Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
25 Cards in this Set
- Front
- Back
3 Fundamental Principles
|
Responsibility Principle, Performance Principle and Reporting Principle
|
|
Key elements of the Responsibility Principle
|
a) approp. competence and capabilities to perform audit; b) comploying with relevant ethical requirements; c) professional skepticism and professional judgement
|
|
Key elements of Performance Principle
|
Obtain reasonable assurance with high but not absolute, the auditor: a) plans work and properly supervises assistants; b) applies approp. materiality levels; c) IDs and assess risk of material misstatements; d) Sufficient and approp. audit evidence
|
|
Key elements of Reporting Principle
|
Auditor expresses an opinion based on evidence obtained in a written report
|
|
Audit Procedures
|
Particular and specialized actions that auditors take to obtain evidence in a specific audit engagement.
|
|
Auditing standards
|
Audit quality guides that remain the same throughout the audit.
|
|
Independence in fact
|
Allows auditors to form an opntion on the financial statements w/o being affected by influences
|
|
Independence in appearance
|
Others' perceptions of auditor's independence.
|
|
Due Care
|
Reflects a level of performance that would be exercisede by reasonable auditors in similar circumstances. Includes Professional Skeptism and Judgement
|
|
Professional Skepticism
|
State of mind that is characterized by appropriate questioning and critical assessment of audit evidence.
|
|
Professional Judgment
|
Application of relevant training and experience in making informed decisions.
|
|
5 elements of Fundamental Principle: Assurance
|
a) reasonable assurance; b) planning and supervision; c) materiality; d) risk assessment; e) audit evidence
|
|
Reasonable Assurance
|
Performance Principle. Recognizes that GAAS may not detect all material misstatements
|
|
Planning and Supervision
|
Performance Principle. a) preparing audit plan and supervising audit work; b) obtaining knowledge of client's business; c) dealing with difference of opnion among acctg. firm's own personnel.
|
|
Materiality
|
Performance Principle. Recognizes that auditors should focus on matters that are important to financial statement users
|
|
Risk Assessment
|
Performance Principle. ID important concerns (risks) they face in the audit.
|
|
Risk Assessment: Internal control
|
a system's capability to prevent or detect material acctg. frauds or errors and provide for their correction on a timely basis
|
|
Risk Assessment: Risk of Material Misstatement (RMM)
|
Inherent Risk: probability that a misstatement or error will occur; and Control Risk: probability that a misstatement or error will not be prevented or detected in a timely manner
|
|
Risk Assessment: Audit Evidence
|
Performance Principle. evaluate sufficient appropriate evidence to afford a reasonable basis for their opinion.
|
|
Detection Risk
|
The risk that audit team's procedures will fail to detect a material misstatement.
|
|
Reporting Principle: Unqualified Report
|
"good" in the sense that auditors are not calling attention to anything wrong w/ the financial statements
|
|
Reporting Principle: Adverse Report
|
Opposite of unqualified, concludes that the financial statements are not presented in conformity w/ GAAP
|
|
Reporting Principle: Qualified Report
|
except for a relatively isolated departure, finanical statements are presented in conformity with GAAP.
|
|
Reporting Principle: Disclaimer of Opinion
|
Auditors may choose not to express an opinion on the financial statements.
|
|
Auditor's Report Components
|
a) Report Title; b) Addressee; c) Introductory Para: Responsibility of managment and the auditors; d) Scope Para: PCAOB/GAAS mentioned; e) Opinion Para: opinion on financial statements in conformance to GAAP; f) Explanatory Para:
g) IC para: |