lecture_02 4240

lecture_02 4240 - ACCT 4240: Auditing Professional...

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ACCT 4240: Auditing Professional Standards
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Practice Standards Generally Accepted Auditing Standards Measures of the quality of the AUDITOR'S PERFORMANCE Same from audit to audit STANDARDS vs. PROCEDURES Standards for Attestation and Assurance Services Quality Control Standards Others (not discussed in this chapter) International Standards on Auditing (ISAs) Generally Accepted Governmental Auditing Standards (GAGASs) Statements of Internal Audit Standards (SIASs) Video (VIDEO)
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Management Assertions For each account in the financial statements, management makes five assertions that the auditor tests: Existence or occurrence Completeness Rights and obligations Valuation or allocation Presentation and disclosure
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Existence or Occurrence Assertion Assets, liabilities, and equity actually existed at the balance sheet date. Revenue and expense transactions actually occurred during the period covered by the financial statements. Audit tests include counting cash and inventory, confirming receivables with customers primarily testing for overstatement .
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Completeness Assertion All transactions and balances that should be presented in the financial statements are included. Primarily a test of understatement . Audit tests include verifying that all unsold inventory is included, all notes payable are included, and all expenses are recognized.
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Rights and Obligations Assertion Assets are owned by the entity. All liabilities shown are obligations of the entity. Audit tests include verifying ownership of title to items shown as assets, and confirming that liabilities are not obligations of a different entity.
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Valuation or Allocation Valuation is often the most difficult to test. Valuation often involves complex estimates such as allowance for doubtful accounts. Valuation also includes allocation of costs over time, such as depreciation and amortization. Audit tests include determining lower of cost or market and evaluating collectibility.
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Presentation and Disclosure Assertion GAAP properly selected and applied. Disclosures are adequate both in financial statements and footnotes. Transactions and balances are properly classified.
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Generally Accepted Auditing Standards (GAAS) General Standards Have adequate technical training and proficiency. Maintain independence in mental attitude. Exercise due professional care.
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Generally Accepted Auditing Standards (GAAS) Standards of Field Work Adequately plan and supervise the audit. Have sufficient understanding of the internal control structure. Gather sufficient competent evidential matter.
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Generally Accepted Auditing Standards (GAAS) Standards of Reporting Generally accepted accounting principles.
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This note was uploaded on 03/08/2012 for the course ACCT 4240 taught by Professor Staff during the Spring '08 term at U. Memphis.

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lecture_02 4240 - ACCT 4240: Auditing Professional...

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