Session 17 - Class Notes - Session17:AuditorsandCorporate...

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Session  Session  17 17 : Auditors and Corporate  : Auditors and Corporate  Governance Governance Hye Sun Chang ACCY 303  
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Outline Outline • Midterm review • Discuss the common types of audit report  and the conditions under which the auditors  issue each type of audit report.
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Public Compan Public Compan y Audit y Audit     and  and  PCAOB  PCAOB  Standards Standards Audit Reports Controls over Financial Reporting Management’s Evaluation of Reporting Controls Financial Statements Interrelationship
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Integrated Audits Integrated Audits The auditor’s discovery of significant  deficiencies and material weaknesses  in controls will cause the auditor to  ramp up the tests of the financial  statements. During the financial statement audit,  the auditor’s discovery of a material  misstatement implies that controls  have a material weakness. The auditor’s evaluation of controls  will impact the financial statement  audit. A material weakness in controls will  prevent the auditor from issuing a  standard unqualified report on the  financial statements. Auditors will need to refer to the  material control weakness in their  report on the financial statements. Control  Evaluation Financial Statement Audit
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Reports on Controls Reports on Controls Standard Unqualified Report Adverse Report   Adverse Control reports are given when controls have at least one material  weaknesses (MW) or several significant deficiencies that aggregate to an  material weakness.  A material weakness exists when the probability of a material misstatement  is higher than remote (20%)
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Types of Types of  Audit Reports  Audit Reports Standard Unqualified Report Modified Unqualified Report Qualified
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This note was uploaded on 11/08/2011 for the course ACCY 303 taught by Professor Staff during the Spring '08 term at University of Illinois, Urbana Champaign.

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Session 17 - Class Notes - Session17:AuditorsandCorporate...

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