MGT132MidtermessayQ - 60 Auditors must be concerned with...

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60. Auditors must be concerned with both generally accepted auditing standards and generally accepted accounting principles in performing an audit. (a) Compare generally accepted auditing standards with generally accepted accounting principles. (b) Summarize two of the three generally accepted auditing standards known as the general standards. (a) Generally accepted auditing standards are authoritative rules for measuring the quality of audits. The ten generally accepted auditing standards were adopted by the membership of the AICPA. Generally accepted accounting principles are principles of measurement and presentation for financial statements that have "substantial authoritative support." (b) The general standards include (only two required): Technical training and proficiency Independence Exercise due professional care Difficulty: Easy 61. The standard unqualified auditors' report for audits of nonpublic companies consists of three paragraphs. Identify the three paragraphs and describe the purpose of each. Introductory paragraph--describes the financial statements being auditing and the responsibilities of management and the auditors. Scope paragraph--describes the nature of an audit and indicates whether the audit was performed in accordance with generally accepted auditing standards. Opinion paragraph--expresses the auditors' opinion on the financial statements. Difficulty: Easy
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62. Auditors must consider the possibility of fraud by employees or management on every audit engagement. They must also consider the possibility that the client has engaged in illegal acts. (a) Distinguish between employee and management fraud. (b) Describe the auditors' responsibility for the detection of fraud in an audit. (c) Describe the auditors' responsibility regarding illegal acts by a client. (a) Employee fraud is dishonest actions by lower level employees that occur within a company despite management's efforts to prevent such actions. Management fraud occurs when the top executives of a company deliberately deceive stockholders, creditors, and the auditors by misstating the financial statements. (b) The auditors have a responsibility to design the audit to provide reasonable assurance
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MGT132MidtermessayQ - 60 Auditors must be concerned with...

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