1.8 - Financial Statement Audit Opinion - An Overview of Auditing for Auditors

[@gnontiehidesire5789]

Best teacher in auditing so far thank you!!

[@dyVal]

Thank you for this excellent, useful and rare material.

[@zabeth1968]

The better explanation I got than those CPA guides like Becker or Wiley, those guides confused me. Thanks :)

[@moheuddin_sehab]

Love this auditing videos!

[@PatrickLeeCPA]

Thanks.. After I get done with managerial accounting, I plan on coming back to auditing and make some way better videos. Patrick

[@rajeshgarg6007]

Hi, i like all your videos, i'm from india and chartered accountant by profession. Keep going. Thanks.

[@htdiah9587]

the best teacher ever. sir if you dont mind, please make a video about audit sampling and how to audit sales. i am a bit confused about that.

[@katibailey5582]

could you post a video on weighted average with work in progress?

[@PatrickLeeCPA]

Hi Kati, Are you talking about cost accounting or managerial accounting? Calculating work in progress under the weighted average method? I'm pretty sure you're not talking about a topic that is covered in Auditing or you might be talking about it under the pretense of auditing work in progress. Can you give me a little more detail? (If I do come up with a video, it won't be for a few days.)

[@katibailey5582]

I didn't see your reply until now. I was talking about cost accounting. I am studying for BEC and your videos are super helpful for the CPA exams.

[@breaunawilliams267]

If a company does not want an audit of controls can the opinion of the disclaimer be given on the controls while the opinion of unqualified is put on the financial statements?

[@PatrickLeeCPA]

So this is a bit of a complicated question. At the very basic level, technically yes, a disclaimer of opinion can be given on controls and an unqualified on the financial statements. However for public companies, audit of internal controls are mandated by SOX. So auditors will still need to look at them from a SOX perspective. Now from a practicality standpoint, companies tend to be okay with the audit of internal controls because it would reduce the cost of performing the actual audit. If auditors didn't test the internal controls, more work would need to be done on the audit of the financial statements and therefore increasing the cost of performing an audit. Reliance on internal controls saves money in the audit. So there would be a huge reasons that a company doesn't want their internal controls to be audited. I haven't studied enough financial statement audit reports to give you a definite answer on it ever being done. Now private companies are not necessarily bound by SOX and therefore that could happen.

[@breaunawilliams267]

@@PatrickLeeCPA Thank you so much for your reply. That was what I was thinking might be the case. However, I thought the general uses of audits would negate the omission of controls, even for private companies. Thanks Again, BreAuna

[@PatrickLeeCPA]

@@breaunawilliams267 It really is up to the user of the financial statements to make their own judgment on whether an audit without an audit of internal controls is uncomfortable for them or not. An auditor's job is to prepare a report and then it's up to the board of directors and shareholders to interpret the results they way they would like. So a private company doesn't need to do an audit of internal controls, but auditors will strongly suggest it because of how closely related both the internal controls and the financial statements are. Hope that makes sense.

[@breaunawilliams267]

@@PatrickLeeCPA It does make sense, as they say, the customer is always right.

[@matrinaortiguesa5876]

I came here to study because I am stuck in this covid quarantine. Happy studying!!! 🍻

[@PatrickLeeCPA]

You got this!