A1 Flashcards
Generally accepted auditing standards (“GAAS”)
measures of the quality of the auditor’s performance this what they look at so they can figure out how to perform an audit.
Hierarchy
SAS(Private) and PCAOB(Public)
Interpretive Publication
Other auditing publications
An auditor of a nonissuer must conduct the audit in accordance with:
ASB standards.
U.S. generally accepted accounting principles is an accounting term that
Encompasses the conventions, rules, and procedures necessary to define U.S. accepted accounting practice at a particular time.
The term should
indicates a presumptively mandatory requirement, which must be followed in all cases in which the requirement is relevant, except in rare circumstances when departure from the requirement is permitted if there is appropriate justification, performance of sufficient alternative procedures, and thorough documentation.
The term must
indicates an unconditional requirement, which must be followed in all cases in which the requirement is relevant.
The term may/might/could
indicates explanatory material that does not impose a professional requirement for performance.
responsibility to consider but not execute
Steps in the audit cycle
Engagement acceptance
Assess risk and plan response
Perform procedures and obtain evidence
Form conclusion
Report
What is not a practice of professional skepticism
Asking prior year auditors on whether or not the client was open and “fraud-free”
What is not a requirements of an auditor
To have experience with the industry
In order to obtain reasonable assurance, the auditor must
(a) plan the work and properly supervise any assistants;
(b) determine and apply appropriate materiality levels;
(c) identify and assess risks of material misstatement, whether due to error or fraud; and
(d) obtain sufficient appropriate audit evidence.
Requirement for audit evidence
Appropriate
Types of opinions
Unmodified (Nonissuers)
Unqualified (Issuers)
For Audit issues
Qualified
Disclaimer
For FS issues
Qualified
Adverse
GAAP
Auditors use this to see if the transactions in the FS are reported fairly and squarely
The auditor modifies an opinion when
FS as a whole is materially misstated
or
when the auditor doesn’t receive enough information to conclude that they FS is free form error.