AUD 01 - AUD Notes Chapter 1 http/

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AUD - Notes Chapter 1 Audited F/S – The Basics Company’s mgmt responsible to prepare the F/S Auditors responsible to express an opinion on the F/S and on mgmt’s assertion on internal controls (if public) The primary assertion is whether the statements are “presented fairly” in accordance with GAAP Professional Standards Generally Accepted Accounting Standards – GAAS Generally Accepted Government Auditing Standards – GAGAS The Public Company Accounting Oversight Board – PCAOB - Public accounting firms must register with PCAOB in order to audit public companies - Registered firms are subject to board inspection, disciplinary proceedings, and sanctions GAAS – TIP PIE ACDO General standards – TIP T – Training I – Independence (in fact and appearance) P – Professional Care Standards of Field Work – PIE P – Planning and supervision I – Internal control, entity and environment Strong controls imply the auditor will require less evidence Weak controls imply the auditor will require more evidence (more work) An exam trick; weak internal controls does not equal an adverse opinion E – Evidence Standards of Reporting – ACDO A – Accounting = GAAP Explicit; Opinion must state that the acctg used was GAAP C – Consistency between periods Implicit; Silence is okay cause its implied D – Disclosure Implicit; Silence is okay O – Express Opinion Explicit; Opinion must state “In our opinion…” Meant to prevent misinterpretation of the degree of responsibility the auditor is assuming when his/her name is associated with the F/S The auditor may express different opinions of different sections (B/S, I/S) The auditor may express an opinion on 1 section and not the others as long as information has not been limited Reports on Audited F/S The Auditors Standard Report (Unqualified Opinion) Title Addressee Introductory Paragraph – R;R Statement that the F/S as identified in the report were audited Statement that the F/S are the responsibility of mgmt and the auditors responsibility is to express an opinion Scope Paragraph – APMEAM; APMEAM Statement that the audit was conducted in accordance with U.S. GAAS 1
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AUD - Notes Chapter 1 Statement that the audit was planned and performed to obtain reasonable assurance that the F/S are free from material misstatement Statement that the audit included examining evidence on a test basis; assessing the accounting principles used and significant estimates made by mgmt ; and evaluating the overall presentation Statement that the audit provides a reasonable basis for an opinion Opinion Paragraph Statement referring to the F/S specifically identified in the introductory paragraph An opinion as to the fair presentation of the F/S (ACDO ) Statement regarding conformity with U.S. GAAP (A CDO) Firm Name Report Date The Report should be dated on or after the date on which appropriate audit evidence sufficient to support
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AUD 01 - AUD Notes Chapter 1 http/

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