1Bob Anderson, UCSBCHAPTER 2-1PROFESSIONAL STANDARDS: CHAPTER2WELCOME TO ECON 132- AUDITBob Anderson, UCSBIntro & Chapter 2-2QuestionWhen a CPA firm completes an audit of a business and issues a report, does it express an opinion on the client’s accounting records, financial statements, or both? Give reasons.Solution:The auditors' report expresses an opinion on the client's financial statements, not on the accounting records. A major purpose of the audit is to give outsiders assurance thatthe financial statements are reliable. The client's accounting records are important to the public accounting firm only becausethey constitute evidence supporting the financial statements. The CPAs also gather evidence from outside the company and from internal sources other than the accounting records.Bob Anderson, UCSBIntro & Chapter 2-3AICPA GAASREMEMBER THAT AICPA AUDITING STANDARDS ONLY APPLY TO NON-PUBLIC ENTITIESTHERE ARE 10 STANDARDS, WHICH FALL INTO THREE CATEGORIES:1.GENERAL STANDARDSThe firm and planning2.STANDARDS OF FIELDWORKPerforming the audit3.STANDARDS OF REPORTINGIssuance of the OpinionBob Anderson, UCSBIntro & Chapter 2-4Generally Accepted Auditing Standards (issued by AICPA)General StandardsAdequate technical training and proficiency as an auditor.Independence in mental attitude is to be maintained by the auditor.Due professional care is to be exercised.
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