Lec 2 Flashcards
do banks and financial institutions have their own reporting standards?
yes
objective of a F/S audit
enable auditors to express an opinion on whether the F/S are prepared in material respect and based on the right reporting framework
what are the general standards/ethical requirements
competence, objectivity, due professional care
what is meant by competence in relation to general standards
auditor has to have education, work exp, and continued prof. development
what is meant by objectivity in relation to general standards
free from bias and requiring evidence
what is meant by professional in relation to general standards
do what another prudent and reasonably trained auditor would do
what is the scope of an audit on F/S
F/S and notes
what is scope limitation
When we cannot audit one or more of the parts of the F/S
what is Management imposed scope limitation
when management specifically does not allow u to audit all of the things being audited. e.g. allowing for only 3 of 4 warehouses to be audited
GAAS examination standards
auditor should conduct an audit in accordance with CAS, determine audit procedure based on scope, auditor should obtain reasonable assurance that the F/S are free from material misstatement due to fraud or error, auditor should plan and perform an audit to reduce audit risk to an acceptably low level
what is the planning and supervision standard
obtain knowledge of the auditees’s business, deal with differences of opinions among the audit firm’s own personnel
do internal controls need to be audited?
they can choose to audit, but they MUST understand the internal controls
what are examples of internal controls?
separation of duties, access controls, reconciliations
appropriate evidence is both R_____ and R______
reliable and relevant
CAS on sufficient appropriate evidence
required auditors to obtain enough evidence to justify an opinion that reasonable assurance that risk is reduced to an acceptably low level
