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CASH FLOW - Coggle Diagram

- - - - The current year's working papers should refer to the prior year's working papers documenting such evidence involved and the factors considered to confirm that such evidence is still current.
        It is not necessary to include copies of those working papers from the previous year in the files for the current year.
    - - Files
        Each stage of the auditor's work must be accompanied by a compiling file of the work carried out and the evidence obtained. Thus there will be a planning file, a permanent information file and current information
- - - - Recipient of the report: The report can be addressed to the entity whose financial statements have been audited or to its board of directors or its shareholders. It can also be addressed to the partners or the business owner, as the case may be. Occasionally, the auditor is engaged to audit the financial statements of an entity that is not his client.
        
        Introductory paragraph This paragraph specifies:
        
        The financial statements that were audited.
        
        Management's responsibility for the financial statements
        
        The auditor's responsibility for expressing an opinion on those financial statements.
        
        The auditor's report covers only the financial statements identified in the report and the disclosure in the related notes. Management, not the auditor, prepares the information that forms the basis of the financial statements. The financial statements are representations of management.
        
        Scope paragraph
        The auditor indicates having complied with the standards established by the profession for conducting the audit. The standards establish criteria for the professional qualifications of the auditor, the nature and scope of the criteria applied to the audit and the preparation of the independent auditor's report.
        Among other things, the auditor will obtain an understanding of the client's business and its internal control structure, perform analytical procedures, and gather sufficient and competent evidence based on the perceived risk of significant error identified in planning the audit.
        
        Opinion paragraph
        The Independent Public Accountant does not express any guarantee. An auditor's opinion is based on his professional judgment and he is reasonably certain of his conclusions. Here the emphasis is on relative importance.
        
        Signature and date of the report The auditor's report is signed with the name of the Independent Public Accountant because the firm assumes responsibility for the audit.
        The date of the auditor's report is important because it represents the date (generally the date the work was completed in the client's office) up to which the auditor obtained reasonable assurance that the financial statements do not contain material misstatements.
        
        Changes in accounting principles The final explanatory paragraph is added to the auditor's report when management changes accounting principles (such as changing from accelerated to straight-line depreciation) or the method of applying accounting principles (such as a significant change in the method of determining retirement liabilities or the application of the percentage of completion accounting method for long-term contracts) that have a significant impact on the comparability of the financial statements in the periods presented.