General audit procedures
-Read min for board of directors' meetings
-Review contracts
-Review FS
Specific audit procedures
-Examine docs from attorneys
-Obtain legal letter
-Obtain mgmt. representation letter
Legal letter
An audit inquiry sent to the entity's attorneys to obtain or corroborate information about litigation, claims, and assessments.
*Refusal is a scope limitation
Type I
Exists during the BS date
*requires adjustment to the FS
Type II
Didn't exist during the BS date
*Only requires disclosure
What can an auditor do if a subsequent event occurs
Can change the date of the audit report or release a statement stating that the auditor is not responsible for impact of subsequent event
Going concern
an entity's ability to continue operating for at least a year
Indicators that a company is a going concern risk?
-Negative financial trends
-Other financial differences
-Internal problems
-External problems
Holding period
PCAOB- release within 45 days, hold for 7 years
Other- release within 60 days, hold for 5 years
What do you do if subsequent event happens after audit report has been issued?
Contact company and ask them to revise FS, if they don't involve legal counsel
Agreed-upon procedures report
A report providing a summary of findings
NOT an audit