A1 - Audited F/S & Professional Standards Flashcards
The preparation and fair presentation of the financial statements requires:
1 )
2 )
3 )
1) identification of the applicable financial reporting framework;
2) preparation and fair presentation of the financial statements in accordance with the framework; and
3) inclusion of an adequate description of the framework in the financial statements.
* A1-4*
The auditor is responsible for the performance of a properly planned and executed audit in accordance with ___.
Generally accepted auditing standards (GAAS).
A1-6
Generally accepted auditing standards (GAAS) for the audits of nonissuers are issued by the ____ in the form of ____.
Generally accepted auditing standards (GAAS) for the audits of nonissuers are issued by the AICPA’s Auditing Standards Board (ASB) in the form of **Statements on Auditing Standards (SAS). **
A1-6
The Public Company Accounting Oversight Board (PCAOB) was established pursuant to the ____.
Sarbanes-Oxley Act of 2002
A1-6
The International Auditing and Assurance Standards Board (IAASB), a standard setting board of the ___, establishes ____.
The International Auditing and Assurance Standards Board (IAASB), a standard setting board of the International Federation of Accountants (IFAC), establishes International Standards on Auditing (ISA).
A1-7
The SEC publishes their regulations in ___ and ___. Final standards adopted by the PBAOB do not become effective until they are approved by the ___.
The SEC publishes their regulations in **Accounting Series Releases **and Regulation S-K. Final standards adopted by the PBAOB do not become effective until they are approved by the SEC.
A1-8
Specific language is used within the SASs and PCAOB Auditing Standards to clarify the auditor’s level of responsibility:
The terms “must” or “is required” indicate:
The term “should” indicates:
The terms “may”, “might”, and “could” indicate:
The terms “must” or “is required” indicate an unconditional requirement, which must be followed in all cases where the requirement is relevant.
The term “should” indicates a presumptively mandatory requirement, which must be followed in all cases where the requirement is relevant, except in rare circumstances in which departure from the requirement is permitted if there is appropriate justification, performance of sufficient alternative procedures, and thorough documentation.
The terms “may”, “might”, and “could” indicate: explanatory material that does not impose a professional requirement for performance.
A1-9
The ISAs contain only one category of professional requirements that require____.
The ISAs contain only one category of professional requirements that require the auditor to comply with the requirements when relevant, except in rare circumstances, similar to the presumptively mandatory requirements under U.S. auditing standards.
US Auditing Standards has 3 levels of auditing guidance:
- AICPA Statements on Auditing (SASs) and PCAOB Auditing standards
- Interpretive Publications
- Other Auditing Publications
A1-9
The overall objectives of the auditor when conducting a F/S audit are:
- to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to error or fraud, which enables the auditor to express an opinion on whether the financial statements are presented fairly, in all material respects, in accordance with an applicable financial reporting framework; and
- to report on the financial statements and communicate as required by GAAS based on the auditor’s findings.
A1-10
The auditor must be independent in both___ and ___ of an entity when performing an engagement in accordance with GAAS unless: a)___ or b) ____.
The auditor must be independent in both fact and appearance of an entity when performing an engagement in accordance with GAAS unless: **a) GAAS provides otherwise or b) the auditor is required by law or regulation to accept the engagement and report on the F/S. **
A1-10
Defintion of GAAS:
Measures of the quality of the auditor’s performance, and guide the auditor in the performance of a properly planned and executed audit.
A1-OQ-1
