Chapter 6 - Professional Responsibilities Flashcards
Independence REQUIRED
Applies only to:
- Audits
- Special Reports
- Reviews
Independence NOT REQUIRED
- Compilations
- Non-Attest Services: tax & consulting
PCAOB
Sets rules for CPA firms that audit public issuers
Tax Services
Ok when approved by Audit Committee
Cool Off Period
CPA firm cannot audit client if CPA’s firms employee holds high position at client for ONE YEAR
SOAP
Summary of Adjustments Past
State Board of Accountancy
Licenses CPAs
AICPA & State CPA Society
Clubs & not authoritative bodies
Audit Documentation
Supports auditor’s opinion
Report Release Date
Date on which auditor grants client to use report
Keeping WP
- SAS: 5years
- PCAOB: 7 years
Document Completion Date
Time to complete WP after Report Release Date:
SAS - 60 days
PCAOB - 45 days
Objective of detailed substantive testing
Detect Material Misstatement
IT Segregation of Duties
C - Control Team O - Operators P - Programmer A - Analyst (system) L - Librarian
Highly computerized systems
Substantive testing alone may not suffice - test of controls should be performed to assess control risk
Integrated Test Facility
Can run fictitious and real data at the same time
Parallel Simulation
Runs client’s data on auditor controlled software
GAGAS (Yellow Book)
Government Auditing Standards
GAAS
Generally Accepted Accounting Standards
Types of Government Audits
- Financial
- Performance
Quality Control and Assurance
Peer review every 3 years
GAGAS
Report all fraud and illegal acts
Content of Report on IC (governmental)
- Assertion that evaluating compliance is part of developing opinion
- Assertion that specific controls relating to F/R are considered
- Indication that EITHER no weaknesses found or significant def. found and whether material
Single Audit Act
Fed assistance of $750k or more (separately to every single program, NOT in total on F/S)
Retention of govnt. reports
3 years
Quality Controls
- H Human Resources
- E Engagement/Client Acceptance
- L Leadership Responsibilities for Quality @Firm
- P Performance
- M Monitoring
- E Ethical Requirements (to maintain public confidence in profession)
