Auditing Ch 1 - AUDITED FINANCIAL STATEMENTSTHE BASICS...

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Becker Auditing – 2008 Edition Chapter 1 1 AUDITED FINANCIAL STATEMENTS—THE BASICS Company's Management: Financial Statements Auditors: Expression of Opinion (on financial statements and if publicly traded, management's assertion on internal control) Primary assertion: whether statements are "presented fairly" in accordance with GAAP. PROFESSIONAL STANDARDS Auditing Standards: GAAS: Generally Accepted Auditing Standards GAGAS: Generally Accepted Government Auditing Standards PCAOB: The Public Company Accounting Oversight Board Auditing Guidance: The GAAS Hierarchy 1. Statements on Auditing Standards (SASs) 2. Interpretive Publications 3. Other Auditing Publications (i.e. journals, textbooks) GAAS General Standards T - Training I - Independence (in appearance and fact) P - Professional Care Standards of Fieldwork P - Planning and Supervision I - Internal Control, Entity, and Environment E - Evidence Standards of Reporting A - Accounting = GAAP -- Must State (Explicit) C - Consistency -- Silence is OK (Implicit) D - Disclosure -- Silence is OK (Implicit) O - Express Opinion -- Must State (Explicit) Weak internal control does NOT equal adverse opinion Taken as a whole applies equally to a complete set of financial statements, and to an individual financial statement, such as a balance sheet. - Different opinions are okay - One statement opinions are okay REPORTS ON AUDITED FINANCIAL STATEMENTS Auditor's Standard Report (Unqualified Opinion) A. Title ("Independent" auditor's report) B. Addressee (To company, stockholders, board of directors, generally not addressed to management.) C. Introductory Paragraph 1. Statement that the financial statements were audited 2. RR - Responsibility of management is financial statements and Responsibility of auditor is to express an opinion. D. Scope Paragraph 1. AA - Audit was conducted in Accordance with US GAAS 2. PP - audit was Planned and Performed to obtain reasonable assurance MM - that the financial statements are free from Material Misstatement 3. EE - audit included Examining Evidence on test basis AA - Assessing the Accounting Principles used MM - significant estimates Made by Management 4. Statement that audit provides reasonable basis for opinion.
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Becker Auditing – 2008 Edition Chapter 1 2 E. Opinion Paragraph 1. Statement referring to financial statements identified in intro paragraph 2. Opinion to fair representation of financial statements (ACD O ) 3. Statement regarding conformity with US GAAP ( A CDO) F. Firm Name (signed or printed) G. Report Date (on or after the date when audit evidence was obtained.) RR - Responsibility of management = financial statements, Responsibility of auditor = express opinion. AA - Audit was conducted in Accordance with US GAAS
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This note was uploaded on 05/11/2010 for the course CPA 2010 taught by Professor ?? during the Spring '10 term at Becker College.

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Auditing Ch 1 - AUDITED FINANCIAL STATEMENTSTHE BASICS...

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