Chap001

Auditing and Assurance Services

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“An audit also includes assessing the accounting principles used and significant estimates made…” The explanation that management uses estimates indicates that some of the figures in the financial statements are not exact. 1-5
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Chapter 01 - An Introduction to Assurance and Financial Statement Auditing “We believe that our audits provide a reasonable basis for our opinion.” This statement indicates that the audit is not “proof” that the financial statements are exact, only that there is reasonable evidence about their accuracy. Opinion paragraph : “…the consolidated financial statements referred to above present fairly, in all material respects,…” This sentence indicates that the financial statements are a “fair”, not exact, representation. Also, the idea of materiality is revisited here, indicating that there may still be relatively small errors in the financial statements. Solutions to Discussion Cases 1-30 Independent audits are a critical component of corporate governance and can enhance the effectiveness of the examination and supervision process. Such audits can improve the reliability of financial reports and help identify internal control weaknesses. Thus, such audits can benefit bank examiners in enhancing the safety and soundness of financial institutions. Solutions to Internet Assignments 1-31 There are numerous Internet sites that contain accounting information. Following are some suggested sites: The AICPA's home page ( ) contains extensive information on the organization's activities. For example, it contains the entire report of the Special Committee on Assurance Services. The American Accounting Association’s home page ( ) contains numerous links, including professional organizations, accounting journals, and education sites. The Association of Certified Fraud Examiners ( ) home page contains extensive information on the Association’s certification as Certified Fraud Examiners (CFE). The Institute of Internal Auditors ( ) home page contains detailed information on internal auditing. The International Federation of Accountants ( ) Web site provides detailed information on international accounting and auditing standards. The Government Accountability Office (formerly the General Accounting Office, ) Web site provides detailed information on the GAO’s activities and allows users to obtain copies of GAO reports. The SEC’s Edgar Web site ( ) contains all filings by public companies with the SEC. It also contains information on other activities by the SEC. The PCAOB’s Web site ( ) offers detailed information about the PCAOB and the standards it has proposed and established. The major public accounting firms and many smaller firms also maintain Web sites. 1-6
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