Notes 2 auditing Corporate Governance
What is corporate governance?
A process by which the owners and creditors of an organization exert control and require accountability
for the resources entrusted to the organization. The stockholder/owners elect a boa
Addendum B to Note 1
Fundamental Audit Principles have replaced 10 basic audit standards.
Auditors must have basic competencies and capabilities to perform the audit.
Auditors must comply with ethical principles.
Auditors must be professi
Note 11 Auditing
CPAs have a responsibility to safeguard the publics interest. As we have seen, this responsibility is both
an ethical and a legal one. This note stresses the legal responsibility of CPAs.
The legal environment for CPAs is one of increased
Note B Auditing the Acquisition and Expenditure Cycle
The most common reason for restatement of financial statements is misstated costs and expenses.
Capitalizing expenditures and improperly accounting for income taxes are leading examples o
Note 8 auditing
Auditing is the process of gathering and assessing evidence.
In planning an audit three questions need to be answered:
What audit procedures need to be performed?
How much evidence is needed?
When should the audit procedures be performed?
Note 10-Auditing- Concluding the Audit
The auditors professional objective is to produce a high quality audit. This will satisfy the needs of
companys stakeholders and participants in the capital market.
What does a high quality audit depend on?
Note A - Auditing the Revenue and Accounts Receivables Cycle
Many companies find it difficult earning net income in the early stages of their growth and
development. Investors look at revenue growth as the more important metric in assessing the
Note 9 auditing for fraud
The regulators message is clearauditors must assume a greater responsibility for detecting fraud and
assuring investors that the financial statements are free of material fraud.
Fraud deterrence can occur if:
There is a highly et
Note 4 Auditing
Risk is at the heart of every business transaction. It is pervasive. Risk for auditors can be
Business riskaffects operations and outcomes of organizational activities.
Financial reporting riskconnected with recording and repo