An auditor should have the degree of skill commonly

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Unformatted text preview: ommonly possessed by other auditors and must exercise it with reasonable care and diligence. An auditor also should exercise professional skepticism. a) (S)he should have a questioning mind and critically assess audit evidence. Due care allows the auditor to obtain reasonable assurance. A member should complete professional services according to professional standards and with reasonable care and diligence. a) e. Competence involves technical qualifications and the ability to supervise and evaluate the work. It relates to knowledge of standards, techniques, and technical subject matter and to the ability to exercise sound judgment. b) In some cases, additional research and consultation is a normal part of performing services. However, if a member cannot gain sufficient competence, (s)he should suggest the engagement of someone competent. Consulting Services 1) The general standards apply to consulting services. EXAMPLES q q In a consulting engagement to design and implement an IT application, a member hires a subcontractor to provide additional programming services. The member has a responsibility to ensure that the subcontractor has the professional qualifications and skills needed. A member plans to hire a systems analyst as a member of the firm’s staff. The member is not required to be able to perform all the services of the systems analyst. But the member must be qualified to supervise and evaluate the spet’s work. 2. Compliance with Standards – Rule 202 a. A member who performs professional services shall comply with standards issued by designated bodies (the PCAOB and relevant AICPA committees and boards). EXAMPLES Professional services include the following: q q q Audits, reviews, and compilations of financial statements Engagements to issue special reports Attestation engagements other than traditional audits and reviews, such as engagements to report on Performance of agreed-upon procedures Internal control over financial reporting s Compliance with statutes, regulations, or contracts s Financial forecasts or projections Tax services Consulting services Valuation services Personal financial planning services s s q q q q Copyright © 2012 Gleim Publications, Inc., and/or Gleim Internet, Inc. All rights reserved. Duplication prohibited. 15 SU 2: Professional Responsibilities 3. Accounting Principles – Rule 203 a. Any material departure from an accounting principle issued by an AICPA-designated standard setter prevents a member from 1) Expressing an opinion (or stating affirmatively) that the financial statements (or other financial data) of any entity are presented in conformity with GAAP. a) 2) Stating that (s)he is not aware of any material modifications that should be made to achieve conformity with GAAP. a) b. Thus, the member provides positive assurance. Thus, the member provides limited assurance. Rule 203 applies to all members, whether or not in public practice, regarding any affirmative statement about GAAP conformity. EXAMPLES Rule 203 applies q q q To members who sign client reports provided to regulatory agencies, creditors, or auditors that contain such representations. To members who provide litigation support services. A member provides expert witness testimony that the defendant’s financial statements are not fairly stated in conformity with GAAP. If the communication states that the financial statements conform with GAAP. A member submits financial statements in his/her capacity as an officer, shareholder, partner, director, or employee to a third party. c. d. A departure is material if it has a material effect on the financial statements or data as a whole. However, in some cases, a member may be able to provide assurance about conformity with GAAP despite a material departure. 1) 2) 3) To do so, the member must be able to demonstrate that, due to unusual circumstances, the financial statements or data would have been misleading without a departure from GAAP. The member must describe a) The departure; b) Its approximate effects, if practicable; and c) The reasons compliance with the principle would be misleading. Events that may justify departures from established accounting principles are new legislation or evolution of a new form of business transaction. An unusual degree of materiality or conflicting industry practices ordinarily does not justify departures. Copyright © 2012 Gleim Publications, Inc., and/or Gleim Internet, Inc. All rights reserved. Duplication prohibited. 16 SU 2: Professional Responsibilities 2.5 RESPONSIBILITIES TO CLIENTS 1. Confidential Client Information – Rule 301 a. A member in public practice shall not disclose confidential client information without the client’s consent. However, this Rule does not affect a CPA’s obligations to 1) 2) 3) 4) Comply with a valid subpoena or summons or with applicable laws and regulations Discharge his/her professional obligations Cooperate in an official review of his/her professional practice Initiate a complaint with or respond to any inquiry made by an appropriate investigative or disciplinary body EXAMPLES q q q q A member withdrew from an engagement because of fraud on a client’s tax return. If contacted by the successor accountant, the member shoul...
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This note was uploaded on 04/02/2013 for the course ACCT 7100 taught by Professor Swanson during the Spring '13 term at Valdosta State University .

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