Chapter 3: Regulation of F/S Audits Flashcards
Why is there regulation of f/s audits?
to instill public confidence in audited f/s regardless of who conducted audit
Regulation of auditors
intended to ensure that auditor possesses proper qualifications to conduct audit (CPA exam, CPA license, Continuing Professional Education, Codes of Conduct, and Independence Rules)
Regulation of audit process
intended to ensure the audit is performed in professional, non-negligent manner (GAAS, SAS, PCAOB standards)
Regulation of audit firms
intended to ensure the audit firm itself is in position to adequately conduct audits (Quality Control Standards, Peer Reviews)
What are auditors required to conduct audits and report on?
1) Financial Statement Fairness, 2) Internal Control Effectiveness
Who does the PCAOB regulate?
audits of publicly traded companies
GAAS (Generally Accepted Audit Standards)
broad statements of responsibility and apply t all audits
Standards of GAAS
General Standards, Standards of Field Work, and Standards of Reporting
General Standards
establish auditors qualifications
Field Work Standards
establish broad guidelines for how audit to be conducted
Reporting Standards
describe required content for audit report
SAS (Statements on Audit Standards)
interpretations of GAAS, how standards apply and clarification of GAAS
