short answer questions
Under the current audit reporting structure, what appears in the “standard audit report” and what are the three basic categories or reasons (i.e., “buckets”) for when a modification is required? How does the auditor determine when an adverse opinion or disclaimer of opinion is needed?
What report should an auditor issue if he or she believes that the audited entity is: a) is about to go bankrupt, b) is being poorly run by its current management or faces substantial risks for the future, c) has a material weakness but does not have a material misstatement, or d) finds a significant deficiency that is deemed a “critical audit matter” but does not rise to the level of a material weakness?
How often are “standard” or “unqualified” audit reports issued today? What does the reader learn about the company when such report is issued? Does such report have symbolic or informative value?
Who is demanding auditor report changes and why? Do “they” want auditors to do more audit work (and charge more) or merely tell more of what auditors found or believe about the company? Briefly explain.
What is the “information gap” and how does it differ from the “expectations gap?” Why is the distinction important?
What are the most important differences between the present-day audit report and the PCAOB-proposed auditor reporting model, new IAASB auditor reporting standard, FRC Revision to ISA 700, and EU Regulation 537/2014?
What could be some potential unintended consequences of the proposed changes listed in 6 above? What happens if the new audit reporting model standards are too prescriptive or not prescriptive enough?
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