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Auditor's Opinion for an Investment Club

You have been asked to prepare a brief presentation on the nature and purpose of the auditors' opinion for your investment club. The club members would like your presentation to answer these questions:

a. How is the "scope" of an audit determined? What role should the auditors' fee play in setting the scope?
b. How can the auditors examine the financial statements and related records of a company without reconstructing every financial transaction of the period under examination?
c. In the auditors' opinion the auditors state whether the financial statements are presented "fairly." What, if anything, does this opinion of "fairness" have to do with accuracy of the statements?
d. If a company uses an accounting principle that is inconsistent with an FASB pronouncement, what must auditors disclose?
e. What are the general reasons for issuing a qualified opinion?

How would you answer these questions?

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You have been asked to prepare a brief presentation on the nature and purpose of the auditors' opinion for your investment club. The club members would like your presentation to answer these questions:

* How would you answer these questions? I would answer these questions in text-form as detailed below. Then, I would make a PowerPoint presentation of my answers for the investment club.

a. How is the "scope" of an audit determined? What role should the auditors' fee play in setting the scope?

- Dart.org references that, "Audits are conducted in accordance with Generally Accepted Governmental Auditing Standards (GAGAS) and the Institute of Internal Auditor (IIA) Auditing Standards. The scope of the audit and/or review is determined from one or more of the following:

* Information collected during a preliminary survey, which includes interviews with the appropriate client personnel;
* Assessment of risk associated with the client's functions;
* Evaluation of answers received on an internal control questionnaire tailored for the assignment; and/or
* Client requests concerning topics, functions and/or time frames.

Sometimes discoveries or events that occur during a project can change an audit's scope. The client will be notified if the scope changes significantly.

In order to achieve the department's ...

Solution Summary

This solution answers various questions regarding the nature and purpose of an auditor's opinion for an investment club.

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