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Chapter 01 Slides - Chapter1 1 Auditing 4510/5510 1-1...

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1 - 1 The Demand for Audit and  Other Assurance Services Chapter 1 Auditing 4510/5510 1
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1 - 1 - 2 Sarbanes-Oxley Act The Act established the Public Company Accounting Oversight Board. It also requires auditors to report on the effectiveness of internal control over financial reporting. 2 Auditing 4510/5510
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1 - 1 - 3  What is Auditing? Auditing 4510/5510 Auditing is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria. Auditing should be done by a competent, independent person. 3
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1 - 1 - 4 Information and Established Criteria Auditing 4510/5510 To do an audit, there must be information in a verifiable form and some standards ( criteria ) by which the auditor can evaluate the information. 4
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1 - 1 - 5 Accumulating Evidence and Evaluating Evidence Auditing 4510/5510 Evidence is any information used by the auditor to determine whether the information being audited is stated in accordance with the established criteria. 5
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1 - 1 - 6 Competent, Independent Person Auditing 4510/5510 The auditor must be qualified to understand the criteria used and must be competent to know the types and amount of evidence to accumulate to reach the proper conclusion after the evidence has been examined. The competence of the individual performing the audit is of little value if he or she is biased in the accumulation and evaluation of evidence. 6
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1 - 1 - 7 Audit Report Auditing 4510/5510 The final stage in the auditing process is preparing the Audit Report , which is the communication of the auditor’s findings to users. 7
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1 - 1 - 8 Audit of a Tax Return Example Auditing 4510/5510 Internal Internal Revenue Revenue agent agent Competent, independent person Examines cancelled checks and other supporting records Accumulates and evaluates evidence Determines correspondence Federal tax Federal tax
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