2011 Audit 2 Text Update - This first page gives a listing...

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This first page gives a listing of the corrected lecture text pages that follow. Print these corrected pages and insert in the lecture text. AUDITING Date Added Lecture Page Number Description 03/14/2011 A-2 31 Change "Must" to "Should" 03/14/2011 A-2 57 Change "Must" to "Should" 03/14/2011 A-2 79 Add text 03/14/2011 A-2 80 Add text; Add Report 03/14/2011 A-2 99 Add text 03/14/2011 A-2 103 Alignment of table cells 04/18/2011 A-2 73 Text change
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Becker Professional Education | CPA Exam Review Auditing 2 ©2010 DeVry/Becker Educational Development Corp. All rights reserved. A2- 31 5. Analytical Procedures Should be Performed Analytical procedures involve developing an expectation (based on plausible relationships) and comparing recorded amounts or ratios based on recorded amounts to that expectation. While expectations are not as encompassing as those developed during an audit (and corroboration is not required), analytical procedures in a review should still be designed to detect relationships and individual items that appear to be unusual and may indicate material misstatement. These procedures consist of: a. Comparing the current statements with prior period statements, or current ratios with prior period ratios; b. Comparing actual statements with budgets or forecasts, if available; c. Comparing financial and relevant nonfinancial information; d. Comparing ratios and indicators with those of other entities in the industry; and e. Comparing relationships among elements in the financial statements within the period and with corresponding prior period relationships. 6. Review Other Procedures During a review, the accountant should also: a. Read the financial statements for conformity with generally accepted accounting principles (or an OCBOA). b. Obtain reports of other accountants who have been engaged to audit or review significant components of the reporting entity. c. If appropriate, request management to consider the effects of any going concern uncertainties or any subsequent events. The auditor should then consider whether management's conclusions are reasonable and whether the client's accounting and disclosures are adequate. 7. Client Representation Letter from Management Must be Obtained The accountant is required to obtain a representation letter from management for all financial statements and periods covered by the review report, even if current management was not present during all such periods. The letter should be dated as of the date of the accountant's report. The letter should be addressed to the accountant and signed by the members of management responsible for and knowledgeable about the matters in the letter (generally the CEO and CFO). Management's failure to provide a representation letter results in an incomplete review (see below). a.
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This note was uploaded on 09/25/2011 for the course ACCOUNTING AC591 taught by Professor W during the Spring '11 term at Keller Graduate School of Management.

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2011 Audit 2 Text Update - This first page gives a listing...

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