ACC571 SA response - Standardized Assessment Standardized...

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Standardized Assessment 1 Standardized Assessment: Accounting Program Strayer University Define the Scope of the Audit and the Desired Outcomes
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Standardized Assessment 2 Before defining the scope of the audit, we need to understand the definition of auditing. Auditing is “the process of gathering and evaluating evidence about information to determine the degree of correspondence between the information and the standards used to prepare the information” (Hopwood, Leiner, & Young, 2008, p.82). The American Accounting Association also provides this definition: 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 these assertions and established criteria and communicating the results to interested users (Committee on Basic Auditing Concepts, 1966). That is, auditing is a systematic process of objectively gathering evidence about an entity’s operations, evaluating it, and finding out whether those operations meet acceptable standards. The objective of financial statement audits is to add credibility of the financial statements, through independent verification, for owners, stockholder, lenders and prospective buyers. The end result of this verification is the audit report. In this case, the scope of the audit, including (a) gathering evidence, (b) testing evidence, (c) issuing the audit report, (d) the period examined, and, finally, (e) the desired outcomes will be discussed as the following items. Gathering Evidence Audit evidence should provide a factual basis for audit opinions, conclusions, and recommendations. It has been categorized as physical, testimonial, documentary, and analytical
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Standardized Assessment 3 evidence (Hopwood, Leiner, & Young, 2008). Evidence can be obtained from various sources. Some sources of gathering audit evidence will be addressed as the following items. 1. Audit evidence “includes the information contained in the accounting records underlying the financial statement and other information” (Georgiades,2010, p.2). Accounting records generally include the records of initial entries and supporting records, for example: checks, records of electronic fund transfers, invoices, contracts, the general and subsidiary ledgers, journal entries, other adjustments to the financial statements not reflected in formal journal entries, and records such as worksheets and spreadsheet supporting cost allocations, computations, reconciliations, and disclosures (Georgiades, 2010). 2. Management is responsible for the preparation of the financial statements based on the accounting records of the entity. The auditor should obtain audit evidence by testing the accounting records, for example, through analysis and review, re-performing procedures followed in the financial reporting process, and reconciling related types and applications of the same information (Clikeman, 2009). However, since accounting records alone do
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This note was uploaded on 11/15/2011 for the course ACCOUNTING ACC571 taught by Professor Naurid.ahmed during the Summer '11 term at Strayer.

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ACC571 SA response - Standardized Assessment Standardized...

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