g standards of PCAOB auditor must be independent there must be no significant

G standards of pcaob auditor must be independent

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(e.g. standards of PCAOB), auditor must be independent, there must be no significant limitations imposed on the auditor’s procedures, and client’s FS must be free of material departures from GAAP b. Qualified Opinion : If a client’s FS contains a misstatement that auditor considers material and client refuses to correct misstatement, then auditor will have to qualify the report i. Explains FS are fairly stated for except for the misstatement identified by auditor c. Adverse Opinion: if a misstatement is considered so material that it pervasively affects the interpretation of the FS i. Indicates that FS are not fairly stated and should not be relied upon d. If auditor is unable to obtain all the necessary information to conclude whether the inventory account is fairly stated ( scope limitation ) auditor will qualify the report
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i. If scope limitation is so pervasive that it limits the ability of the auditor to conclude on the FS (e.g. client’s financial records were all destroyed in fire), auditor will issue a disclaimer of opinion ” indicating that it is not possible to express an opinion on the fairness of FS
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Chapter 2: The FS Auditing Environment 1. Types of auditors a. External auditor (independent auditors) : may practice as a sole proprietor or as a member of a CPA firm i. Independent because they are not employees of the entity being audited ii. External auditors audit FS for publicly traded and private companies, partnerships, municipalities, individuals iii. They can also conduct compliance, operational, and forensic audits for such entities iv. To sign an opinion, an external auditor MUST BE A CERTIFIED PUBLIC ACCOUNTANT (CPA) 1. Regulated by state law through licensing departments in each state 2. CPA certification: Education, Examination, Experience 3. 150 semester credit hours of education at an accredited college or university, professional experience 4. CPA exam is administered by the AICPA b. Internal Auditor: employees of individual companies, government agencies, and other entities i. Institute of Internal Auditors (IIA) is the primary organization supporting internal auditors 1. Mission: “provide dynamic leadership for the global profession of internal auditing” 2. IIA developed a set of professional standards to be followed by internal auditors and has established a certification program 3. Certified Internal Auditor (CIA) Uniform CIA Examination 4. IIA defines internal auditing: an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes ii. Internal auditor conduct financial, internal control, compliance, operational, and forensic audits within their organizations 1. In some cases, external auditors with the annual FS audit 2. Also, often are involved in assurance and consulting engagements for their entities c. Government Auditors:
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