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11 Cards in this Set
- Front
- Back
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What do financial statements represent?
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Representations of Management
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What is the auditor's primary role?
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To provide an IMPARTIAL(independent) ASSESSMENT of the RELIABILITY of management's financial statements.
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Are Public Companies required to provide audited FS?
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Yes. The SEC requires public companies to provide audited FS.
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Are Private Companies required to provide audited FS?
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No.
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Who can require Private Companies to provide audited FS?
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Creditors can require or negotiate audited FS thru Debt Covenants.
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Give 3 reasons why Management might choose to provide audited FS?
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1. Gain more favorable cost of capital
2. Gain insight from the auditors about adequacy of Internal Controls 3. Gain insight from auditors about how its company company compares with others in the industry |
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What is the definition of a Standard?
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Important criteria which measure quality.
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What does the acronym GAAP stand for?
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Generally Accepted Accounting Principles
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What is GAAP?
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The STANDARDS by which the QUALITY of the FS is judged.
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What does the acronym GAAS stand for?
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Generally Accepted Auditing Standards
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What is GAAS?
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The STANDARDS by which the QUALITY of the AUDITOR'S PERFORMANCE is judged.
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