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Major Topics
I. Overview of Reporting
II. The Standard Report
III. Reasons for Departing from Standard Report
10/20/2015
10/20/2015
Major Topics
I. Overview of Reporting
II. The Standard Report
III. Reasons for Departing from Standard Report
Scope
o Audit conducted in accordance with PCAOB standards
o Description of an audit (specific references to test basis,
materiality, and significant estimates)
o Audit provides reasonable assurance
Opinion
o Are F/S presented in conformity with applicable financial
reporting framework (GAAP)?
Internal Control
o References examination, report, and opinion on internal
control
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10/20/2015
Report Title
Report Address
Introductory Paragraph
Scope Paragraph
Opinion Paragraph
We have audited the accompanying balance sheets of DUNDER-MIFFLIN, INC. as of December 31, 2012 and
2011, and the related statements of income, shareholders equity, and cash flows for each of the years in the
three-year period ended December 31, 2012. These financial statements are the responsibility of DUNDERMIFFLIN, INC.'s management. Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of DUNDER-MIFFLIN, INC. as of December 31, 2012 and 2011, and the results of its operations and
its cash flows for each of the years in the three-year period ended December 31, 2011, in conformity with
accounting principles generally accepted in the United States of America.
Internal Control
Paragraph
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), DUNDER-MIFFLIN, INC.S internal control over financial reporting as of December 31, 2012,
based on criteria established in Internal Control Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission and our report dated January 29, 2012 expressed an
unqualified opinion thereon.
Signature
Report Date
10
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Major Topics
I. Overview of Reporting
II. The Standard Report
III. Reasons for Departing from Standard Report
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10/20/2015
Is the
Departure
Material?
NO
Standard Report
(Unqualified
Opinion)
YES
NO
Is the
Departure
Pervasive?
Qualified
Opinion
YES
Adverse
Opinion
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Qualified Opinion
Issued when departure is material, yet not
pervasive
Report Modifications:
o Introductory and scope paragraphs remain the
same
o Add paragraph preceding the opinion paragraph
explaining departure and detailing $ amounts
involved
o Modify opinion paragraph (In our opinion,
except for the matter discussed in the
preceding paragraph,.)
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Adverse Opinion
Issued when F/S do not present fairly according
to GAAP (i.e., a serious, pervasive departure from
GAAP).
Report Modifications:
o Introductory and scope paragraphs remain the
same
o Add paragraph preceding the opinion
paragraph explaining the departure and
detailing $ amounts involved
o Change opinion paragraph (financial
statements do not present fairly)
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10/20/2015
Major Topics
I. Overview of Reporting
II. The Standard Report
III. Reasons for Departing from Standard Report
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Scope Limitations
Is the
Limitation
Material?
NO
Standard Report
(Unqualified
Opinion)
Alternative
Procedures
Available?
YES
Standard Report
(Unqualified
Opinion)
NO
Qualified
Opinion
YES
NO
Is the
Limitation
Pervasive?
YES
Disclaimer of
Opinion
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10/20/2015
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Lack of Independence
Scenario: Auditors begin engagement but
independence subsequently compromised
Report
o Single paragraph
o Indicates auditors are not independent
o Does not indicate why independence lacking
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10/20/2015
Major Topics
I. Overview of Reporting
II. The Standard Report
III. Reasons for Departing from Standard Report
22
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Situations
o Consistency
o Going-concern
o Rule 203
departures from
GAAP
o Division of
responsibility
o Emphasis of a
matter
Consistency
Relates to:
o Change in accounting principles
o Adjustments to correct misstatements in
previously-issued F/S
Type of changes in accounting principles:
o Accounting principles (GAAP to GAAP)
o Form of reporting entity
o Accounting principles (non-GAAP to GAAP)
o Accounting principle inseparable from changes
in estimates
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10/20/2015
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Going-Concern Uncertainties
Auditors are responsible to evaluate whether
substantial doubt exists about ability of entity to
continue in existence for one year beyond date of
F/S
Options
o Add explanatory paragraph following opinion
paragraph (still unqualified opinion)
o If serious uncertainty, may issue disclaimer of
opinion
o Modified language must include the words
substantial doubt and going concern
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10/20/2015
Division of Responsibility
Group financial statements: Financial
statements comprised of more than one
division/subsidiary/segment/component
Group auditors: Conduct audit of material portion
of the entity
Component auditors: May be engaged by group
auditors to audit divisions, subsidiaries, or
components
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Division of Responsability
Take
Responsibility
for
Component
Auditors
Work?
YES
Standard Report
(Unqualified
Opinion)
YES
Obtain permission
and present
component
auditors report
NO
Refer to
Component
Auditors by
Name?
NO
Indicate Division
of Responsibility
in Unqualified
Opinion
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Effect on Report
30
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10/20/2015
Emphasis of a matter
Call user attention to important matters
Add explanatory paragraph after opinion
paragraph discussing the matter
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Major Topics
I. Overview of Reporting
II. The Standard Report
III. Reasons for Departing from Standard Report
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10/20/2015
Comparative F/S
Continuing Auditors
o Update opinion by considering if previouslyissued opinions still appropriate
o If previously-issued opinions not appropriate,
revise opinion in current report
Predecessor auditors
o With permission, auditors may present reissued
report from predecessor on prior-years F/S
along with their report on current F/S
o If predecessors report not presented, auditors
report must reference predecessors report and
opinion on prior-years F/S
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Reporting Summary
Opinion
Paragraphs modified/added
Material
Pervasive
Qualified
Adverse
Scope Limitation
Qualified
Disclaimer
Other matters
(Consistency, Goingconcern, Rule 203,
Emphasis of a matter)
Unqualified
Unqualified
Unqualified
Unqualified
Intro
Scope
Opinion
Addl
X
X
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