411 ACCT summer 2010
Kubichan
Chapter 1 -5 Exam review
Chapter 1
1. Definition of accounting and auditing
2. Definition of assurance services
3. The five categories of attestation services
4. Definitions of operational and compliance audits
5. Requirements for becoming a CPA and which bodies govern CPAs
Chapter 2
1. Understand the relationships and functions of the PCAOB, SEC, AICPA
2. Know which standards apply to which services and who creates them
a. PCAOB auditing standards audits of public co
b. GAAP and SAS audits of private co
c. SSARS accounting and review standards
d. International auditing standards
e. Quality control standards for firms
3. Know the 10 generally accepted auditing standards and their breakout into general,
fieldwork, and reporting standards
Chapter 3
1. Know the content of the standard audit report and its components
a. Introductory paragraph
b. Scope
c. Opinion
2. Know the 5 requirements to have an unqualified opinion
a. All statements present
b. Were able to follow the general standards of GAAS
c. Were able to gather sufficient evidence and follow the fieldwork standards
d. Statements are in accordance with GAAP and full disclosures
e. No circumstances require modification to the report
3. Know the reasons for giving an unqualified opinion with an explanatory paragraph
a. Consistency
b. Going concern
c. Emphasis
d. Multiple auditors
e. Justified departure from GAAP
4. SOX requirements for reporting on internal control as part of the financial statement audit
5. Know the three reasons for departing from an unqualified opinion
a. Departure from gaap
b. Scope departure
c. Lack of independence
6. Know the reasons for giving a qualified, adverse disclaimer or of opinion depending on
materiality
Chapter 4
1. The parts of the Code of Professional Conduct and its enforceability
a. Principles
b. Rules of Conduct
c. Interpretations of the rules of conduct
d. Ethical rulings
2. Definitions of independence and who it applies to covered members
3. Audit committee requirements
4. Direct and indirect financial interests
5. Relatives and financial interests and employment
6. Bookkeeping and audit of same company
a. AICPA allows for private companies
b. Not allowed by SEC for public companies
7. Litigation or unpaid fees and independence of auditors
8. Basics of remaining rules
a. Confidentiality of clients info
b. Contingent fees for audit clients not allowed
c. Acts considered discreditable
d. Commissions and referral fees condition for it to be allowable
e. Form of organization and name rules
9. Enforcement of rules by AICPA and State boards
Chapter 5
1. Definition of Business failure, audit failure, and audit risk
2. Prudent person concept
3. Definitions of ordinary negligence, gross negligence, constructive fraud and fraud
4. Definitions of common law, statutory law, joint and several liability and proportionate
liability
5. Definitions of privity, third party beneficiary, breach of contract and tort actions
6. Auditors defense against lawsuits
a. Lack of duty
b. Nonnegligent performance
c. Contributory negligence
d. Absence of a causal relationship
7. Liability to third parties
a. Ultramares doctrine known users
b. Restatement of torts (Credit Alliance) limited foreseen class of users
c. Foreseeable users only used in two states
8. Basics of SEC acts and filings 8k 10 k etc
9. Foreign Corrupt practices act