MISC Flashcards
General Standards
- competence
- due care
- independence/objectivity
CAS examination standards
- conduct audit based on CAS
- audit procedure should be in line with scope
- obtain assurance of F/S being free of material un/intentional error
- audit should reduce risk level to acceptably low
reporting standards
- identify F/S
- distinguish responsibility of auditor and management
- ensure report follows the appropriate format
professional responsibilities
- maintain the respect and confidence of general public
- distinguish profession from general public
- maintain order in the profession
- provide means of self policing the profession
fundamental principles on how a member should act
- act to maintain professional reputation
- use due care and maintain competence
- independent in fact and appearance
- preserve client confidentiality
- practice is based on professional excellence
- professional courtesy towards other members
threats to independence
- self-interest
- self-review
- advocacy
- intimidation
- familiarity
what does CPAB do
- reviews public company audits
- reviews auditors QC system
client acceptance decision steps
- review draft F/S
- inquire third parties (e.g. creditors)
- inquire previous auditor
- consider unusual business and audit risk
- ensure firm is competent, staffed and client is auditable
- ensure it is legal to audit (require CPA)
issues with first time audit
- cannot provide assurance on I/S
- COGS will be an issue because beginning balance of inventory is not known
- not a problem for service companies with no inventory
three audit plan documents
- audit strategy - most general
- audit plant
- audit program - most specific
planning workflow of audit
- risk assessment
- audit strategy
- planned audit approach
considerations in risk assesment
- understand the auditee’s business environment, objectives and strategies
- identify risky accounts
considerations during audit plan
- asses need for specialist
- asses possibility of illegal actions
- preliminary analytical procedures
where do analytical procedures occurr
- planning stage - required - risk identify
- implementation stage - optional
- conclusion - required - asses the adjustments made
steps in analytical procedure
- compare F/S with previous years (horizontal analysis)
- compare ratios on a specified base (vertical analysis)
- compare current year to industry
- compare current year to budgeted
imparative principle
- used when following CPA handbook
- universal principle
utilitarian principle
- best outcome for the most amount of people
what body deals with disciplining the violating members
professional conduct comitee
who can revoke your license
provincial PA body
does CPA canada have power to punish
NO
what do substancive procedures do
- provide proof for the account balances
what are interim audits
- audit work done prior to client’s FYE
what is materiality based on
based on users’ specific needs
inherent risk
Inherent risk is the risk posed by an error or omission in a financial statement due to a factor other than a failure of internal control
control risk
probability that financial statements are materially misstated, due to failures in the controls used by a business
audit society concept
The idea of recognizing auditing as playing a bigger part of social control
The basis to determine the nature, timing, and extent of internal control tests and substantive tests of account balances and disclosures is the
risk assessment
