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How Audit Materiality is Material to You A Peer-Reviewed Academic Articles

What is the point in reissuing a financial statement?

If Shah’s report is not presented, an other-matter paragraph should be included to describe this situation. The original auditor’s report on the prior period should not be presented. An audit report would indicate a division of responsibility when the principal auditor’s opinion is based in part on the report of another auditor. If the auditor reissues the audit report at the client’s request, the auditor should use the original report date on the reissued report.

  • These include white papers, government data, original reporting, and interviews with industry experts.
  • Because some companies announced more than one restatement.
  • C) Inability to obtain sufficient appropriate evidential matter.
  • The nature of any emphasis-of-matter or other-matter paragraph included in the predecessor auditor’s report.
  • Several accounts and transactions are audited at once so that if all allowable misstatements, simultaneously in use, were summed they would far exceed planning materiality.
  • The company claimed to launch an internal investigation into the matter.

With this service auditors are engaged to perform procedures to allow them to provide assurance on whether supplementary information is fairly stated, in all material respects, in relation to the financial statements as a whole. The information may be presented in a document containing audited financial statements or may be separate from the financial statements. This is financial and nonfinancial What is the point in reissuing a financial statement? information other than required supplementary information that is included in a document that contains audited financial statements. Auditors are required to read this information for inconsistencies, if any, with the audited financial statements. Assuming the change in accounting principle is justified (i.e. makes sense), then the change should be reflected on a retrospective basis.

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They acknowledged that the errors resulted from lapses in procurement procedures by some employees. In the same announcement, the company revealed they received an additional subpoena from the SEC related to the assessment of goodwill and asset impairments. The subpoena also called for the documents regarding procurement operations. Mistakes reporting equity transactions –This includes improper accounting for business combinations and convertible securities. A “material” error affecting part or all of a financial statement often triggers a restatement. In these situations, management should work closely with its securities counsel and auditors and may need to discuss its approach with the SEC staff, stock exchanges, or other regulatory agencies about the measures to be taken given the facts and circumstances. It is important to distinguish the treatment from a change in accounting principle, as defined above, from a change that results from moving from an accounting principle that is not generally accepted to one that is generally accepted.

What is the point in reissuing a financial statement?

With a restatement, on the other hand, the error must be material, prompting a revision and the issuance of a corrected financial statement. A restatement is a revision of one or more of a company’s previous financial https://business-accounting.net/ statements to correct an error. Changes in accounting estimates arise in the course of business from new information. The amount of change must be taken in the year of the change with disclosure in the notes section.


All agreed-upon procedures engagements result in restricted reports. When a successor auditor does not present the predecessor auditor’s report, the successor should indicate in an other-matter paragraph that the predecessor auditor expressed an unmodified opinion on the prior year’s financial statements. Express an unmodified opinion concerning the restated financial statements. Be accompanied by the original auditor’s report on the prior period. Choice “c” is incorrect Restatement of financial statements following a change in reporting entity affects comparability of the financial statements, but would not result in a change in opinion from the audit report previously issued.

  • Learn accounting fundamentals and how to read financial statements with CFI’s free online accounting classes.
  • However, even with all of the different components working diligently to present clear and accurate reports, errors do occur.
  • A statement of whether the audit committee, or the board of directors in the absence of an audit committee, or authorized officer or officers, discussed the matters disclosed in the filing under Item 4.02 of Form 8-K with the accountant.
  • Fn 1 See section 561 regarding procedures to be followed by the auditor who, subsequent to the date of his report upon audited financial statements, becomes aware that facts may have existed at that date which might have affected his report had he then been aware of such facts.
  • It is not appropriate for the report to state that ICFR is effective with certain qualifications or exceptions.

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