Auditing Theory- Study Guide
Auditing Theory- Study Guide ACCT 6352
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This 4 page Study Guide was uploaded by Noor on Saturday October 1, 2016. The Study Guide belongs to ACCT 6352 at California State University - Los Angeles taught by in Fall 2016. Since its upload, it has received 7 views. For similar materials see Auditing Theory in Accounting at California State University - Los Angeles.
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Date Created: 10/01/16
Chapter 1:Auditing and assurance services • Differences between assurance services, attestation services, and auditing; Know business risk, information risk, audit risk; • Know the major provisions of Sarbanes Oxley act. Know theAICPA, PCAOB, FASB, SEC. • Information risk and Business risk • PublicAccounting Profession Chapter 2: Professional standards •AICPA’s “Principles Underlying anAudit Conducted inAccordance with Generally AcceptedAuditing Standards” • Statements on auditing standards •Auditors’responsibility for detecting misstatements, errors, frauds, and illegal acts. • Standard unmodified audit opinion—you must know the standard unmodified audit opinion (non-public companies). • Be able to identify wording in the standard unmodified report that is incorrect and supply the correct wording. • Know the basic differences between the standard report for a non-public company compared to a public company • Regulation of accounting firms—AICPAand PCAOB—their authority • PCAOBAuditing Standards • IllegalActs by Clients • Responsibilities of ExternalAuditors Chapter 3: Professional Ethics: • Overall structure ofAICPACode of Professional Conduct and its sections Principles of theAICPA’s Code of Professional Conduct Conceptual framework—evaluating threats to independence Broad categories of threats to independence • Definitions—covered member, immediate family, close relative, audit engagement team, direct financial interest, indirect financial interest. • Independence. Independence and financial/other interests Chapter 17: Reports on audited financial statements • You must know under what circumstances the auditor would issue a certain type of report, and how the report would be modified under those circumstances. • Unmodified opinion with either “emphasis of matter” paragraph or “other matter” paragraph Going concern Change in accounting principles (consistency) Emphasis of a matter Group financial statements Justified GAAP departure • Modified opinions: Qualified, adverse, disclaimer—occur because either (1) non- GAAPFS, or (2)Audit was not GAAS (scope limitation) • Know situations in which misstatement is deemed “pervasive” • Qualified opinion FS depart from GAAP Limitations on scope of auditors’procedures Problems, while material, are not pervasive • Adverse opinion FS not presented fairly in accordance with GAAP Deficiencies so significant that FS taken as a whole are misleading. Material misstatements are pervasive • Disclaimer of opinion Because of scope limitation, auditors unable to form an opinion, or did not form an opinion on FS. Not an opinion—states that auditor does not express an opinion on FS. Also if auditor not independent. • Other reporting issues Two or more report modifications. Different opinions different FS Comparative financial statements prior year unaudited, different auditor prior year, updating opinion on prior year condensed financial statements, other information accompanying audited FS
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