Module A, B, C Class Notes Flashcards
What are compilations of these companies?
Trial balances
Who has compilations?
Small companies
What does the accountant do to a company’s compilation?
Turns it into financial statements
Interim financial statements
Statements before year end for shorter period of time
Ex. Quarterly statements
Report of financial element is similar to…
An auditor’s report
Factor
Sell receivables at discount immediately for cash
An audit is a type of…
Attestation
Not all attestations are…
Audits
2 phrases for a negative assurance
“We are not aware of”
“Nothing came to our attention”
If you give more assurance you must…
Get more evidence
Auditing standards board promulgates…
Attestation standards
Financial projection
Occurrence of one or more hypothetical events
Capital budget example
Need to budget for replacing furniture, carpet, technology
Financial forecasts
Expected conditions and courses of action
Pro forma
Reporting “as if” transaction already occurred
With private company a client can ask auditor…
To issue report on internal control
Debt compliance letter
Requirement to the debtor from the creditor
What statement includes info on audit fees and related services?
Proxy statement
What 3 procedures are conducted in an audit that aren’t usually conducted in a review?
1 test controls
2 substantive procedures
3 test details
First 3 words in a: review report
“We have reviewed”
First 3 words in a: audit report
“We have audited”
First 3 words in a: compilation report
“We have compiled”
Who sets rules for CPAs?
PEEC
PCAOB
What’s an unacceptable answer from a client employee?
Because it’s in the work paper
Intentional means materiality…
Goes out the door
Under reporting charging for time is an example of…
An ethical decision
Auditing standards and Principles are both…
Broad and vague
Objectivity
Independence
Interpretations (how are they characterized?)
Get more specific
Ethical ruling
Most specific explanations
Explains specific cases
What’s in place to monitor at big firms?
Self monitored by firm with hotline
Self review threat
Shouldn’t audit what you prepared
Ex. Can’t do book keeping services for audit client
Mortgage from client, requirement for auditors?
Must be at market rate
Which 3 parties do investors sue?
Auditors
Management
Board
3 instances when an auditor can reveal confidential info
1 subpoena from court
2 peer review
3 violation of conduct
Who would auditors bring in to sue a client?
Audit export on client/industry
Significance of Ultramares doctrine
Third parties not in privity with auditor can bring suit
Business risk
Risk organization could fail to meet its objectives
If a loan is collate riled agains inventory…
Auditors should take a good look at it
It is important to report your audit hours…
Honestly and why it took that long
Don’t ever sign off on a program step…
You didn’t do
