Auditing Exam 1 Phillips

Front 1

Information Risk Causes

Back 1

Remoteness of information
Biases and motives of the provider
Voluminous data
Complex exchange transcations

Front 2

Assurance

Back 2

an independent professional service that improves quality info for decision amkers

Front 3

Attestation

Back 3

CPA firm issues a report about the reliability of an assertion that is the responsibility of another party

example:
Audit of historical financial statements
Review of historical financial statements

Front 4

Types of Audits

Back 4

Operational
Compliance
Financial statements

Front 5

PCAOB

Back 5

Public Accounting Oversight Board:
- oversees the auditors of public accounting
- delegated authority from SEC to make audit standards
- if no standard exist default to the AICPA

Front 6

SEC

Back 6

Security and Exchange Commission
- protects investors
- maintain fair, orderly, and efficient markets
- facilitate capital formation

Front 7

AICPA

Back 7

American Institute of Certified Public Accountants
- sets ethical standards for the profession and U.S. auditing standards for audits of private companies, non-profits, federal, state, and local governments
- develops and grades the CPA exam

Front 8

GAAS

Back 8

Generally Accepted Auditing Standards
- developed by the ASB and issued through the AICPA

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General qualifications and conducts

Back 9

-Adequate training and proficiency
-Independence in mental attitude
-Due professional care

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Field Work performance of the audit

Back 10

-Proper planning and supervision
-Sufficient understanding of the entity, its environment and its internal control
- Sufficient proper evidence

Front 11

Reporting Results

Back 11

- Whether statements were reported in accordance with GAAP
-Circumstances when GAAP not consistently followed
- Adequacy of informative disclosures
- Expression of opinion on financial statments

Front 12

ASB

Back 12

Auditing Standards Board

Front 13

SAS

Back 13

Statements on Auditing Standards

Front 14

SSAE

Back 14

Statements on Standards for Attest Engagements

Front 15

SSARS

Back 15

Statements of Standards for Accounting and Review Services

Front 16

SSCS

Back 16

Statements on Standards for Consulting Services

Front 17

IFAC

Back 17

International Federation of Accuntants

Front 18

ISA

Back 18

International Standards of Auditing

Front 19

Impact of Clarity Project

Back 19

- no longer "report types", now "opinion types"
- no "standard Report"
- Unqualified to Unmodified
- Explanatory paragraph to "emphasis of matter" or "other matter"

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Standard Report Contents

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- Report Title
- Audit Report Address
- Introductory paragraph
- Scope paragraph
- Opinion paragraph
- name of CPA firm
- Audit report date

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Conditions for Receiving Standard report

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- include all F/S
- Three general standards met (responsibilities)
- Complies with 3 performance standards
- F/S comply with GAAP
- No explanatory paragraph or modified wording necessary

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Standard Unqualified Report

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Good report

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Unqualified with explanatory paragraph or modified wording

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Just an extra paragraph attached
- Lack of consistent application of GAAP
- Substantial doubt about going concern
- Auditor agrees with departure from promulgated accounting principles
- Report involving other auditors

Front 24

Qualified report

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generally not good

can result from limitation of scope or an unjustified departure from GAAP but statements overall are fairly stated.

-Scope limitation
- GAAP Departure

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Adverse or Disclaimer

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not good
-materially mistated
- Auditor independence issue (always disclaimer of opionon

Front 26

6 steps to resolve ethical dilmmas

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- obtain relevant facts
- identify ethical issues from facts
- Determine who is affected- stakeholders
- identify alternatives available to the person who must resolve the dilemma
- Identify likely consequence of each alternative
- Decide appropriate action