A1 M1 Professional Standards

Question 1

What is the most authoritative audit guidance?

Answer 1

Statement on Auditing Standards (nonissuers) and PCAOB Auditing Standards (issuers)

Question 2

What is the second most authoritative audit guidance?

Answer 2

Interpretative publications

ex. Auditing interpretation of GAAS, exhibits to GAAS, auditing guidance from AICPA Auditing and Accounting guides, and Auditing statements of position

Question 3

What is the least authoritative audit guidance?

Answer 3

Other auditing publications

ex. Auditing articles in Journal of Accountancy, AICPA CPA letter, CPE materials, textbooks etc.

Question 4

What does generally accepted auditing standards mean?

Answer 4

measure the auditor’s quality of performance and guide auditor in planning and performing audit

Question 5

What does U.S. generally accepted accounting principles mean?

Answer 5

includes the conventions, rules, and procedures to define U.S. accepted accounting practice at point in time

-this is because accounting literature changes over time

Question 6

What is the auditor’s responsibility on statements on auditing standards (SAS) and PCAOB?

Answer 6

follow the guidance provided by the standards and be able to justify any departures

Question 7

What does the term “must” or “is required” indicate?

Answer 7

a requirement that has to be fulfilled in all circumstances

Question 8

What does the term “should” indicate?

Answer 8

a presumptively mandatory requirement that must be followed unless departure of it is allowed

Question 9

What does “may” “might” and “could” indicate?

Answer 9

explanatory material that does not require performance