Chapter 1 - Additional Slides Flashcards
What is an attest engagement? What are example?
When the assertions are made explicitly in writing by the accountable party (the asserter), the resulting assurance engagement is called an attest engagement.
Financial statements and notes.
What is a direct reporting engagement? What is an example?
If there is no explicit assertions made in writing by the accountable party, the PA needs to develop the explicit standards of performance themselves, resulting in a direct reporting engagement.
A government auditor assigned to determine whether the goals of the environmental protection agency are met by the agency
What is the general standard (audit)
The auditor should comply with relevant professional ethical requirements relating to audit engagement. - Competence, objectivity, due professional care.
What are the GAAS (Audit) Examination Standards?
- The auditor should conduct an audit in accordance with Canadian Audit Standards (CAS)
- In determining the audit procedures to perform in accord with CA’s “scope of an audit”, the auditor should comply with each CAS relevant to the audit.
- The auditor should obtain reasonable assurance that the financial statements taken as a whole are free from material misstatements, whether due to fraud or error.
- The auditor should plan and perform an audit to reduce audit risk to an acceptably low level that is consistent with the objective of the audit.
What are the 5 parts of the assurance engagement general standards?
- Practitioner should have a reasonable basis for believing the engagement can be completed in accordance with assurance standards.
- Management must acknowledge the responsibility for the subject matter
- Adequate proficiency to perform the engagement and adequate knowledge of the subject matter
- Engagement is performed with due care and an objective state of mind.
- Criteria for evaluating the subject matter should be identified or developed.
T or F: Review engagements have their own standards
If the above is true, what are the 3 standards and what is the code for the standards
True
Review engagement general standards
Review engagement examination standards
Review engagement reporting standards.
CSRE 2400
What is Section 7060?
Auditor Review of Interim Financial Statements and Other Financial Standards
Which CAS standards describes planning and supervision.
What are 4 items required to be done by auditors under this standard?
CAS 300 highlights planning and supervision.
- Prepare the audit program and supervise the audit work
- Obtain knowledge of the audits business
- Dealing with differences of opinion among the audit firms own personnel.
- Timing
What does CAS require auditors to do with the clients internal controls?
What does good internal controls lead to?
- CAS requires understanding of the auditees system of internal controls
- Good internal controls reduce the probability of errors or irregularities in the financial statements.
What does CAS 200.17 describe?
What is the definition of sufficient audit evidence in accordance with CAS 200.17?
It describes the need for sufficient and appropriate audit evidence in forming conclusions.
To obtain reasonable assurance, the auditor shall obtain sufficient appropriate audit evidence to reduce audit risk to an acceptably low level and thereby enable the auditor to draw reasonable conclusions on which to base the auditors opinion.
What are the two characteristics of appropriate evidence? Does the standards require absolute evidence?
They are reliable and relevant.
No, the standards only require sufficient.
What are the audit reporting standards?
- The report should identify the financial statements and distinguish between the responsibilities of management and the responsibilities of the auditor.
- The auditor should determine whether the financial reporting framework adopted by management in preparing the financial statements are acceptable.
- The auditor should refer to CAS 700, 701, 705, and 706 when expressing an opinion on a complete set of general purpose financial statements in accordance with a financial reporting framework that is designed to achieve fair presentation.
What is the general topics of CAS
- 700
-701
-705
-706
700 (Forming an opinion)
701 (New standards - KAM)
705 - Modification of an opinion
706 (EOM and OM paragraphs)
What does an audit opinion imply?
What ethical principle does an individual need to assess evaluate disclosure?
What happens if the report has a lack of disclosure?
An audit opinion implies that there is adequate disclosure and all important information required by the users is included.
- Auditors need professional judgement
- It is a departure from GAAP and may require a qualified report.
What is CAS 200.15?
Professional skepticism. Requires the auditor to plan and perform an audit with professional skepticism recognizing that circumstances may exist that cause the financial statement to be materially misstated.
