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Lecture_one_Web - 11/24/09 AFM 451 1 What is your...

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Unformatted text preview: 11/24/09 AFM 451 1 What is your conclusion? What tests will you conduct? W h a t i s y o u r c o n c l u s i o n ? W h a t t e s t s w i l l y o u c o n d u c t ? W h a t i s y o u r p l a n ? Who is your client? Client & their Financial Statements P r o fe s s io n a l J u d g m e n t P r o f e s s i o n a l J u d g m e n t Professional Judgment P r o f e s s i o n a l J u d g m e n t P ro fe s s io n a l J u d g m e n t P r o f e s s i o n a l J u d g m e n t P r o f e s s i o n a l J u d g m e n t P r o f e s s i o n a l J u d g m e n t W h a t a u d i t r e p o r t w i l l y o u i s s u e ? I n t e r n a l c o n t r o l s & B a l a n c e s N a t u r e , T i m i n g , E x t e n t 11/24/09 AFM 451 2 Introduction Introduction The role of audits is critical in the business environment Important decisions are made on the basis of accounting information. Audits reduce the risk that these decisions will be based on inaccurate information. Auditors provide assurance as to the accuracy of accounting information. This creates three-party accountability. 11/24/09 AFM 451 3 Three-Party Accountability Three-Party Accountability Subject Matter Auditor Accountable Party User(s) Accountability Conclusion 11/24/09 AFM 451 4 Demand for Reliable Demand for Reliable Information Information Accounting attempts to record and summarize a companys transactions into F/S for the benefit of users. Accounting is a function of the organizations management. Users are removed from accounting due to complexity , remoteness or consequences. 11/24/09 AFM 451 5 Auditing Auditing Preparation of financial information by management creates a conflict of interest between users of financial information and management. The auditor serves as an independent intermediary who lends credibility to the financial information. Also called providing assurance as to the reliability of the information. 11/24/09 AFM 451 6 Auditing Auditing An external auditor is independent of management and of the production of the financial information....
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This note was uploaded on 11/23/2009 for the course AFM 480 taught by Professor Gb during the Spring '09 term at Waterloo.

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Lecture_one_Web - 11/24/09 AFM 451 1 What is your...

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