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18 Cards in this Set
- Front
- Back
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What do Accountants do? |
Accountantsrecord the substance of economic events in order to provide financialinformation for decision making.(e.g. prepare financial statements) |
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Who sets the standard accounting rules for public companies? |
The FASB |
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F/S can include: |
-Intentional Errors -Unintentional Errors -Errors of Omission -Errors of Commission *And lack clarity or transparency |
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Impact of Significant Errors |
-Misinformation misleads -Impact decision of financial statement users -Investors -Lenders -Suppliers |
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What is a financial statement audit? |
An audit provides reasonable assurance about the reliability of the financial statements |
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Auditing (don't need to memorize) |
Auditing is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria. Auditing should be done by a competent and independent person |
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Why do audits exist? |
Need to reduce information risk |
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Assurance services |
1. Attestation services: Audits, Reviews, and other Attest Services 2. Other Assurance services |
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Non-Assurance services |
1. Other management consulting 2. Accounting and Bookkeeping 3. Tax services 4. In between Assurance+Non-Assurance: Certain Management consulting |
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Assurance |
Services to improve the quality of information |
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Attest |
Report on the reliability of an assertion (Attestation Standards) |
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Audit |
Written report on whether F/S are in accordance with GAPP |
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Attestation services` |
Any quantifiable information with established criteria is capable of being attested to Ex: Emmy Awards, Miss America Pageant, Lottery |
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Why are attestation and assurance services expanding? |
New types of information require assurances about the quality of the information |
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Lower information risk --> Lower borrowing cost for auditee |
Audit benefits the auditee (even if required by lender or other user) |
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Sources of information risk |
-Remote information -Biases of provider -Volume of transactions -Complex transactions |
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Types of audits |
-Financial statement audit -Operational audit: concerned with efficiency and effectiveness -Compliance audit: compliance with rules and regulations |
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Who regulates public accounting auditors? |
The PCAOB |
