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59 Cards in this Set
- Front
- Back
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How many Standards of GAAS are there? |
10
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What's the acronym to remember the 10 Standards of GAAS?
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TIE-PIE-GCDO
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What are the 10 Standards of GAAS?
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General Stds: |
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What is the Nature of the 3 General Stds?
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Personal in nature |
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What is the Nature of the 3 Field Work Stds?
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Evidence gathering in nature
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What is the Nature of the 3 Reporting Stds?
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Relate to the Language used in the auditor's report |
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What does auditor Training mean?
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Have adequate TECHNICAL TRAINING and PROFICIENCY to perform the audit.
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What does auditor Independence mean?
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Maintain Independence in MENTAL ATTITUDE in all matters relating to the audit.
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What does auditor Due Professional Care mean?
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Exercise due professional care in the PERFORMANCE of the audit and the PREPARATION of the report.
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What does auditor Planning and Supervision mean?
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Adequately PLAN the work and must properly SUPERVISE any assistants.
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What is the auditor's responsibility regarding Internal Control?
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Obtain a SUFFICIENT UNDERSTANDING of the entity and its environment, including its internal control, TO ASSESS risk of material misstatement of the financial statements, whether due to fraud or error; and to DESIGN the nature, timing, and extent of further audit procedures.
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What is the auditor's responsibility regarding Evidence?
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Obtain sufficient appropriate audit evidence by PERFORMING AUDIT PROCEDURES to AFFORD A REASONABLE BASIS FOR AN OPINION regarding the financial statements under audit.
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What is the auditor's responsibility regarding GAAP?
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Must STATE in the auditor's report whether the financial statements are presented in accordance with (GAAP).
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What is the auditor's responsibility regarding Consistency?
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Must IDENTIFY in the auditor's report those CIRCUMSTANCES in which PRINCIPLES have not been consistently observed in the current period in relation to the preceding period."
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What is the auditor's responsibility regarding Disclosure?
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When the auditor determines that informative DISCLOSURES are NOT REASONABLY ADEQUATE, must state so in the auditor's report.
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What is the auditor's responsibility regarding Opinion?
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1. Must either express an opinion regarding the financial statements, taken as a whole, or state that an opinion cannot be expressed, in the auditor's report.
2. When the auditor cannot express an overall opinion, the auditor should state the reasons therefore in the auditor's report. 3. In all cases where an auditor's name is associated with financial statements, the auditor should clearly indicate the character of the auditor's work, if any, and the degree of responsibility the auditor is taking, in the auditor's report. |
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Guidance Applicable to GAAS
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There is relevant Guidance Applicable to GAAS.
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What are the guidances related to Guidance Applicable to GAAS?
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1. Statements on Auditing Sds (SASs)
2. Interpretive Publications 3. Other Auditing Publications 4. AICPA Quality Control Stds |
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What SAS describes and clarifies the guidance that is applicable to GAAS?
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SAS 95
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What are SASs?
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Interpretations of GAAS; Must be followed by auditors per Rule 202 of the AICPA Code of Prof Conduct.
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In regards to the SASs, what are the three expectations of the auditor?
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1. Have sufficient knowledge of the SASs to identify those applicable to the audit.
2. Be prepared to justify any departures from the SASs. 3. MATERIALITY and AUDIT RISK also underlie the application of the 10 standards (GAAS) and the SASs, particularly those related to field work and reporting. |
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What is the auditor's responsibility in regards to departures from the SASs?
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Must be prepared to justifty them.
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What are Interpretive Publications?
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Include:
1. Auditing interpretations of the SASs. 2. Auditing guidance included in AICPA Audit & Accounting Guides 3. AICPA Auditing Statements of Position (and the appendices to the SASs). |
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Give 3 facts relating to Interpretive Publications.
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1. Interpretive publications are not auditing standards.
2. These are issued under the authority of the Auditing Standards Board after all ASB members have had an opportunity to comment on the interpretive publication. 3. Auditors should be aware of (and consider) interpretive publications applicable to their audits. When auditors do not apply such auditing guidance, they should be prepared to explain how they complied with the SAS provisions related to such interpretive publications |
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Give 4 examples of Other Auditing Publications.
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Articles in the Journal of Accountancy, AICPA's CPA Letter, Continuing Professional Education Programs, & Textbooks.
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What is the Authority regarding Other Auditing Publications?
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Auditing publications have no authoritative status. However, they may help the auditor understand and apply the SASs.
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To assess Appropriateness of the Other Auditing Publications, what must one consider?
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1. The degree to which the PUBLICATION is RECOGNIZED as helpful in applying the SASs and the degree to which the AUTHOR is RECOGNIZED as an authority on auditing matters.
Note: Other auditing publications reviewed by the AICPA Audit and Attest Standards staff are presumed to be appropriate. |
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Section: Relationship of GAAS to the AICPA's "Quality Control Standards"
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Section: Relationship of GAAS to the AICPA's "Quality Control Standards"
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What is an individual audit engagement governed by?
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GAAS
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What is a CPA firm's collective portfolio of accounting and auditing services governed by?
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The Quality Control Standards
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Guidance on the Quality Control Standards is provided by what?
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The AICPA's Stmts on Quality Control Standards (SQCS) issued by the Auditing Standards Board.
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Which Quality Control Stmt guides a Firm's System of Quality Control?
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QC10 - A Firm's System of Quality Control
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T or F A CPA firm is required to have a "system of quality control" for accounting and auditing services regarding the performance of engagements.
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True
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The System of Quality Control regarding engagements must be in accordance with what?
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Professional Standards, Regulatory and Legal requirements, and the Issuance of Reports that are appropriate in the circumstances.
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What is the Nature and Scop of the System of Quality Control for a CPA firm?
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The policies and procedures will vary with the circumstances (e.g., firm size and number of offices, complexity of services offered, experience of professional staff, etc.)
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What are the Inherent Limitations of the System of Quality Control for a CPA firm?
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Similar to any internal control system, a quality control system provides reasonable (a high, but not absolute) assurance, reflecting implicit cost-benefit trade-offs.
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What are the 6 elements of a Quality Control System?
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1. Leadership Responsibilities
2. Relevant Ethical Requirem'ts 3. Acceptance & Continuance of Clients Engagements 4. Human Resources 5. Engagement Performance 6. Monitoring |
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Define the Leadership Responsibility element in a Quality Control System.
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Policies and procedures should promote an internal culture that EMPHASIZES QUALITY (the "tone at the top").
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Define the Relevant Ethical Requirements element in a Quality Control System.
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Policies and procedures should address the INDEPENDENCE OF PERSONNEL as necessary (should obtain written confirmation of compliance with independence requirements from all appropriate personnel at least annually).
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Define the Acceptance and Continuance of Clients and Engagements element in a Quality Control System.
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Policies and procedures should carefully ASSESS THE RISKS associated with each engagement (including issues related to management integrity) and to undertake only engagements that can be completed with professional competence.
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Define the Engagement Performance element in a Quality Control System.
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Policies and procedures should FOCUS ON COMPLIANCE with all applicable firm and professional standards and regulatory requirements, and encourage personnel to consult as necessary with professional (or other) literature or other human resources within or outside of the firm for appropriate guidance.
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Define the Monitoring element in a Quality Control System.
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Policies and procedures should provide an ON-GOING ASSESSMENT of the ADEQUACY OF DESIGN and the OPERATING EFFECTIVENESS of the system of quality control .
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What does the Quality Control Standards say about handling Differences of Opinion?
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The firm should establish policies and procedures for dealing with and resolving differences of opinion within the engagement team, with those consulted, and between the engagement partner and the engagement quality control reviewer. CONCLUSIONS REACHED ARE: Documented and implemented and that the report is not released until the matter is resolved.
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What are the two types of Professional Requirements that the various AICPA standards distinguish between?
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1. Unconditional Requirement
2. Presumptively Mandatory Requirement |
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What does the Unconditional Professional requirement mean?
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Must comply with the requirement without exception (indicated by "MUST" in applicable standards).
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What does the Presumptively Mandatory professional requirement mean?
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In rare circumstances, the practitioner may depart from such a "requirement," but must document the justification for the departure and how the alternate procedures performed were adequate to meet the objective of the "requirement" (indicated by "SHOULD" in applicable standards).
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What words are considered Descriptive Guidance within the body of the standards that do not impose a "Requirement?"
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Descriptive guidance is indicated by "MAY," "MIGHT," or "COULD" in applicable standards.
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What are the 3 types of categories of standards within GAAS?
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General Stds
Field Work Stds Reporting Stds |
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What governs an individual audit engagement?
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GAAS
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What govern's a CPA firm's collective portfolio of accounting and auditing services (related to financial statements)?
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The Quality Control Standards
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What is the name for the Quality Control Standards?
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Statements on Quality Control Standards (SQCS)
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Who issues the Statements on Quality Control Stadards (SQCS)?
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The AICPAs Auditing Standards Board
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Is a CPA firm required to have a system of quality control?
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Yes
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What services does a CPA firm's quality control system cover?
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Accounting & auditing (attestation, compilaton, & review)
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What is the system of quality control's Basic Requirement?
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To provide "reasonable assurance" of:
1. PERFORMING engagements in accordance with PROFESSIONAL STDS and REGULATARY and LEGAL requirements 2. ISSUING REPORTS that are appropriate in the circumstances |
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A firm should document its quality control policies and procedures. T or F
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True
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The firm should communicate its quality control policies and procedures to its personnel. Is this communication required in writing?
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No
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What is the most important aspect of the Relevant Ethical Requirement in a QCS?
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Independence
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How often should a firm obtain written confirmation of compliance with independence requirements from all necessary personnel?
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Annually (paper or electronic)
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