Lec 1 Flashcards
what are the parts of the three-party accountability triangle
auditor, user(s), accountable party (client being audited)
what do auditors provide to users?
conclusions
why are users removed from accouting
too complex and remote
when is professional judgement applied
when there is uncertainty
what are assertions
Claims made by business owners and managers that the information included in company financial statements are correct
what must be done to obtain assurance
There must be sufficient appropriate audit evidence to reduce audit risk to an acceptably low level
why might managment attempt to show lower performance
typically in private companies and done for tax reduction purposes
why might management attempt to show higher performance
typically in public companies might want to do this to increase bonuses
what are some instances where professional judgment must be applied within reporting
applied in revenue recognition, depreciation policies, estimates
what is the objective of an audit
to express opinion on financial statements
what is opinion expressed on in terms of the objective of an audit
if the F/S are reported in respect of materiality, and if they comply to the applicable reporting framework
what is audit risk and how is it calculated?
the risk than an auditor states an incorrect opinion. 1 - % of assurance
what is risk based audit?
when you spend more time auditing auditing riskier clients rather than low risk
what is GAAP in canada
IFRS
what is GAAP in USA
US GAAP
