Chapter 24 - Completion + Professional Judgment

N provide opinion regarding financial statements(i.e

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Unformatted text preview: n Provide opinion regarding financial statements (i.e., fairness, conformity with GAAP). n To the audit committee, or equivalent party having oversight over accounting, reporting, and internal controls. n Provide information from the audit relevant to the oversight process. n Fraud & Illegal Acts n Internal Control Deficiencies n Other Significant Communications + Reporting to Internal Oversight Bodies n Information regarding internal control n material weaknesses n significant deficiencies n Information regarding the accounting n policies, choices, estimates, uncertainties, etc. n overall "quality" of the accounting, n Details regarding the audit itself n misstatements, fraud n problems working with management n consults (opinion shopping) + It is All About Judgment n What is professional judgment in the audit context? n The process by which a professional makes a decision on a problem and comes to a conclusion regarding that decision problem using information gathered during the audit. + What Affects Professional Judgment? n Book Knowledge – school, CPA, CPE n Experience - base rates, red flags, industry n Potential problems n Inexperienced people n Lack of training n Lack of industry expertise n Innate – intelligence, wisdom, talents n Experience – interpersonal skills, unstructured problems n Potential problems n Bounded rationality n Confirmation bias n Recency bias n Self-serving bias n Knowledge n Ability/Skill + What Affects Professional Judgment? n Regulatory environment n Potential problems n Lack of knowledge of the environment n Dealing with changing environment n Client preferences n Supervisors (groupthink) n Public/third parties n Self n Potential problems n independence n Environment n Motivation +...
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n Provide opinion regarding financial statements(i.e...

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