Section 4

1. Section 4 Other Engagements

2. Introduction • Public accountants also perform 1. 2 3. • Principal type of audit engagement?

3. Special Auditing Services • Accounting services, what must public accountants comply with? • Public accountants must comply with?

4. A number of auditing services besides financial statements • Audit of financial information • Compliance with a contractual agreement • Cash-basis financial statements • Personal financial statements

5. Special Reports • Special reports used to describe the following: • Financial information other than F/S • Compliance with contractual agreements • Results of applying specified auditing procedures

6. 1. Audit Reports on financial information other than financial statements • Specified elements, accounts or items • E.g.. Lease agreement provisions • Modification of the standard auditors report

7. AUDITORS’ REPORT ON SCHEDULE OF GROSS SALES To Landlord Limited: At the request of Client Limited, we have audited the schedule of gross sales (as defined in paragraph 2 of the lease agreement dated My 3, 200X, with Landlord Limited) at the King Street store (city, province) for the year ended December 31, 200X. This financial information is the responsibility of the management of Client Limited. Our responsibility is to express an opinion on this financial information based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial information is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial information. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial information. In our opinion, this schedule present fairly, in all material respects, the gross sales of Client Limited at its King Street store (city, province) for the year ended December 31, 200X, in accordance with the provisions of paragraph 2 of the lease agreement referred to above. Carney, Black and Heath, LLP Chartered Accountants Hamilton, Canada March 1, 200Y

8. 2. Audit Reports on compliance with agreements, statutes and regulations. • Debt agreements • E.g.. Prepared for bond trustees • Again a modification of the standard auditors report

9. AUDITORS’ REPORT ON COMPLIANCE WITH AGREEMENT To Trust Company Limited: We have audited Client’s Limited compliance as at December 31, 200X, with the criteria established by [describe nature of provisions to be complied with] described in sections to inclusive of [name of agreement] dated , 200X, with [name of party to agreement] and the interpretation of such agreement as set out in note 1 attached. Compliance with the criteria established by the provisions of the agreement is the responsibility of the management of Client Limited. Our responsibility is to express an opinion on this compliance based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether Client Limited complied with the criteria established by the provisions of the agreement referred to above. Such an audit includes examining, on a test basis, evidence supporting compliance, evaluating the overall compliance with the agreement, and where applicable, assessing the accounting principles used and significant estimates made by management. In our opinion, Client Limited is in compliance, in all material respects, with the criteria established by [the provisions to be complied with] described in sections to of this agreement. Carney, Black and Heath, LLP Chartered Accountants Hamilton, Canada Date

10. 3. Reports on the results of applying specified auditing procedures to financial information other than financial statements. • Different from the previous engagements just discussed • Informed individuals must have • What should the public accountants report or letter include?

11. Items included: • Specifically identify the financial information • Specify procedures • State only factual results • State that an audit has not been performed • Indicate and restrictions on report distribution • Disclose the addressee, accountant name, and date

12. Other Special Reports • Reports prepared on a basis of accounting other than GAAP • Personal financial statements

13. 1. Reports on cash-basis statements. • Most common type • Why is it not GAAP? • More descriptive titles

14. AUDITORS’ REPORT To the Shareholders of XYZ Company. We have audited the accompanying statement of assets and liabilities arising from cash transactions of XYZ Company as at December 31, 200X, and the statements of revenue collected and expenses paid for the year then ended. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance 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. As described in note 1, these financial statements were prepared on the basis of cash receipts and disbursements and are not intended to be a presentation in accordance with generally accepted accounting principles. In our opinion, these financial statements present fairly, in all material respects, the assets and liabilities arising from cash transactions of XYZ Company as at December 31, 200X, and the revenue collected and expenses paid during the year then ended, on the basis of accounting described in note 1. Carney, Black and Heath, LLP Chartered Accountants Toronto, Canada March 1, 200Y

15. 2. Reports on personal financial statements. • What type of person? • GAAP is quite different • Different descriptive titles • Issue of completeness

16. Accounting Services • What types of companies? • Review services and compilation engagements

17. A. Review services. • CICA 8100, a review consists of: 1. 2. 3.

18. Purpose of a review? • Public accounts should ensure that • The subject matter is • Appropriate criteria for

19. Review Engagement letter • Review in accordance with GAAP. • Form and content of report. • Client’s management responsibility • Detection of fraud and error.

20. Professional standards for a review CICA 8100 • General Standard • Adequate technical training and proficiency in conducting reviews • Due care • Objective state of mind

21. Review standards • Adequate planning and proper execution • Possess or acquire sufficient knowledge of the business • Plausibility

22. Reporting standards • Scope and nature • The report should include: • Has anything come to the accountants attention? • That no assurance can be provided

23. CICA 8100 - Enquiry, analytical procedures, and discussion • What are enquiries concerned with? • What type of analytical procedures? • Discussions with whom?

24. Review engagement report • Subject matter reported on. • Review made in accordance with • Review consisted primarily of • Not an audit • When there are no reservations – unqualified negative assurance

25. Cannot express an unqualified negative assurance? • Departure from appropriate criteria • Inappropriate or unreasonable interpretation • Information not available

26. Reservation in the report • Qualification • Adverse statement • Denial of assurance • A reservation paragraph

27. Paragraph on restriction of use • CICA suggests the following: • This report is intended to be used solely for [indicate specific use] and is not to be referred to nor distributed to any person not a member of management of Client Limited or [name of person to whom the report is addressed].

28. Types of review engagements • Interim and annual F/S • Financial information other than F/S • Compliance with agreements and regulations

29. 1. Interim and Annual F/S • Should follow additional requirements of CICA 8200 • Some specific procedures

30. Enquiries: 1. 2. 3. 4.

31. Analytical procedures: 1. 2. • Previous engagements:

32. Other public accountants: • Discussing the F/S: • Letter of representation:

33. REVIEW ENGAGEMENT REPORT To [person engaging the public accountant]: We have reviewed the balance sheet of XYZ Limited as at ……………200X, and the statements of income retained earnings, and cash flows for the year then ended. Our review was made in accordance with generally accepted standards for review engagements and accordingly consisted of enquiry, analytical procedures and discussion related to information supplied to us by the company. A review does not constitute an audit, and consequently, we do not express an audit opinion on these financial statements. Nothing has come to our attention as a result of our review that causes us to believe that these financial statements are not, in all material respects, in accordance with generally accepted accounting principles. Carney, Black and Heath, LLP Chartered Accountants Toronto, Canada Date

34. 2. Financial information other than F/S • Includes specific financial statement items • Same review procedures but should also look at CICA 5805 • Report should include:

35. REVIEW ENGAGEMENT REPORT To ABC Company At the request of Client Limited, we have reviewed [name of financial information] of XYZ Limited as at ……………200X, (calculated in accordance with the provisions of Section X of the ……. agreement with ABC Company dated May 5, 199X, and the interpretations set out in Note 1). Our review was made in accordance with generally accepted standards for review engagements and accordingly consisted of enquiry, analytical procedures and discussion related to information supplied to us by the company. A review does not constitute an audit, and consequently, we do not express an audit opinion on this [name of financial information]. Nothing has come to our attention as a result of our review that causes us to believe that this [name of financial information] is not, in all material respects, in accordance with [the basis of accounting]. Carney, Black and Heath, LLP Chartered Accountants Toronto, Canada Date

36. 3. Compliance with agreements and regulations • What does this type of engagement include? • CICA 8600: 1. 2. 3. 4.

37. REVIEW ENGAGEMENT REPORT To [person engaging the public accountant] We have reviewed Client Limited's compliance as at December 31, 200X, with [covenants or conditions to be complied with] described in sections ….. to ….. inclusive of the agreement dated November 3, 199X, with [party to the agreement] and the following interpretations of certain provisions of such agreement: [describe interpretations].Our review was made in accordance with generally accepted standards for review engagements and accordingly consisted of enquiry, analytical procedures and discussion related to information supplied to us by the company. A review does not constitute an audit, and consequently, we do not express an audit opinion on this matter. Nothing has come to our attention as a result of our review that causes us to believe that the company is not in compliance with [covenants or conditions to be complied with] described in sections ….. to ….. inclusive of the agreement [and related interpretations] referred to above. Carney, Black and Heath, LLP Chartered Accountants Toronto, Canada Date

38. B. Compilation services. • A compilation involves • The purpose • Not intended to provide any assuarnace

39. When should accountant be involved? • 1. • 2. • Need an agreement letter

40. The agreement letter. • The conduct of the engagement • Client's responsibility • Cannot detect fraud or error • Appropriateness of F/S • No assurance • Uninformed readers • Notice to reader

41. CICA 9200. • Adequate technical training and proficiency in accounting • Adequate planning and proper execution • Must not accept unreasonable information

42. The Notice To Reader. • Should include the following matters: • Source of information for the compilation • No audit or review • Caution readers • Should not express what?

43. NOTICE TO READER To [person engaging the public accountant] We have compiled the balance sheet of Client Limited as at December 31, 200X, and the statements of income, retained earnings, and cash flows for the [period] then ended from information provided by management (the proprietor). We have not audited, reviewed or otherwise attempted to verify the accuracy or completeness of such information. Readers are cautioned that these statements may not be appropriate for their purposes. Carney, Black and Heath, LLP Chartered Accountants Toronto, Canada Date • Lack of Independence • I am not independent of X Limited because my spouse owns 25 percent of the shares of the company.

44. C. Comfort letters & Letters of consent. • Prospectus • Purpose of a comfort letter

45. Addressed to a regulatory authority • Does the following: • Identifies company • Specifies the F/S • States the status of the examination • Provides negative assurance • State the use of the letter

46. Purpose of a letter of consent • Auditors consenting to the use of their audited F/S • Comply with CICA 7100

47. Underwriters • Comfort letter to underwriters • Auditor’s independence • An opinion • If no audit performed? • Negative assurance • Use of the letter

48. D. Reporting on Future-Oriented F/S. • Who is interested in future-oriented F/S? • Most common types?

49. What do users want? • What types of evidence does the accountant gather? • Must not vouch for achievability

50. AUDITORS’ REPORT ON FINANCIAL FORECAST To the Directors of X Limited: The accompanying financial forecast of X Limited, consisting of a balance sheet as at [date] and the statements of income, retained earnings, and cash flow for the [period(s)] then ending, has been prepared by management using assumptions with an effective date of [effective date]. We have examined the support provided by management for the assumptions, and the preparation and presentation of this forecast. Our examination was made in accordance with the applicable Auditing Guideline issued by the Canadian Institute of Chartered Accountants. We have no responsibility to update this report for events or circumstances occurring after the date of our report. • In our opinion: • As at the date of this report,the assumptions developed by management are suitably supported and consistent with the plans of the company, and provide a reasonable basis for the forecast; • This forecast reflects such assumptions; and • The financial forecast complies with the presentation and disclosure standards for forecasts established by the Canadian Institute of Chartered accountants. Since this forecast is based on the assumptions regarding future events, actual results will vary from the information presented and the variations may be material. Accordingly, we express no opinion as to whether this forecast will be achieved. Carney, Black and Heath, LLP Chartered Accountants Toronto, Canada Date