Auditoria Flashcards
What is the purpose in performing an attestation engagement?
In performing an attestation engagement, a CPA typically: Expresses a conclusion on an assertion about some type of subject matter. To provide assurance about specific assertions made by management. A practitioner is engaged to issue or does issue an examination, a review, or an agreed-upon procedures report on subject or assurance about subject matter that is the responsibility of another party.
Describe assurance services.
Lending credibility to financial and non-financial information and improving quality for decision makers. Independent professional services that improve the quality of information for decision making.
Identify the primary role and responsibility of an independent external auditor.
To provide reasonable assurance that the financial statements are not materially misstated due to fraud or error and in accordance with accounting principles generally accepted in the United States .
What are the three fundamental principles underlying GAAS?
*General Standards, Standards of Fieldwork, Standards of Reporting.
*General Standards: Training and Proficiency, Independence, Professional Care (TIP).
*Fundamental Principles: Responsibilities, Performance, and Reporting
Responsibilities: Competence, Independence, Due Care, Professional Skepticism/Judgement
Performance: Reasonable assurance, planning & supervision, materiality, risk assessment, audit evidence
Reporting: opinion or no opinion, in accordance with financial reporting framework
What is the role of the Public Company Accounting Oversight Board (PCAOB) in relation to the standard-setting process?
develops standards for the audits of public entities
inspect firms.
If an auditor has never accepted a certain type of audit they can accept the audit if they can obtain the required knowledge to properly audit before the end of the engagement.
*Have to gain relevant experience by end of the engagement
- Client Integrity - Does Management have integrity?
- Auditor Competency - Is the firm competent enough to take on the engagement
- Compliance with legal and ethical standards (audit firm)
- Any issues with the company in past audits?
19 Acts Discreditable Rule?
A member shall not commit an act discreditable to the profession.
Who/what established the Public Company Accounting Oversight Board?
The Sarbanes-Oxley Act of 2002 (SOX)
When auditing inventory, the auditor selects items from the inventory listing and then looks for the items selected. This is an example of what type of procedure?
Assertion: Existence; Procedure: Vouching
When observing an inventory count, this is an example of what type of procedure?
Observation
Look up Vouching and Tracing:
Vouching starts with a number on the financial statements and then you find the original document that supports
that number. Tracing is the opposite direction. Tracing looks at the financial statement and traces the path of
that document all the way to the financial statements.
Pervasiveness
Means found everywhere or spread everywhere. A pervasive misstatement would be so serious that, to all intents
and purposes the FS are useless. Similarly with a pervasive lack of sufficient appropriate audit evidence.
What area does an auditor work from when testing the completeness assertion for a liability account.
search for unrecorded liabilities
Understand who is and isn’t a covered member in an audit
partners or a manager who provide service of 10 hours or more. (need to be a member of the audit team)
AICPA Definition: (Accounting Institute of Certified Public Accountants)
1. An individual on the audit or attest engagement team
2. An individual in a position to influence the audit or attest engagement
3. A partner or manager who provides non-attest services to the audit or attest client beginning once he or she provides 10 hours of non-attest services to the audit or
attest client within any fiscal year and ending on the later of the date (i) the firm signs the report on the financial statements for the fiscal year during which those services
were provided or (ii) he or she no longer expects to provide 10 or more hours of non-attest services to the audit or attest client ton a recurring basis
4. A partner in the office in which the lead audit or attest engagement partner primarily practices in connection with the audit or attest engagement
5. the firm, including the firm’s employee benefit plans or
6. an entity whose operating, financial, or accounting policies can be controlled (as defined by GAAP for consolidation purposes) by any of the individuals or entities described in 1 through 5 or by two or more such individuals or entities if they act together.
An auditor selected items for test counts from the client’s warehouse during the physical inventory observation. The auditor then traced these test counts into the detailed inventory listing that ultimately agreed to the financial statements.
This procedure most likely provided evidence concerning management’s assertion of: Completeness
