The Audit Report Was Timely, but at What Cost?
This is intended to distinguish the report from a compilation or review report. The scope paragraph (see part 4) clari? es what is meant by an audit. Second, it lists the ? nancial statements that were audited, including the balance sheet dates and the accounting periods for the income statement and statement of cash ? ows. The wording of the ? nancial statements in the report should be identical to those used by management on the ? nancial statements.
Notice that the report in Figure 3-1 is on comparative ? nancial statements. Therefore, a report on both years’ statements is needed.Third, the introductory paragraph states that the statements are the responsibility of management and that the auditor’s responsibility is to express an opinion on the statements based on an audit. The purpose of these statements is to communicate that management is responsible for selecting the appropriate generally accepted accounting principles and making the measurement decisions and disclosures in applying those principles and to clarify the respective roles of management and the auditor.
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4. Scope paragraph. The scope paragraph is a factual statement about what the auditor did in the audit.