Financial reporting framework set of criteria used to determine the measurement

Financial reporting framework set of criteria used to

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Financial reporting framework – set of criteria used to determine the measurement, recognition, presentation, and disclosure of material items in the F/S o GAAP o IFRS o Or special purpose framework: Cash or tax bases Unmodified (or unqualified) opinion - concludes that the entity’s F/Ss present its financial condition, results of operations, and cash flows in conformity with framework Adverse opinion – F/Ss are not presented in conformity with financial reporting frameworks
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Qualified opinion – concludes that except for a relatively isolated (usually limited) departure, the entity F/Ss are presented in conformity with the framework Disclaimer of opinion – an opinion cannot be expressed System of quality control – provide the firm reasonable assurance that the firm and its personnel o Comply with professional standards and applicable regulatory and legal requirements o Issue reports that are appropriate in the circumstances Quality Control Elements required of public accounting firms under the Sarbanes-Oxley act; 1. Leaderships responsibilities for quality within the firm (“tone at the top”) a. Rewarding on quality of work b. Devoting sufficient resources c. Ensure management objectives do not override the quality of the work performed 2. Relevant ethical requirements a. Communicate independence requirements to personnel b. Identify circumstances that could threaten independence and reduce them 3. Acceptance and continuance of client relationships and specific engagements should depend on; a. The integrity and business reputation of the client b. The firm’s ability to adequately perform the engagement with an appropriate level of professional competence c. The firm’s ability to comply with legal and ethical requirement related to the engagement 4. Human resources- Enroll quality control policies. 5. Engagement performance a. Engagement quality control reviews: Reviewing and evaluating the engagement and methods of judgment used. 6. Monitoring a. Purpose – to provide the firm with reasonable assurance that policies and procedures composing the system of quality control are operating effectively and complied with in practice. [ex.] reviews of selected administrative and personnel record [ex.] reviews of engagement documentation, reports, and the client’s F/S [ex.] discussions with firm personnel [ex.] Assessments of the (1) appropriateness of the firm’s guidance materials and professional aids (2) compliance with policies and procedures on independence, (3) effectiveness of continuing
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professional education, and (4) decisions regarding the acceptance and continuance of client relationships and specific engagements Engagement quality control reviews – an internal evaluation of the significant judgements made by the audit team and the conclusions reached in formulating its report.
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