Exam I Review Sheet_2019.docx - ACCT 4335 Financial Statement Audit Fall 2019 Exam I Review Sheet Disclaimer This review sheet is intended to assist you

Exam I Review Sheet_2019.docx - ACCT 4335 Financial...

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ACCT 4335: Financial Statement Audit Fall 2019 Exam I Review Sheet Disclaimer: This review sheet is intended to assist you with preparing for the exam efficiently. It covers the majority of the topics tested in the exam. However, it is possible that topics not listed on this review sheet, but covered in lecture slides, will also be tested in the exam. Chapter 1- Auditing and Assurance Services What are information risk and business risk? - Information risk: the risk that the information disseminated by a company will be materially false or misleading - The risk that an entity will fail to meet its stated business objectives due to poor performance (failure to pay debt when due What are auditing, attestation engagement, and assurance services? - Auditing: is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between the assertions and established criteria and communicating the results to interested users - Attestation engagement: a practitioner assesses and reports on subject matter or and assertion about subject matter that is the responsibility of another party - Assurance services: are independent professional services that improve the quality of information or its context for decision makers. What is required by Section 302 of the SOX? - Act states that the key company officials must certify the financial statement. That is, the company CEO and CFO must sign a statement indication: They have read the financial statement They are not aware of any false or misleading statements They believe that the financial statements presents an accurate picture of the company financial condition What are the five management assertions made about financial statements per PCAOB auditing standards? - Existence or occurrence: assets and liabilities included in the accounts exists and recorded transaction are valid and have actually occurred. - Right and obligations: entity has a legal claim on all assets and revenues reported and has a legal responsibility for all liabilities and expenses - Completeness: all balances and transaction have been recorded in the financial statements - Valuation or allocations: assets, liabilities, and recorded transaction have been valued in accordance with GAAP 1
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- Presentation and disclosure: all accounts are presented in the appropriate place and all information required has been disclosed in the statements and footnotes What is professional skepticism? - Refers to an auditors questioning mindset towards representations made by management and evidential matter gathered What are the three main sources of revenue for public accounting firms? - Assurance services - Tax services - Consulting and advisory services What are the professional services that public accounts are prohibited from providing to their audit clients under SOX?
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