Lesson: The Audit Report

Instructor: Nick Palazzolo

In this lesson, Nick Palazzolo discusses the various components of an audit report, including the opinion letter, management's responsibilities letter, and report on internal controls. The importance of including references to accounting standards and explicitly stating management's and the auditor's responsibilities is also emphasized. In addition, Nick explains the report release dates, retention periods, and rules regarding modifications to audit documentation for both private and issuer companies. Understanding these key aspects of an audit report is essential for anyone involved in the auditing process.

Updated: June 22, 2023 Create an account

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Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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Talking about the audit report, we've got opinions and the opinions are in the audit report, but we've obviously got a whole report with some other items in that. And the components of the audit report are going to include the opinion letter, which is really what they're paying for. This is it. This is the big kahuna. Management's responsibilities letter discussing. We've got the whole section on that, discussing what management's responsible for them specifically, explicitly stating that, and a report on internal controls. The opinion letter states whether the financial statements are free from material misstatement and the management responsibility letter states that management's responsible for the financial statements and the internal controls. Lastly, the report on internal control states that the internal controls are effective. Do keep a note that obviously this is only going to really exist if we're dealing with an integrated audit or if we're dealing with SOC reporting. So this is not going to be in your quote unquote standard audit, right? You're not expressing an opinion over internal controls in a normal audit. Other important pieces of information in this report are going to include the name and contact information, the date of the report, the scope of the audit. All of those are going to be pretty important. Talking about these audit reports and what are we going to include for each opinion type, no matter, regardless of the opinion, it could be a perfect opinion, clean opinion. It could be an awful opinion. You can say the financial statements are an absolute mess. Regardless, what are you going to include in that audit report? Well, you're going to include references to the US as the country of origin of GAP and GAS. Now, these are items not just here for

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Engagement Results

Module: 2 Concepts, 22 Lessons

Audit Opinions Overview

0:31

Audit Opinions Objectives

1:08

Introduction to Audit Opinions

1:57

Auditor's Evaluation of Criteria in Determining an Opinion