i See part III above b 1 12 Briefly discuss why auditors must often exercise

I see part iii above b 1 12 briefly discuss why

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i. See part III above b. 1-12: Briefly discuss why auditors must often exercise creativity and innovation in auditing financial statements. Give an example different from the one offered in the text. i. Auditors frequently face situations where no standard audit procedure exists. Every client is different, and applying auditing concepts in different situations requires logic and common sense, and frequently creativity and innovation. ii. Example from text verifying the inventory of cattle. Such circumstances require that the auditor exercise creativity and innovation when planning and administering audit procedures where little or no guidance or precedent exists. Chapter 2
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UGBA 126 - Auditing Section Notes Chapter 1 & 2 1/22/2016 I. Industry Evolution a. Auditing + consulting another conflict of interest b. Scandals (Enron, WorldCom, Arthur Anderson, others) c. Regulation (SOX, PCAOB, others) II. High-level Business Model a. Objectives Strategies Processes Controls Transactions b. 5 Key Processes i. Revenue ii. Purchasing iii. Inventory Management iv. Financing v. Human Resource Management III. Generally Accepted Auditing Standards (GAAS) a. General i. Adequate technical training & proficiency ii. Independence iii. Due professional care b. Fieldwork i. Adequate planning & supervised assistants ii. Obtain sufficient understanding of internal controls iii. Obtain sufficient appropriate evidential matter c. Reporting i. Accordance with GAAP ii. Consistent year to year iii. Disclosures are reasonably adequate iv. Opinion IV. Principles Underlying and Audit per the ASB a. Purpose b. Responsibilities c. Performance d. Reporting V. Problems from Lecture a. 2-18: Place the events of the last few decades in proper sequence: i. Increased consulting services to audit clients ii. Enron and other scandals iii. SOX iv. Prohibition of most consulting work for audit clients v. Establishment of PCAOB b. 2-19: Which of the following statements best descri bes management’s and the external auditor’s respective levels of responsibility for a public company’s financial statements?
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UGBA 126 - Auditing Section Notes Chapter 1 & 2 1/22/2016 i. C. Management has the primary responsibility to ensure that the company’s financial statements are prepared in accordance with GAAP, and the auditor provides reasonable assurance that the statements are free of material misstatement c. 2-20: How would you describe the relationship between business objectives, strategies, processes, internal control systems and transactions? i. To achieve its objectives , a business formulates strategies and implements processes , which are carried out through business transactions . The entity’s internal control systems must be designed to ensure the transactions are properly executed, captured and processed) d. 2-30: i. AICPA: provide members with the resources, information, and leadership that enable them to provide valuable services in the highest professional manner to benefit the public as well as employers and clients ii. SEC: to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation iii. Attempt to restore investor confidence in the stock market in ’30s iv. Visit website v. Visit website vi. Visit website VI. Additional Practice Problems a.
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