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Chapter 2 Power Point

Chapter 2 Power Point - Chapter 2 Overview of an Integrated...

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Chapter 2 Overview of an Integrated Audit Prepared by Adrianne E. Slaymaker, D.B.A. CPA
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Integrated Audits An audit engagement examining both a company’s financial statements and ICFR is an integrated audit PCAOB registers and has jurisdiction over firms that perform audits and U.S. public companies Learning Objective #1
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The Public Company Accounting Overs ight Board The PCAOB was formed to ensure that audit quality is not compromised and that auditor performance continues to meet public expectations. The membership of the board consists of five SEC- appointed public members and is supported by fees paid by publicly traded companies. The Board’s tasks include registering and monitoring accounting firms that prepare audit reports for public companies. establishing rules to govern auditing, quality control, ethics, and independence.
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PCAOB Standard Setting Role: Congress has given it the responsibility for creating standards for the audits of publicly traded companies. The PCAOB has declared that the previously created practice standards (e.g., ASB’s SASs ) will function as Interim Professional Auditing Standards for audits of public companies. Monitoring Role: The Board’s goal is to ensure that audit quality is not compromised. Firms not registered are not allowed to conduct audits of public companies. Board monitoring activities include inspections of registered auditing firms (similar to peer reviews), special investigations, and disciplinary proceedings. PCAOB rules requiring reporting by registered public accounting firms were approved by the SEC on August 13, 2009 and will take effect on October 12, 2009. The rules implement a provision of the SOX and constitute the first reporting obligations imposed on registered firms by the Board.
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Preliminary Requirements for an Integrated Audit Benchmarks must exist against which ICFR can be compared for effectiveness and financial statements can be compared for fairness The auditor needs guidelines called auditing standards Entity must have records sufficient for auditors to gather evidence The auditor must have confidence in management’s integrity Learning Objective #2
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General Standards The General Standards affect all phases of the audit, including client acceptance or retention. 1. The auditor must have adequate technical training and proficiency to perform the audit . 2. The auditor must maintain independence in mental attitude in all matters relating to the audit . 3. The auditor must exercise due professional care in the performance of the audit and the preparation of the report.
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Standards of Field Work The Fieldwork Standards guide the planning, internal control evaluation, and the evidence gathering phases of the engagement.
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