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11 Cards in this Set
- Front
- Back
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Define Auditing
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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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What does Evidence Mean?
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Evidence is any information used by the auditor to determine whether the information being audited is stated in accordance with the established criteria.
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Different Forms of Evidence are?
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1. Electronic and documentary data about transactions
2. Written and electronic communication with outsiders 3. Observations by the auditor 4. Oral testimony of the auditee (client) |
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Why auditing should be carried out by an independent, competent person?
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The auditor must be qualified to understand the criteria used and must be competent to know the types and amount of evidence to accumulate to reach the proper conclusion. Independence is necessary to make users rely on auditor’s report despite they are paid fees by the company under analysis.
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What is an Assurance Service?
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An Assurance Service is an independent professional service that improves the quality of information for decision makers. Assurance Services can be done by CPAs or by a variety of other professionals. There are many different types of Assurance Services. One of the most important is the “Attestation Service”, in which CPA firm issues a report about the reliability of an assertion that is made by another party.
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What is an Operational Audit?
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An operational audit evaluates the efficiency and effectiveness of any part of an organization’s operating procedures and methods. Reviews are not limited to accounting and can include the evaluation of organizational structure, computer operations, production methods and any other area in which the auditor is qualified. In an operational auditing establishing criteria for evaluating the information is extremely subjective and, as a consequence, it is more difficult to evaluate whether the efficiency and effectiveness of operations meet these criteria.
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What is an Compliance Audit?
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A compliance audit is conducted to determine whether the auditee is following specific procedures, rules or regulations set by some higher authority. Results of compliance audits are typically reported to management, rather than outside users, because management is the primary group concerned with the extent of compliance with prescribed procedures and regulations. Therefore a significant portion of work of this type is often done by auditors employed by the organizational units.
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What is an Financial Statement Audit?
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A financial statement audit is conducted to determine whether the financial statements being verified are stated in accordance with specified criteria. Normally the criteria are U.S., Italian Or international accounting standard.
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The 3 main factors of a CPA firms organizational structure are.
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1.Need for independence from clients, which permits auditors to remain unbiased in drawing conclusions about the FSs.
2.The importance of a structure to encourage competence, which permits auditors to conduct audits and perform other services efficiently and effectively. 3.The increased litigation risk faced by auditors. |
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What are Auditing Standards?
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Auditing Standards are general guidelines to aid auditors in fulfilling their professional responsibilities in the audit of historical financial statements. They include consideration of professional qualities, such as competence and independence, reporting requirements and evidence.
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What is International Standards on Auditing (ISAs)?
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ISAs are issued by the International Auditing and Assurance Standard Board with the purpose of improving the uniformity of auditing practices throughout the world. ISAs do not override a country’s regulations governing the audit but most countries base their auditing standards on ISAs, modified as appropriate for each country’s regulatory environment and statutory requirements.
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