Mac 730 - Audit

Front 1

FS auditing is the process of ________ to _______ about economic actions / events.

Process involves 3 steps
1. ____________
2. ____________ - criteria = ?
3. ____________ - Audit report usually integrated with report on FS and _______. If auditor has no reservations, known as ___________.

Why F/S users need assurance?
1. ___________
2. ___________
3. ___________
4. ___________

Back 1

attesting; assertions

1. Gathering evidence to attest to assertions
2. Evaluating evidence against obj. criteria; GAAP or IFRS
3. Communicating the audit conclusion to interested parties; internal controls; unqualified report

1. Potential bias in Info
2. Remoteness of users
3. Complexity
4. Riskiness of investments

Front 2

SARBOX - year _____. Only applies to ______

5 main critical improvements for F/S and auditing...
1. _____________
oversight structure that ensures accountability to shareholders / stakeholders (workers, lenders, etc..). SARBOX requires cos to _____________ to provide oversight of ___________.

2. _____________
_______ required to give assesment of ________

3. _____________
Created the _________ to set audit standards.

4. _____________
Audit committee should have sole power to ____________; Consulting work cannot be performed for audit clients*.
Mandatory _____ every ___ years of _________.
5. _____________

Back 2

2002; public companies;

1. Improved corp. goverance; establish independent audit committee; all audit functions (internal and external);

2. Required reporting on Internal Controls. external auditor; internal controls;

3. Audit Standard Setting; PCAOB (Public Company Accounting Oversight board)

4. Auditor Independence; hire and fire an audit firm; rotation; five; engagement partner;

5. Public Expectation of Auditors;

Front 3

Assurance services: include _______ and _____ services and can be provided on _______ info or other info (ie. quality of business processes; reliability of comp. systems; accuracy of performance data)

Attestation Service = subset of assurance and always involve a 3rd party;

Audit = F/S

Back 3

audit; attestation; financial;

Front 4

Audit Opinion Formulation Process:
I. ____________
II. _____________
III. ______________
IV. _____________
V. ____________

Back 4

I. Assessing client acceptance
II. Understanding the client (update knowledge on industry, business, etc..)
III. Obtain Evidence about Controls and Determine F/S Impact.
IV. Obtaining substanitive Evidence about account assertion (making sure accounts balance)
V. Wrapping up Audit / Decisions.