Chapter 3: Audit Reports
1. Purposes of an audit report:
a. Communicate with our principal (stockholder/
b. Meet the statutory requirements.
Ethical rulings Provide more detailed guidance to practitioners about
interpretation of the rules of conduct for less commonly
There is no difference between independence in fact and independence in appearance.
Chapter 4: Professional ethics
Society has attached a special meaning to the term professional. A professional is:
someone who has passed a qualifying exam to enter the job market.
a person who is expected to conduct himself or herself at a highe
Chapter 3: Audit reports
To emphasize the fact that the auditor is independent, a typical addressee of the audit report could be:
Company Controller Shareholders Board of Directors
a. No Yes Yes
b. No No Yes
c. Yes Yes No
d. Yes No No
The purpose of th
Dene materiality. Identify and discuss conditions that affect materiality.
Materiality is a misstatement in the nancial statements if knowledge of the misstatement
would affect a decision of a reasonable user of the statements.