Ch.+3+Slides - Chapter 3 Engagement Planning Chapter 3 Quiz...

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Chapter 3 Engagement Planning
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Chapter 3 Quiz!
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Why Do We Audit? 1-3 Investors / Creditors Demand Info Financial Statement s Managemen t Assertions Information Risk Audit Opinion
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Management Assertions ( PCAOB) Existence or occurrence – Assets included in accounts exists and events that give rise to transactions have taken place Completeness - All transactions have been recorded Rights and obligations - Entity has a legal claim on all assets and revenues reported and has a legal responsibility for all liabilities and expenses Valuation or allocation – Transactions are recorded at the correct amount Presentation and disclosure – All accounts are presented in the appropriate place and all information required has been disclosed in the statements and footnotes . 1-4
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GAAS Fundamental Principles Responsibilities Competence Ethics / Independence Professional Skepticism / Professional Judgment Performance Planning and supervision Understand entity and identify/assess risk Obtain sufficient evidence Reporting Express an opinion on whether Financial Statements are in accordance w/ GAAP
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1. Standard report Expresses an unqualified opinion 2. Unqualified opinion with modified wording F/S are in conformity with GAAP Additional matters are disclosed in report 3. Qualified opinion “Except for” some matter, F/S are in conformity with GAAP 4. Adverse opinion F/S are not in conformity with GAAP 5. Disclaimer of opinion No opinion is issued by auditors Types of Auditors’ Reports
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Stages of an Audit Obtain (or Retain) Engageme nt Obtain (or Retain) Engageme nt Engageme nt Planning Risk Assessmen t Audit Evidence Reporting
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