Chapter Two professional standards

1. Chapter Twoprofessional standards

2. Tony GAAS GAAP Which refers to Accounting Standards ? Which refers to Auditing Standards ?

3. Jason G Which organization(s) creates Accounting Standards ? Which organization(s) creates Auditing Standards ?

4. GAAP FASB primary source GAAS PCAOB (public companies) aicpa ASB (private companies)

5. Hierarchy of GAAP p. 50 Don’t worry about Federal Governmental Entities Or State & Local Governmental Entities

6. Hierarchy of GAAP p 50 A FASB Statements FASB interpretations APB opinions ARB bulletins B FASB technical bulletins AICPA industry & actg guides AICPA state of position

7. Hierarchy of GAAP C FASB EITF Concensus AICPA AcSEC Practice Bulletins D AICPA interpretations Q&As from FASB industry practice

9. FASB CodificationASU Accounting Standards Updates • Effective July 1, 2009, changes to the source of authoritative U.S. GAAP, the FASB Accounting Standards Codification, are communicated through an Accounting Standards Update (ASU). ASUs will be published for all authoritative U.S. GAAP promulgated by the FASB,

10. FASB Accounting Standards Codification The Codification is the single source of authoritative nongovernmental U.S. GAAP. The Codification is effective for periods ending after September 15, 2009. All previous level (a)-(d) US GAAP standards issued by a standard setter are superseded. Level (a)-(d) US GAAP refers to the previous accounting hierarchy. All other accounting literature not included in the Codification will be considered nonauthoritative.

11. Comparison of Attestation Stds with GAAS p 53 Don’t worry about attestation standards Except to know that they exist

12. Organizations Securities Exchange Commission Public Companies Accounting Oversight Board Financial Accounting Standards Board American Institute of Certified Public Accountants State Board of Accountancy California Society of CPAs

13. Organizations SEC PCAOB FASB American Institute of Certified Public Accountants California Board of Accountancy

14. GAAP GAAS FASB PCAOB AICPA ASU AS SFAS or FAS SAS

15. Rob Foy The 10 Generally Accepted Auditing Standards are broken up into three groups. What are those three groups ?

16. Auditing Standards general standards standards of field work standards of reporting page 38

17. general standardsthe auditor • adequate technical training and proficiency to perform the audit • Independence in mental attitude • exercise due professional care

18. standards of field workthe work we do • adequately plan the work and properly supervise any assistants • sufficient understanding of the internal control to assess risk • sufficient appropriate audit evidence

19. standards of reportingthe auditor’s report • financial statements presented in accordance with GAAP • identify circumstances in which GAAP have not been consistently observed • informative disclosures are adequate • the auditor must express an opinion, or

20. Robert H Very briefly, what are the three general standard ?

21. general standardsthe auditor • adequate technical training and proficiency to perform the audit • independence in mental attitude • exercise due professional care

22. Kyle What is the first general standard ?

23. 1st general standard The auditor must have adequate technical training and proficiency to perform the audit

27. Jeff What is the third general standard ?

28. 3rd general standard The auditor must exercise due professional care in the performance of the audit and the preparation of the report

29. General Standard II

30. Chris Mc What is the second general standard ?

31. 2 general standard The auditor must maintain independence in mental attitude in all matters relating to the audit

32. standards of field work

33. standards of field workthe work we do • adequately plan the work and properly supervise any assistants • sufficient understanding of the internal control to assess risk • sufficient appropriate audit evidence

34. Kaela What is the first standard of field work ?

35. 1st standard of field work The auditor must adequately plan the work and must properly supervise any assistants

36. Sarah What is the second standard of field work ?

37. 2nd standard of field work The auditor must obtain a sufficient understanding of the entity and its environment including its internal control structure to assess the risk of material misstatement of the financial statements whether due to error or fraud, and to design the nature, timing and extent of further audit procedures

39. Allegra What is the third standard of field work ?

40. 3rd standard of field work The auditor must obtain sufficient, appropriate audit evidence by performing audit procedures to afford a reasonable basis for an opinion regarding the financial statements under audit

41. Report of the Independent Certified Public Accountant To the Board of Directors and Shareholders of Miller Motor Co. We have audited the accompanying balance sheet of Miller Motor Co. as of Dec. 31, 2009 and 2008, and the related statements of income, retained earnings and cash flows for the three years ended Dec. 31, 2009. These statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards of the Public Company Accounting Oversight Board. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Miller Motor Co. as of Dec. 31, 2009 and 2008, and the results of its operations and cash flows for the year then ended in conformity with accounting principles generally accepted in the United Stated. standards of reporting

42. Kim Briefly! What are the reporting standards ?

43. standards of reportingthe auditor’s report • financial statements presented in accordance with GAAP • identify circumstances in which GAAP have not been consistently observed • informative disclosures are adequate • the auditor must express an opinion, or

44. Christine What is the first reporting standard?

45. 1st standard of reporting The auditor must state in the auditor’s report whether the financial statements are presented in accordance with generally accepted accounting principles

46. Lindsey What is the second reporting standard?

47. 2nd standard of reporting The auditor must identify in the auditor’s report those circumstances in which such principles have not been consistently observed in the current period in relation to the preceding period

48. Rachel What is the third reporting standard?

49. 3rd standard of reporting When the auditor determines that informative disclosures are not reasonably adequate, the auditor must so state in the auditor’s report

50. Aaron What issues are covered in the fourth reporting standard?