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10 Cards in this Set
- Front
- Back
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What is an audit?
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A methodical review and objective examination of an enterprise's financial statements.
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What is the objective of an independent audit?
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The objective of the independent audit is to express an opinion stating whether the financial statements, taken as a whole, are fairly presented in all material respects in conformity with accounting principles accepted in the United States of America.
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What are the three general standards?
Let me give you a TIP on how to remember this! |
The audit must be performed by a person or persons having adeuate technical training and proficiency as an auditor.
In all matters relating to the assignment, an independence in mental attitude is to be maintained by the auditor or auditors. Due professional care is to be exercised in the planning and performance of the audit and the preparation of the report. |
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What are the three standards of fieldwork?
I'd like a piece of PIE! |
The auditor must adequately PLAN the work or must properly supervise any assistants.
The auditor must obtain sufficient understanding of the entity and its environment, including it INTERNAL CONTROL, to assess the risk of material misstatement of the financial statements whether due to error or fraud, and to design the nature, timing, and extent of further audit procedures. The auditor must obtain sufficient appropriate audit EVIDENCE by performing audit procedures to afford a reasonable basis for an opinion regarding the financial statements under audit. |
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What are the four standards of reporting?
All CPAs Do Ok! |
The report shall state whether the financial statements are presented in accordance with generally accepted ACCOUNTING PRINCIPLES.
The report shall identify those circumstances in which such principles have not been CONSISTENTLY observed in the current period in relation to the preceeding period. Informative DISCLOSURES in the financial statements are to be regarded as reasonably adequate unless otherwise stated in the report. The report shall either contain an expression of OPINION regarding the financial statements, taken as a whole, or an assertation to the effect that an opinion cannot be expressed. When an overall opinion cannot be expressed, the reasons should be stated. In all cases where an auditor's name is associated with financial statements, the report should contain a clear-cut indication of the character of the auditor's work if any, and the degree of responsibility the auditor is taking. |
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What should be included in the INTRODUCTORY paragraph of the auditor's standard report?
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A statement that:
The financial statements identified in the report were audited. The financial statements are the responsibility of management. The auditor's responsibility is to express an opinion based upon the audit. |
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What should be included in the SCOPE paragraph of the auditor's standard report?
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Statements that:
The audit was conducted in accordance with the auditing standards generally accepted in the United States of America. For issuers, reference is made to the PCAOB. The audit was planned and performed to obtain reasonable assurance that the financial statements are free of material misstatement. The audit included: Examining evidence on a test basis. Assessing the accounting principles used and significant estimates made by management Evaluating the overall financial statement presentation The audit provides a reasonable basis for the opinion. |
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What should be included in the OPINION paragraph of the auditor's standard report?
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A statement that:
- In the auditor's opinion, the financial statements identified in the introductory paragraph are presented fairly in all material respects. - the financial statements are in conformity with accounting principles generally accepted in the United States of America. |
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Where are GAAS and GAAP referenced in the auditor's standard report?
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GAAS Scope Paragraph
GAAP Opinion Paragraph |
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When is the EXPLANATORY paragraph added to an UNQUALIFIED opinion?
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Necessary and justified departure from GAAP
Going Concern To emphasize a matter regarding the financial statements A justified lack of consistency caused by a material change in GAAP Required SEC regulation S-K quarterly financial data has been omitted of has not been reviewed Supplementary information required by GAAP has been omitted of departs from guidelines, or the auditor's work related to such information is incomplete or insufficient Other information in a document containing audited financial statements is material inconsistent with information appearing in the financial statements |
