SSAEs, SSARSs, and the Interpretations necessary to fully understand all the latest professional standards. The guide offers the most recent revisions to the standards, including those on: * Materiality, * Audit reports, * ERISA audits, * SSAE direct examination engagements, and * Practitioner's review reports. The Guide explains the standards clearly and accurately, providing explicit information on how to conduct your engagements efficiently, effectively, and properly--all in one resource. In addition, Wiley Practitioner's Guide to GAAS 2022 provides readers with: * Practical direction on the steps necessary to help you comply with GAAS * Comprehensive guidance on the entire auditing process, from start to finish * Explanations of all attestation and review, compilation, and preparation standards * A glossary of relevant terminology for each subject A crucial resource for accountants and auditors who are looking for a comprehensive explanation of the information used on a daily basis, Wiley Practitioner's Guide to GAAS 2022 is an invaluable resource written to save you time and simplify your compliance with professional standards.

Leseprobe

Table of Contents

COVER

TITLE PAGE

COPYRIGHT

PREFACE—ORGANIZATION AND KEY CHANGES

RESOURCES

ATTESTATION STANDARDS

ACCOUNTING AND REVIEW STANDARDS

PUBLICATION CURRENCY

ABOUT THE AUTHOR

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

SCOPE

DEFINITIONS OF TERMS

OBJECTIVES OF AU-C SECTION 200

REQUIREMENTS

COMPLYING WITH GAAS

NOTES

2 AU-C 210 Terms of Engagement

SCOPE

DEFINITIONS OF TERMS

OBJECTIVES OF AU-C SECTION 210

FUNDAMENTAL REQUIREMENTS

AU-C 210 ILLUSTRATION

NOTES

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

SCOPE

DEFINITIONS OF TERMS

OBJECTIVE OF AU-C SECTION 220

REQUIREMENTS

4 AU-C 230 Audit Documentation

SCOPE

DEFINITIONS OF TERMS

OBJECTIVE OF AU-C SECTION 230

REQUIREMENTS

INTERPRETATIONS

AU-C 230 ILLUSTRATIONS

NOTE

5 AU-C 240 Consideration of Fraudin a Financial Statement Audit

SCOPE

DEFINITIONS OF TERMS

OBJECTIVES OF AU-C SECTION 240

REQUIREMENTS

AU-C 240 ILLUSTRATIONS

NOTES

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

SCOPE

DEFINITION OF TERM

OBJECTIVES OF AU-C SECTION 250

REQUIREMENTS

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

SCOPE

DEFINITIONS OF TERMS

OBJECTIVES OF AU-C SECTION 260

REQUIREMENTS

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

SCOPE

DEFINITIONS OF TERMS

OBJECTIVE OF AU-C SECTION 265

REQUIREMENTS

MANAGEMENT RESPONSE

INTERPRETATIONS

AU-C 265 ILLUSTRATIONS

9 AU-C 300 Planning an Audit

SCOPE

OBJECTIVE OF AU-C SECTION 300

REQUIREMENTS

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

SCOPE

TECHNICAL ALERT

DEFINITIONS OF TERMS

OBJECTIVE OF AU-C SECTION 315

OVERVIEW

REQUIREMENTS

AU-C 315 ILLUSTRATIONS

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

SCOPE

DEFINITION OF TERM

OBJECTIVE OF AU-C SECTION 320

OVERVIEW

REQUIREMENTS

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

SCOPE

DEFINITIONS OF TERMS

OBJECTIVE OF AU-C SECTION 330

OVERVIEW

REQUIREMENTS

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

SCOPE

DEFINITIONS OF TERMS

OBJECTIVES OF AU-C SECTION 402

REQUIREMENTS

AU-C 402 ILLUSTRATION—AUDIT PROGRAM FOR AN AUDITOR'S REVIEW OF A SERVICE AUDITOR'S REPORT

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

SCOPE

DEFINITIONS OF TERMS

OBJECTIVE OF AU-C SECTION 450

REQUIREMENTS

15 AU-C 500 Audit Evidence

TECHNICAL ALERT

SCOPE

DEFINITIONS OF TERMS

OBJECTIVE OF AU-C SECTION 500

REQUIREMENTS

INTERPRETATIONS

16 AU-C 501 Audit Evidence—Specific Considerations for Selected Items

TECHNICAL ALERT

SCOPE

OBJECTIVES OF AU-C SECTION 501

DEFINITION OF TERM

REQUIREMENTS—INVESTMENTS IN SECURITIES AND DERIVATIVE INSTRUMENTS

ILLUSTRATIONS—INVESTMENTS IN SECURITIES AND DERIVATIVE INSTRUMENTS

REQUIREMENTS—INVENTORY EXISTENCE AND CONDITION

AU-C 501 ILLUSTRATIONS—INVENTORY OBSERVATION

REQUIREMENTS—LITIGATION, CLAIMS, AND ASSESSMENTS INVOLVING THE ENTITY

AU-C 501 ILLUSTRATION—LITIGATION, CLAIMS, AND ASSESSMENTS

REQUIREMENTS—SEGMENT REPORTING

REQUIREMENTS—USING MANAGEMENT'S SPECIALISTS

NOTES

17 AU-C 505 External Confirmations

SCOPE

DEFINITIONS OF TERMS

OBJECTIVE OF AU-C SECTION 505

REQUIREMENTS

AU-C 505 ILLUSTRATIONS

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

SCOPE

DEFINITIONS OF TERMS

OBJECTIVE OF AU-C SECTION 510

REQUIREMENTS

AU-C 510 ILLUSTRATIONS

19 AU-C 520 Analytical Procedures

SCOPE

DEFINITION OF TERM

OBJECTIVES OF AU-C SECTION 520

OVERVIEW

REQUIREMENTS

AU-C 520 ILLUSTRATIONS

20 AU-C 530 Audit Sampling

SCOPE

DEFINITIONS OF TERMS

OBJECTIVE OF AU-C SECTION 530

OVERVIEW

REQUIREMENTS

NONSAMPLING TECHNIQUES

NONSTATISTICAL AUDIT SAMPLING TECHNIQUES

STATISTICAL AUDIT SAMPLING TECHNIQUES

NOTES

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

TECHNICAL ALERT

SCOPE

DEFINITIONS OF TERMS

OBJECTIVE OF AU-C SECTION 540

OVERVIEW

REQUIREMENTS

22 AU-C 550 Related Parties

SCOPE

DEFINITIONS OF TERMS

OBJECTIVES OF AU-C SECTION 550

OVERVIEW

REQUIREMENTS

AU-C 550 ILLUSTRATION—RELATED-PARTY CHECKLIST

23 AU-C 560 Subsequent Events and Subsequently Discovered Facts

SCOPE

DEFINITIONS OF TERMS

OBJECTIVES OF AU-C SECTION 560

OVERVIEW

REQUIREMENTS

AU-C 560 ILLUSTRATION—SUBSEQUENT EVENTS CHECKLIST

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

SCOPE

DEFINITION OF TERM

OBJECTIVES OF AU-C SECTION 570

RESPONSIBILITY FOR THE EVALUATION OF THE ENTITY'S ABILITY TO CONTINUE AS A GOING CONCERN

REQUIREMENTS

AU-C 570 ILLUSTRATION—GOING CONCERN CHECKLIST

25 AU-C 580 Written Representations

TECHNICAL ALERT

SCOPE

DEFINITION OF TERM

OBJECTIVES OF AU-C SECTION 580

REQUIREMENTS

AUDITOR'S RELATIONSHIP WITH A SMALL OR NONPUBLIC CLIENT

AU-C 580 ILLUSTRATIONS

NOTE

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

SCOPE

DEFINITION OF TERM

OVERVIEW

OBJECTIVES OF AU-C SECTION 585

REQUIREMENTS

DETERMINING IMPORTANCE OF OMITTED PROCEDURES

AU-C 585 ILLUSTRATION—APPLYING THE OMITTED PROCEDURE

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

SCOPE

INTRODUCTION

DEFINITIONS OF TERMS

OBJECTIVES OF AU-C SECTION 600

OVERVIEW

REQUIREMENTS

INTERPRETATIONS

AU-C 600 ILLUSTRATIONS

28 AU-C 610 Using the Work of Internal Auditors

SCOPE

OBJECTIVES OF AU-C SECTION 610

DEFINITIONS OF TERMS

OVERVIEW

REQUIREMENTS

AU-C 610 ILLUSTRATIONS

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

SCOPE

DEFINITIONS OF TERMS

OBJECTIVES OF AU-C SECTION 620

REQUIREMENTS

QUALIFICATIONS OF A SPECIALIST—COMPETENCE, CAPABILITIES, OBJECTIVITY

INTERPRETATIONS

AU-C 620 ILLUSTRATIONS

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

SCOPE

DEFINITIONS OF TERMS

OBJECTIVES OF AU-C SECTION 700

REQUIREMENTS: FORMING AN OPINION

REQUIREMENTS: AUDITOR'S REPORT

REQUIREMENTS: REPORTS ON COMPARATIVE FINANCIAL STATEMENTS

INTERPRETATIONS

AU-C 700 ILLUSTRATIONS

31 AU-C 701 Communicating Key Audit Matters in the Independent Auditor's Report

SCOPE

DEFINITION OF TERM

REQUIREMENTS

OBJECTIVES OF AU-C SECTION 701

COMMUNICATING KEY AUDIT MATTERS IN THE AUDITOR'S REPORT

32 AU-C 703 Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA

OVERVIEW

SCOPE

OBJECTIVES

REQUIREMENTS

EVALUATION OF REPORTABLE FINDINGS

AU-C 703 ILLUSTRATIONS

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

SCOPE

DEFINITIONS OF TERMS

OBJECTIVE OF AU-C SECTION 705

REQUIREMENTS

AU-C 705 ILLUSTRATIONS

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

SCOPE

DEFINITIONS OF TERMS

OBJECTIVE

REQUIREMENTS

AU-C 706 ILLUSTRATIONS

35 AU-C 708 Consistency of Financial Statements

SCOPE

DEFINITION OF TERM

OBJECTIVES OF AU-C SECTION 708

REQUIREMENTS

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

SCOPE

DEFINITIONS OF TERMS

OBJECTIVE OF AU-C SECTION 720

REQUIREMENTS

ILLUSTRATIONS: OTHER INFORMATION SECTIONS TO BE INCLUDED IN AUDITOR'S REPORTS RELATING TO OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT

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

SCOPE

DEFINITION OF TERM

OBJECTIVES OF AU-C SECTION 725

REQUIREMENTS

INTERPRETATION

AU-C 725 ILLUSTRATIONS

38 AU-C 730 Required Supplementary Information

SCOPE

DEFINITIONS OF TERMS

OBJECTIVES

REQUIREMENTS

AU-C 730 ILLUSTRATIONS

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

SCOPE

DEFINITIONS OF TERMS

OBJECTIVE OF AU-C SECTION 800

REQUIREMENTS

ILLUSTRATIONS OF AUDITOR'S REPORTS ON SPECIAL PURPOSE FINANCIAL STATEMENTS

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

SCOPE

DEFINITIONS OF TERMS

OBJECTIVE OF AU-C SECTION 805

REQUIREMENTS

INTERPRETATION

ILLUSTRATIONS OF AUDITOR'S REPORTS ON A SINGLE FINANCIAL STATEMENT AND A SPECIFIC ELEMENT OF A FINANCIAL STATEMENT

NOTES

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

SCOPE

DEFINITIONS OF TERMS

OBJECTIVE OF AU-C SECTION 806

REQUIREMENTS

AU-C 806 ILLUSTRATIONS

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

SCOPE

DEFINITIONS OF TERMS

OBJECTIVES OF AU-C 810

REQUIREMENTS

AU-C 810 ILLUSTRATIONS

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

SCOPE

DEFINITION OF TERM

OBJECTIVE OF AU-C SECTION 905

REQUIREMENTS

AU-C 905 ILLUSTRATIONS

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

SCOPE

AU-C DEFINITIONS OF TERMS

OBJECTIVE OF AU-C 910

REQUIREMENTS

ILLUSTRATIONS OF AUDITOR'S REPORTS ON FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH A FINANCIAL REPORTING FRAMEWORK GENERALLY ACCEPTED IN ANOTHER COUNTRY

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

SCOPE

DEFINITIONS OF TERMS

OBJECTIVE

REQUIREMENTS

ILLUSTRATION: ILLUSTRATIVE WRITTEN REPORT TO THE REQUESTING PARTY

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

SCOPE

DEFINITIONS OF TERMS

OBJECTIVES OF AU-C SECTION 920

OVERVIEW

REQUIREMENTS: GENERAL

REQUIREMENTS: FORMAT AND CONTENTS OF COMFORT LETTERS

REQUIREMENTS: COMMENTING IN A COMFORT LETTER ON INFORMATION OTHER THAN AUDITED FINANCIAL STATEMENTS

REQUIREMENTS: OTHER MATTERS

AU-C 920 ILLUSTRATIONS

47 AU-C 925 Filings with the U.S. Securities and Exchange Commission under the Securities Act of 1933

SCOPE

DEFINITIONS OF TERMS

OBJECTIVE

REQUIREMENTS

ILLUSTRATION: ILLUSTRATIVE DISCLOSURES AND REPORTS (AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS, AU-C 925.A15)

48 AU-C 930 Interim Financial Information

SCOPE

DEFINITION OF TERM

OBJECTIVE OF AU-C SECTION 930

REQUIREMENTS

AUDITOR'S REPORT

INTERIM FINANCIAL INFORMATION ACCOMPANYING AUDITED FINANCIAL STATEMENTS

DOCUMENTATION

AU-C 930 ILLUSTRATIONS

49 AU-C 935 Compliance Audits

SCOPE

DEFINITIONS OF TERMS

OBJECTIVES OF AU-C SECTION 935

REQUIREMENTS

AU-C 935 ILLUSTRATIONS

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

SCOPE

DEFINITIONS OF TERMS

OBJECTIVES OF AU-C 940

REQUIREMENTS

REPORTING REQUIREMENTS

AU-C 940 ILLUSTRATIONS—ILLUSTRATIVE REPORTS

NOTES

51 AU-C 945 Auditor Involvement with Exempt Offering Documents

SCOPE

DEFINITIONS OF TERMS

OBJECTIVES OF AU-C 945

REQUIREMENTS

52 AT-C Preface

AT-C ORGANIZATION

AT-C PREFACE

53 AT-C 105 Concepts Common to All Attestation Engagements

TECHNICAL ALERT

SCOPE AND WRITTEN ASSERTION

OBJECTIVES

DEFINITIONS OF TERMS

REQUIREMENTS

INTERPRETATIONS

AT-C 105 ILLUSTRATIONS—PRACTITIONER'S AGREED-UPON PROCEDURES REPORTS

54 AT-C 205 Assertion-Based Examination Engagements

OVERVIEW

OBJECTIVES

DEFINITIONS OF TERMS

REQUIREMENTS

ILLUSTRATION: PRACTITIONER'S EXAMINATION REPORT ON SUBJECT MATTER; UNMODIFIED OPINION

INTERPRETATIONS

ILLUSTRATIONS (AT-C 205.A121)

55 AT-C 206 Direct Examination Engagements

TECHNICAL ALERT

SCOPE

OBJECTIVES OF AT-C 206

REQUIREMENTS

EXHIBIT—ILLUSTRATIVE DIRECT EXAMINATION REPORTS (STATEMENT ON STANDARDS FOR ATTESTATION ON ENGAGEMENTS)

56 AT-C 210 Review Engagements

TECHNICAL ALERT

SCOPE

DEFINITIONS OF TERMS

OBJECTIVES OF SECTION 215

REQUIREMENTS

ILLUSTRATIONS—ILLUSTRATIVE PRACTITIONER'S REVIEW REPORTS

57 AT-C 215 Agreed-Upon Procedures Engagements

TECHNICAL ALERT

SCOPE

OBJECTIVES OF AT-C SECTION 215

REQUIREMENTS

STATEMENT OF POSITION 21-1

ILLUSTRATIONS—ILLUSTRATIVE PRACTITIONER'S AGREED-UPON PROCEDURES REPORTS (AT-C 215.A77)

NOTE

58 AT-C 305 Prospective Financial Information

SCOPE

DEFINITIONS OF TERMS

OBJECTIVES

OBJECTIVES

REQUIREMENTS

REPORTS

NOTE

59 AT-C 310 Reporting on Pro Forma Financial Information

SCOPE

DEFINITIONS OF TERMS

OBJECTIVES OF AN EXAMINATION ENGAGEMENT

OBJECTIVES OF A REVIEW ENGAGEMENT

REQUIREMENTS

ILLUSTRATIONS

NOTE

60 AT-C 315 Compliance Attestation

SCOPE

DEFINITIONS OF TERMS

OBJECTIVES OF AN EXAMINATION ENGAGEMENT

OBJECTIVES OF AN AGREED-UPON PROCEDURES ENGAGEMENT

REQUIREMENTS—EXAMINATION ENGAGEMENTS

REQUIREMENTS: AGREED-UPON PROCEDURES ENGAGEMENT

NOTE

61 AT-C 320 Reporting on an Examination of Controls at a Service Organization Relevant to User Entities’ Internal Control Over Financial Reporting

SCOPE

DEFINITIONS OF TERMS

OBJECTIVES OF AT-C SECTION 320

REQUIREMENTS

ILLUSTRATION: TYPE 1 SERVICE AUDITOR'S REPORT (ASSOCIATION OF INTERNATIONAL CERTIFIED PROFESSIONAL ACCOUNTANTS, AT-C 320.75)

62 AT-C 395 Management's Discussion and Analysis

SCOPE

DEFINITION OF TERM

OBJECTIVES

REQUIREMENTS: EXAMINATION

REQUIREMENTS: REVIEW

ILLUSTRATIONS

NOTES

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

SCOPE

DEFINITIONS OF TERMS

OBJECTIVES AND LIMITATIONS OF SSARS ENGAGEMENTS

FUNDAMENTAL REQUIREMENTS

64 AR-C 70 Preparation of Financial Statements

SCOPE

OBJECTIVES AND LIMITATIONS OF PREPARATION ENGAGEMENTS

DEFINITIONS OF TERMS

DETERMINING THE TYPE OF ENGAGEMENT

REQUIREMENTS

ILLUSTRATION—AN ENGAGEMENT LETTER FOR AN ENGAGEMENT TO PREPARE FINANCIAL STATEMENTS IN ACCORDANCE WITH ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA

65 AR-C 80 Compilation Engagements

SCOPE

OBJECTIVES AND LIMITATIONS OF COMPILATION ENGAGEMENTS

DEFINITIONS OF TERMS

REQUIREMENTS

ILLUSTRATION—CHECKLIST FOR A COMPILATION ENGAGEMENT

ILLUSTRATIVE ENGAGEMENT LETTERS (BASED ON AR-C 80.A51)

ILLUSTRATIVE EXAMPLES OF THE ACCOUNTANT'S COMPILATION REPORT ON FINANCIAL STATEMENTS

ILLUSTRATIVE REPORT PARAGRAPHS—REQUIRED SUPPLEMENTARY INFORMATION (ADAPTED FROM AT-C 80)

NOTE

66 AR-C 90 Review of Financial Statements

SCOPE

OBJECTIVES

DEFINITIONS OF TERMS

REQUIREMENTS

ILLUSTRATIONS: REVIEW ENGAGEMENT

NOTES

67 AR-C 100 Special Considerations—International Reporting Issues

SCOPE

OBJECTIVE

DEFINITIONS

REQUIREMENTS

REPORTING

68 AR-C 120 Compilation of Pro Forma Financial Information

SCOPE

DEFINITION OF TERM

OBJECTIVES OF AR-C SECTION 120

REQUIREMENTS

ILLUSTRATIONS

APPENDIX A: DEFINITIONS OF TERMS—AU-C STANDARDS

NOTES

APPENDIX B: DEFINITIONS OF TERMS—AT-C STANDARDS

APPENDIX C: DEFINITIONS OF TERMS—AR-C STANDARDS

APPENDIX D: INTERPRETIVE PUBLICATIONS AND OTHER AUDITING PUBLICATIONS

NOTE

INDEX

END USER LICENSE AGREEMENT

List of Tables

Chapter 20

Table 20.1 Upper Limit Factors, m Deviations or Misstatements in Sample (m′...

Table 20.2 Lower Limit Factors, m Deviations or Misstatements in Sample (m’...

List of Illustrations

Chapter 12

Exhibit 12.1 Determining the Extent of Tests

Exhibit 12.2 Sample Sizes for Small Populations

Exhibit 12.3 Source List of Procedures or Evidential Matter

Chapter 36

Exhibit 36-1 AU-C 720 Processes

Guide

Cover

Table of Contents

Title Page

Copyright

Preface—Organization and Key Changes

About the Author

Begin Reading

Appendix A: Definitions of Terms—AU-C Standards

Appendix B: Definitions of Terms—AT-C Standards

Appendix C: Definitions of Terms—AR-C Standards

Appendix D: Interpretive Publications and Other Auditing Publications

Index

End User License Agreement

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Practitioner’s Guide to GAAS 2022

Covering All SASs, SSAEs, SSARSs, and Interpretations

Joanne M. Flood, MBA, CPA

Copyright © 2022 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.Published simultaneously in Canada.

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ISBN 9781119875017 (Paperback)ISBN 9781119875024 (ePDF)ISBN 9781119875048 (ePub)

Cover Design and Image: Wiley

PREFACE—ORGANIZATION AND KEY CHANGES

This book reduces the official language of Statements on Auditing Standards (SASs), Statements on Standards for Attestation Engagements (SSAEs), Statements on Standards for Accounting and Review Services (SSARSs), and the interpretations of those standards into easy-to-read and understandable advice. It is designed to help CPAs in the application of, and compliance with, authoritative standards.

RESOURCES

Wiley Practitioner's Guide to GAAS 2022 contains robust tools to help practitioners implement the standards. This book follows the sequence of sections of the AICPA Codification of Statements on Auditing Standards, the Codification of Statements on Standards for Attestation Engagements, and the Codification of Statements on Standards for Accounting and Review Services. Sections are divided into the following easy-to-understand parts:

Scope.

A handy brief identification of the original standard for the section.

Definitions of Terms.

A list of official definitions that refers readers to one of the appendices to find explanations of terms that are ordinarily scattered throughout the standards.

Objectives.

An explanation of the reasons for the section.

Requirements.

Concise listing and descriptions of those things specifically mandated by the section, and helpful techniques for complying with the fundamental requirements of the section.

Interpretations.

A brief summary of each interpretation.

Illustrations.

Sample reports and checklists.

NEW AUDITING STANDARDS

Audit Evidence—SAS 142

In July 2020, the ASB issued SAS 142, Audit Evidence. The SAS is intended to provide auditors with enhanced guidance on audit evidence by:

Providing risk assessment requirements for estimates and

Further procedures that:

are more specific to estimates,

address today's complex business environment and the complexity of financial reporting frameworks,

highlight the causes of uncertainty, and

focus on the risk of management bias.

The SAS supersedes AU-C 500 and amends other Sections. SAS 142 is effective for periods ending on or after December 15, 2022.

Auditing Accounting Estimates and Related Disclosures—SAS 143

SAS 143 enables auditors to appropriately address complex scenarios from accounting standards that include estimates and related disclosures and to enhance the auditor's focus on factors that drive estimation uncertainty and management biases. Particularly important are estimates related to asset impairments during the current environment of economic uncertainty and volatility.

SAS 143 is effective for audits of financial statements for periods ending on or after December 15, 2023.

ATTESTATION STANDARDS

The ASB has a project to develop a guide for an examination engagement on internal controls, other than an audit of ICFR that is integrated with a financial statement audit.

ACCOUNTING AND REVIEW STANDARDS

In February 2020 the ARSC issued SSARS 25, Materiality in a Review of Financial Statements and Adverse Conclusions. SSARS 25 amends AR-Cs 60, 70, 80, and 90. The SSARS con- verges AR-C 90 with Substantial Standard for Review Engagements 2400. SSARS 25 also aligns concepts of materiality with auditing standards.

SSARS 25 is effective for engagements performed in accordance with SSARSs on financial statements for periods ending on or after December 15, 2021.

PUBLICATION CURRENCY

This publication is current through SAS No. 143, SSARS 25, and SSAE 19.

Joanne M. Flood

September 2022

ABOUT THE AUTHOR

Joanne M. Flood, MBA, CPA, is an author and independent consultant on accounting and auditing technical topics and e-learning. She has experience as an auditor in both an international firm and a local firm and worked as a senior manager in the AICPA's Professional Development group. She received her MBA summa cum laude in accounting from Adelphi University and her bachelor's degree in English from Molloy College. Joanne received the New York State Society of Certified Public Accountants Award of Honor for outstanding scholastic achievement at Adelphi University. Joanne also has a certificate in Designing Interactive Multimedia Instruction from Teachers College, Columbia University.

While in public accounting, Joanne worked on major clients in retail, manufacturing, and finance and on small business clients in construction, manufacturing, and professional services. At the AICPA, Joanne developed and wrote e-learning, text, and instructor-led training courses on US and international standards. She also produced training materials in a wide variety of media, including print, video, and audio, and pioneered the AICPA's e-learning product line. Joanne resides on Long Island, New York, with her daughter, Elizabeth. Elizabeth is also Joanne's editorial assistant, providing valuable production and copyediting services. Joanne is the author of the following Wiley publications:

Financial Disclosure Checklist

Wiley GAAP 2022: Interpretation and Application of Generally Accepted Accounting Principles

Wiley Practitioner's Guide to GAAS 2022: Covering All SASs, SSAEs, SSARSs, and Interpretations

Wiley GAAP: Financial Statement Disclosures Manual

(

Wiley Regulatory Reporting)

Wiley Revenue Recognition

1AU-C 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Generally Accepted Auditing Standards

Scope

Definitions of Terms

Objectives of AU-C Section 200

Requirements

Management's Responsibilities

Auditor's Objectives

Materiality

Ethical Requirements

Professional Judgment and Skepticism

Complying with GAAS

GAAS and the GAAS Hierarchy

SCOPE

AU-C 200 describes:

The auditor's overall responsibilities when conducting a GAAS audit, including

The auditor's overall objectives,

The nature and scope of the audit, and

The scope, authority, and structure of GAAS.

(AU-C 200.01)

DEFINITIONS OF TERMS

Source: AU-C 200.14. For definitions related to this standard, see Appendix A, “Definitions of Terms”: Applicable financial reporting framework, Audit evidence, Audit risk, Auditor, Detection risk, Financial reporting framework, Financial statements, Historical financial information, Interpretive publications, Management, Misstatement, Other auditing publications, Premise, relating to the responsibilities of management and, when appropriate, those charged with governance, on which an audit is conducted (the premise), Professional judgment, Professional skepticism, Reasonable assurance, Risk of material misstatement, Those charged with governance.

OBJECTIVES OF AU-C SECTION 200

The overall objectives of the auditor, in conducting an audit of financial statements, are to:

obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, thereby enabling the auditor to express an opinion on whether the financial statements are presented fairly, in all material respects, in accordance with an applicable financial reporting framework; and

report on the financial statements, and communicate as required by GAAS, in accordance with the auditor's findings.

(AU-C 200.12)

If reasonable assurance cannot be obtained and a qualified opinion is insufficient, the auditor must either:

Disclaim an opinion or

Withdraw from the engagement when possible under applicable law or regulation.

(AU-C 200.13)

REQUIREMENTS

MANAGEMENT'S RESPONSIBILITIES

Financial statements are prepared by management with oversight from those charged with governance. GAAS do not impose requirements on management or those charged with governance, but rather an audit is conducted on the premise that management and those charged with governance understand their responsibilities. (AU-C 200.05)

Many times clients do not understand their responsibilities for audited financial statements. The financial statements are management's. They contain management's representations. The form and content of the financial statements are management's responsibility, even if the auditor prepared them or participated in their preparation. Management also is responsible for implementing and maintaining an effective system of internal control. (See Appendix A, definition of premise.)

AUDITOR'S OBJECTIVES

The purpose of an audit of financial statements is confined to the expression of an opinion on the financial statements being audited. In performing the audit, the auditor is responsible for compliance with GAAS. (AU-C 200.04)

MATERIALITY

In every audit, the auditor has to obtain reasonable assurance1 about whether the financial statements are free of material misstatement, whether due to errors or to fraud. (AU-C 200.06) Materiality is taken into account when planning and performing the audit. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.2 However, the auditor is not required to obtain reasonable assurance that misstatements not material to the financial statements taken as a whole, whether caused by fraud or error, are detected. Materiality considers qualitative and quantitative elements and should be viewed in context. (AU-C 200.07)

ETHICAL REQUIREMENTS

The auditor has a responsibility to consider GAAS in all audits. For more information, see the section “Complying with GAAS” later in this chapter.

To provide reasonable assurance that it is conforming with generally accepted auditing standards in its audit engagements, an accounting firm should establish quality control policies and procedures. These policies and procedures should apply not only to audit engagements but also to attest any accounting and review services for which professional standards have been established. (AU-C 200.A20) The AICPA's Quality Control Standards detail the firm's responsibility for establishing and maintaining a system of quality control for auditors. See QC Section 10, A Firm's System of Quality Control, for more information.

The auditor must be independent. If not independent, the auditor cannot issue a report under GAAS. The only exception is if GAAS provides otherwise or law or regulation requires the auditor to accept the engagement and report on the financial statements. (AU-C 200.15) In that situation, AU-C 705, Modifications to the Opinion in the Independent Auditor's Report, applies.

To be independent, the auditor must be intellectually honest; to be recognized as independent, he or she must be free from any obligation to or interest in the client, its management, or its owners. The auditor should be independent in appearance as well as fact. (AU-C 200.A17) For specific guidance, the auditor should look to the AICPA and the state society codes of conduct and, if relevant, the requirements of the Securities and Exchange Commission (SEC). (AU-C 210.A21)

Policies and procedures should provide reasonable assurance that personnel maintain independence when required and perform all responsibilities with integrity, objectivity, and due care.

Independence is an impartiality that recognizes an obligation for fairness.

Integrity pertains to being honest and candid, and requires that service and public trust not be subordinated to personal gain.

Objectivity is a state of mind that imposes an obligation to be impartial, intellectually honest, and free of conflicts of interest.

Due care requires the auditor to discharge professional responsibilities with the competence and diligence necessary to perform the audit and issue an appropriate report and to render services promptly, thoroughly, and carefully, while observing applicable standards. (AU-C 200.A19)

(AU-C 200.A16)

(See the AICPA's Code of Professional Conduct, ET.0.300.)

PROFESSIONAL JUDGMENT AND SKEPTICISM

Professional Judgment

The auditor must exercise professional judgment in planning and performing an audit of financial statements. (AU-C 200.17-18) The auditor should:

Observe GAAS,

Possess the degree of skill commonly possessed by other auditors, and

Exercise that skill with reasonable care and diligence.

Professional judgment is developed through training and experience. It will come into play in all aspects of the audit, particularly when

Assigning materiality,

Assessing audit risk,

Evaluating the sufficiency of audit evidence,

Evaluating management's integrity and judgment, and

Arriving at conclusions.

(AU-C 200.A28)

As can be seen from the above list, professional judgment is exercised throughout the audit.

Professional Skepticism

The auditor should also exercise professional skepticism; that is, an attitude that includes a questioning mind and a critical assessment of audit evidence.

In practice, this means that auditors should be alert for:

Contradictory evidence,

Indications of fraud,

Unusual circumstances and those that suggest the need for additional audit procedures,

Evidence that calls into question the reliability of documents and responses to inquiries,

The possibility of collusion when performing the audit, and

How management may override controls in a way that would make the fraud particularly difficult to detect.

(AU-C 200.A22–.A23)

However, the auditor is not an insurer, and the audit report does not constitute a guarantee. It is based on reasonable assurance. Thus, it is possible that an audit conducted in accordance with GAAS may not detect a material misstatement.

Auditor's biases, whether conscious or unconscious, may affect professional skepticism and judgment. Those biases may affect the design and performance of procedures and the evaluation of audit evidence. Here are examples of some biases:

Availability – events or experiences that come to mind or are readily available

Confirmation – items that affirm an existing belief rather than contradict an existing belief

Overconfidence – overestimating one's ability to make accurate risk assessments or other judgments

Anchoring – using an initial piece of information to inadequately assess subsequent information

Automation – favoring information generated by automated systems even when there are questions about its reliability or usefulness

(AU-C 500.A27)

Sufficient Appropriate Audit Evidence and Audit Risk

In order to form an opinion, the auditor must obtain reasonable assurance. The auditor obtains reasonable assurance by obtaining sufficient appropriate audit evidence to reduce audit risk to an acceptably low level to draw a reasonable conclusion. (AU-C 200.19)

COMPLYING WITH GAAS

Auditors must comply with and understand relevant AU-C sections; that is, those that are in effect and address the circumstances of the audit. (AU-C 200.20 and .21) GAAS uses two categories of professional requirements to describe the degree of responsibility the standards impose on auditors.

Unconditional requirements

. The auditor is required to comply with an unconditional requirement in all cases in which the circumstances exist to which the unconditional requirement applies. SASs use the word

must

to indicate an unconditional requirement.

Presumptively mandatory requirements

. The auditor is also required to comply with a presumptively mandatory requirement in all circumstances where the presumptively mandatory requirement exists and applies. However, in rare circumstances, the auditor may depart from a presumptively mandatory requirement. The departure should only relate to a specific procedure when the auditors determine that the procedure would be ineffective in the specific circumstances. The auditors must document their justification for the departure and how the alternative procedures performed in the circumstances were sufficient to achieve the objectives of the presumptively mandatory requirement. GAAS uses the word

should

to indicate a presumptively mandatory requirement.

(AU-C 200.25–.26)

The term should consider means that the consideration of the procedure or action is presumptively required, whereas carrying out the procedure or action is not.

AU-C Section 200 also clarifies that explanatory material is intended to explain the objective of the professional requirements, rather than impose a professional requirement for the auditor to perform. (AU-C 200.A64)

GAAS AND THE GAAS HIERARCHY

The auditor is responsible for planning, conducting, and reporting the results of an audit according to GAAS.3 GAAS provide the standards for the auditors’ work in fulfilling their objectives. Each AU-C section contains objectives that provide a link between the requirements and the overall objectives of the auditors. Auditors should have sufficient knowledge of the AU-C sections to determine when they apply, and should be prepared to justify departures from them.

Interpretive Publications

Interpretive publications are not auditing standards, but are recommendations, issued under the authority of the ASB, on how to apply GAAS in specific circumstances, including engagements for entities in specialized industries. Interpretive publications consist of the following:

Auditing Interpretations of AU-C sections, listed in each chapter of this book that has a related Interpretation.

AICPA Audit and Accounting Guides and Statements of Position, listed in

Appendix B

of this book.

(AU-C 200.A82)

Auditors should consider interpretive publications that apply to their audits.

Other Auditing Publications

Other auditing publications, listed in Appendix C of this book, are not authoritative but may help auditors to understand and apply GAAS. An auditor should evaluate such guidance to determine whether it is both (1) relevant for a particular engagement and (2) appropriate for the particular situation. When evaluating whether the guidance is appropriate, the auditor should consider whether the publication is recognized as helpful in understanding and applying SASs, and whether the author is recognized as an auditing authority. AICPA auditing publications that have been reviewed by the AICPA Audit and Attest Standards staff are presumed to be appropriate. (AU-C 200.A83–.A85)

NOTES

1

See

Appendix A

, Definitions of Terms

.

2

This definition of materiality from SAS No. 138 aligns the GAAS description with that of the IASB and the IAASB. It aligns materiality concepts in AICPA Professional Standards with the description used by the U.S. judicial system, the PCAOB, the SEC, and the FASB. SAS 138 is effective for periods ending on or after December 15, 2021.

3

Generally accepted auditing standards are issued in the form of Statements on Auditing Standards and codified into AU-C sections in the AICPA's Professional Standards

.

2AU-C 210 Terms of Engagement

Scope

Definitions of Terms

Objectives of AU-C Section 210

Fundamental Requirements

Engagement Acceptance

AU-C 210 Illustration

SCOPE

This section states the requirements and provides application guidance on the auditor's responsibilities when agreeing upon terms of engagement with management and those charged with governance. It also establishes the important preconditions for an audit, for which management is responsible. Engagement letters can also be the foundation of a defense in the event of a dispute with the client. AU-C 220, Quality Control for an Engagement Conducted in Accordance with Generally Accepted Auditing Standards, addresses those aspects of engagement acceptance that the auditor can control and the auditor's responsibilities regarding ethical requirements concerning acceptance of an engagement. (AU-C 210.01 and .A1)

DEFINITIONS OF TERMS

Source: AU-C 210.04. For definitions related to this standard, see Appendix A, “Definitions of Terms”: Preconditions for an audit, Recurring audit.

OBJECTIVES OF AU-C SECTION 210

AU-C Section 210.03 states that:

… the objective of the auditor is to accept an audit engagement for a new or existing audit client only when the basis upon which it is to be performed has been agreed upon through

establishing whether the preconditions for an audit are present and

confirming that a common understanding of the terms of the audit engagement exists between the auditor and management and, when appropriate, those charged with governance.

FUNDAMENTAL REQUIREMENTS

ENGAGEMENT ACCEPTANCE

Preconditions

Unless required to do so by law or regulation, an auditor should discuss the situation with management and not accept an engagement when the preconditions (see Appendix A, “Definitions of Terms”) are not met. (AU-C 210.08) To assess whether those preconditions are met, the auditor should:

determine whether the financial reporting framework

1

to be applied in the preparation of the financial statements is acceptable and

obtain the agreement of management that it acknowledges and understands its responsibility

for the preparation and fair presentation of the financial statements in accordance with the applicable financial reporting framework;

for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; and

to provide the auditor with

access to all information of which management is aware that is relevant to the preparation and fair presentation of the financial statements, such as records, documentation, and other matters;

additional information that the auditor may request from management for the purpose of the audit; and

unrestricted access to persons within the entity from whom the auditor determines it necessary to obtain audit evidence

. (AU-C 210.06)

In evaluating whether the financial reporting framework is acceptable, the auditor may want to consider:

The nature of the entity

The purpose and nature of the financial statements

Whether the framework is determined by law or regulator

(AU-C 210.A4)

Additional information may include other information, financial or nonfinancial, included in the entity's financial report described in AU-C 720. Examples of this other information include reports on operations, financial summaries, selected quarterly data, and more. If the auditor expects to receive such information after the date of the auditor's report, the auditor may consider including in the engagement letter actions the auditor will take if the other information contains an uncorrected material misstatement. (AU-C 210.A17)

Limitation of Scope

If management limits the scope of the auditor's work so that the auditor will have to disclaim an opinion, the auditor should not accept the engagement. The exception to this is when management is required by law or regulation to have an audit and the disclaimer of opinion is acceptable under law or regulation, for example, with audits of employee benefit plans. Then the auditor may accept the engagement, but is not required to do so. (AU-C 210.07 and .A19)

Agreement on Terms

The auditor should establish an understanding in writing with management or those charged with governance2 about the services to be performed for each audit, review of a public company's financial statements, or agreed-upon procedures for engagement. (AU-C 210.09) The understanding should include:

The engagement's objectives and scope

Management's responsibilities

Auditor's responsibilities

The audit's limitations, the inherent limitations of internal control, and the risk that some misstatements may not be detected

Financial reporting framework

Expected form and content of the report

(AU-C 210.10)

In addition, the auditor may want to:

Elaborate on the scope of the audit by referencing regulations, laws, GAAS, ethical codes, and pronouncements of professional bodies, as applicable.

The communication of key audit matters.

Identify any other communications in addition to the auditor's report.

Discuss audit planning and performance, including composition of the audit team.

Remind management to provide access to all information relevant to the preparation and fair presentation of the financial statements, including information relevant to disclosures.

Remind management about the expectation of written representation, the agreement to make available draft financial statements on a timely basis, including information relevant to the preparation and fair presentation of the financial statements whether obtained from within or outside of the general and subsidiary ledgers.

Remind management about the agreement for management to inform the auditor of subsequent events or facts discovered after the date of the financial statements that may affect the financial statements.

Detail fees and billing arrangements.

Request management to acknowledge receipt of the engagement letter and to agree to the terms by signing the letter.

(AU-C 210.A24)

GAAS does not require auditors to communicate key audit matters. If, however, the engagement letter indicates that the auditor will do so and later it is decided not to do so, the letter should be modified. The reverse is also true. If, after the engagement letter is signed, management requests that key audit matters be communicated, the auditor should consider issuing a new engagement letter or an addendum to the assigned letter. (AU-C 210.A25)

The auditor may also choose to address arrangements concerning the involvement of other auditors, specialists, internal auditors and other entity staff, and predecessor auditors; restrictions on auditor's liability, when not prohibited; audit documentation to be provided to other parties; additional services; and any other agreements with the entity. (AU-C 210.A26)

If the auditor fails to establish an understanding, the auditor should decline the engagement. (AU-C 210.08) A sample engagement letter is included at the end of this chapter.

Initial Audits, Including Reaudits

Inquiry of the predecessor auditor is critical because the predecessor may provide information that will assist the successor auditor in deciding whether to accept the engagement. The communication may be either written or oral. (AU-C 210.A33) Both the predecessor and successor auditors should treat any information obtained from each other as confidential information. (AU-C 210.A31) The successor auditor should request permission from the prospective client to make an inquiry of the predecessor prior to final acceptance of the engagement. However, the successor auditor may make a proposal for an audit engagement before having permission to inquire of the predecessor auditor.

The successor auditor should ask the prospective client to authorize the predecessor to respond fully to the successor auditor's inquiries. If a prospective client refuses to permit the predecessor auditor to respond or limits the response, the successor auditor should inquire as to the reasons and consider the implications of that refusal in deciding whether to accept the engagement. (AU-C 210.11) The successor auditor should make specific and reasonable inquiries of the predecessor about the following five matters:

Information about management's integrity

Disagreements with management about accounting principles, auditing procedures, or other significant matters

Communications to those charged with governance and responsibility regarding fraud, noncompliance with laws or regulations, and significant deficiencies and material weaknesses in internal control

The predecessor auditor's understanding of the reasons for the change of auditors

The predecessor auditor's understanding of the nature of the entity's relationships and transactions with related parties and significant unusual transactions

(AU-C 210.A33)

The predecessor auditor should respond promptly, fully, and factually. However, if the predecessor decides, due to unusual circumstances such as impending, threatened, or potential litigation; disciplinary proceedings; or other unusual circumstances, not to respond fully, he or she should indicate that the response is limited. (AU-C 210.A32) Also, if more than one auditor is considering accepting the audit, the predecessor auditor does not have to respond to inquiries until an auditor has been selected by the entity and has accepted the engagement. (AU-C 210.A30) Any information exchanged between the predecessor and successor auditors should be considered confidential. (AU-C 210.A31)

If the successor auditor receives a limited response, that auditor should consider the implications of the limited response in deciding whether to accept the engagement. (AU-C 210.12)

Recurring Audits

For a recurring audit, the auditor should evaluate whether the terms of the engagement need to be changed. The auditor should also remind the client about the existing terms of engagement. (AU-C 210.13)

Certain factors may warrant a change in the terms of engagement for a recurring engagement. For example, any indication that management misunderstands the objective and scope of the audit and changes in:

Revised or special terms of the audit engagement

Senior management or ownership,

Legal or regulatory requirements,

The nature or size of the entity, or

The financial reporting framework or other reporting requirements.

(AU-C 210.A35)

Change in Terms

If the client requests a change in the terms, the auditor must ensure that there is a reasonable justification for the change. So, too, if prior to completion of an audit, the client requests a change to an engagement with a lower level of assurance, the auditor must be satisfied that a reasonable justification for doing so exists. (AU-C 210.14 and .15)

If the terms are changed, the auditor and management should document in writing the mutually agreed-upon change. (AU-C 210.16) If, however, the auditor concludes there is no reasonable justification for a change in terms, and management does not allow the auditor to continue the original audit, the auditor must take these three steps:

Withdraw from the engagement.

Communicate the situation to those charged with governance.

Determine whether the auditor has any legal, contractual, or other obligation to report the circumstances to owners, regulators, or other parties.

(AU-C 210.17)

Report Layout Required by Law or Regulation

If the report prescribed by law or regulation does not align with GAAS in significant ways, the auditor must decide whether the format would mislead the users and if the report could be reworded to align with GAAS or alternatively whether the auditor could attach a separate report. If none of those remedies are available, the auditor should decline the engagement unless required by law or regulation not to perform the engagement. (AU-C 210.18)

AU-C 210 ILLUSTRATION

ILLUSTRATION 1. EXAMPLE OF AN AUDIT ENGAGEMENT LETTER (ADAPTED FROM AUDIT STANDARDS AU-C 210.A44)

The following is an example of an audit engagement letter for an audit of general purpose financial statements prepared in accordance with US GAAP. This letter is intended only to be a guide that may be used in conjunction with the considerations outlined in AU-C Section 210. The letter will vary according to individual requirements and circumstances and is drafted to refer to the audit of financial statements for a single reporting period. The auditor may seek legal advice about whether a proposed letter is suitable.

Auditor's letterhead

Smith and Jones Certified Public Accountants October 7, 20XX

Addressed to the appropriate representative of those charged with governance

Brock Warner

Plainsmen, Inc.

2320 Tiger Blvd.

Lancaster, PA 19701

The objective and scope of the audi

t