9/2 Class

Question 1

Solutions for homework

Answer 1

Ch 1
3
2
2
3
2
3
4
2
1

Question 2

Generally Accepted Auditing Standards (GAAS)

Answer 2

Framework

Question 3

GAAS General Standards ON THE TEST

Answer 3

1. Audit must be performed by a competent individual(Adequate technical training and proficiency)
2. It must be independent(independence in mental attitude)
3. due professional care must be exercised(Due professional care)

Question 4

Standards of Field Work

Answer 4

1. The work is to be adequately planned and assistants, if any, are to be properly supervised(Adequately planned and properly supervised)
2. sufficient understanding of internal controls(sufficient understanding of entity & environment, including internal controls)
3. sufficient appropriate evidence must be found to base an opinion off of(sufficient appropriate evidence)

Question 5

Standards of Reporting

Answer 5

1. The report shall state whether the financial statements are presented in accordance with GAAP
2. Identify circumstances in which such principles have not been consistently followed for the current period in relation to the prior period(principles applied consistently)
3. info disclosures in the financial statements are to be regarded as reasonably adequate(informative disclosures)
4. (expression of opinion-as appropriate)

Question 6

For private companies AICPA GAAS acronym

Answer 6

Training & Proficiency
Independence in mental attitude
P Due Professional Care
Plan Work and properly supervise
I Understanding entity environment Internal Control
Third std of field work, sufficient appropriate evidence

Opinion about whether fs are GAAP
Verify that GAAP is consistently applied
Evaluate disclosures
Report with opinion or reasons for why it can’t be stated

Question 7

Public Company Accounting Oversight Board (PCAOB) Auditing Standards

Answer 7

Adopted GAAS initially
currently 17 PCAOB standards
public companies must be audited in accordance with PCAOB auditing

Question 8

International Standards on Auditing

Answer 8

auditing standards for international companies

Question 9

SAS Statement on Auditing Standards

Answer 9

minimum standard for all audit engagements

gets an AUC number as well

Question 10

auditors responsibility for detecting mistatements

Answer 10

F/S presented in accordance with GAAP
Free of material misstatements
responsible to detect various types of mistatements

Question 11

materiality

Answer 11

sufficiently important to influence the decision made by reasonable users of financial statements

Question 12

GAAP

Answer 12

authoritative body
FASB
GASB
SEC
IASB
substance over form
reasonable range of limits

Question 13

Quality Control in CPA firms

Answer 13

SAS 25
six elements of quality control:
Leadership Responsibilities 
Relevant ethical requirements
acceptance & continuance of clients & engagements
engagement teams
engagement performance
monitoring

Question 14

Peer Review

Answer 14

mandatory for AICPA

applicable to private audits

Question 15

PCAOB Reviews

Answer 15

mandatory for PCAOB registered firms, every three years under 100 and every year otherwise