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Outlines&Exercises - CHAPTER 1 AUDITING AND ASSURANCE...

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CHAPTER 1 AUDITING AND ASSURANCE SERVICES Why do these users need relevant, reliable information? 1. 2. 3. 4. Assurance Services 1. Attestation Services - Three types of attestation services: (1) (2) (3) 2. Other Assurance Services - Professional skepticism -
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Public Accounting 1. 2. 3. 4. Auditing Definition of auditing (from AAA): 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. Key phrases from this definition: 1. 2. 3. 4.
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So auditing could be drawn as: Other Kinds of Engagements 1. Operational Audits – 2. Governmental Audits - 3. Regulatory Audits – Types of Auditors: 1. Public Accounting Firms – 2. Internal Auditors – 3. Government Accountability Office (GAO) Auditors – 4. Internal Revenue Service (IRS) Agents – 5. Gaming Control Board Auditors –
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Certified Public Accountant (CPA) To qualify for certification in Nevada: 1. Education Requirement – 2. CPA Exam - 3. Experience Requirement – 4. Rules of Professional Conduct (Ethics) exam
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CHAPTER 2 PROFESSIONAL STANDARDS In 1939, the AICPA came up with the 10 Generally Accepted Auditing Standards and they remained basically the same until 2009. In 2009, the Auditing Standards Board replaced this framework with Fundamental Principles. FUNDAMENTAL PRINCIPLES 1. Responsibilities Principle Auditors are responsible for: Having appropriate competence and capabilities to perform the audit. Complying with relevant ethical requirements. Maintaining professional skepticism and exercising professional judgment throughout the planning and performance of the audit. 2. Performance Principle To express an opinion, the auditor obtains reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error. To obtain reasonable assurance, which is a high but not absolute level of assurance, the auditor: Plans the work and properly supervises any assistants. Determines and applies appropriate materiality level or levels throughout the audit. Identifies and assesses the risks of material misstatement, whether due to fraud or error, based on an understanding of the entity and its environment, including the entity’s internal control. Obtains sufficient appropriate audit evidence about whether material misstatements exist, through designing and implementing appropriate responses to the assessed risks. 3. Reporting Principle Based on evaluation of the evidence obtained, the auditor expresses an opinion in accordance with the auditor’s findings, or states that an opinion cannot be expressed, in the form of a written report. The opinion states whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework.
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STATEMENTS ON AUDITING STANDARDS PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD (PCAOB) Created by the Sarbanes-Oxley Act of 2002.
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