1 / 12

CHAPTER 1 AUDITING AND THE PUBLIC ACCOUNTING PROFESSION Fall 2007

CHAPTER 1 AUDITING AND THE PUBLIC ACCOUNTING PROFESSION Fall 2007. What is auditing? Types of Audits Independent Auditor Relationships Services Performed by CPA Firms Accounting Oversight Zoo Relationship between Accounting and Auditing. Auditing Defined.

victoir
Download Presentation

CHAPTER 1 AUDITING AND THE PUBLIC ACCOUNTING PROFESSION Fall 2007

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. CHAPTER 1AUDITING AND THE PUBLIC ACCOUNTING PROFESSIONFall 2007 • What is auditing? • Types of Audits • Independent Auditor Relationships • Services Performed by CPA Firms • Accounting Oversight Zoo • Relationship between Accounting and Auditing

  2. Auditing Defined Auditing is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users.

  3. Auditing in Plain English… An audit is… • a logical series of steps (GAAS) • performed without bias (independent CPA) • to get support (evidence) • about whether representations of management (mgmt’s f/s) • correspond to established standards (GAAP). The results of the audit • are communicated in writing (audit report) • to people who will rely on the findings (the “users”).

  4. Types of Audits Financial • Are the f/s fairly stated under GAAP? Compliance • Has the company established and maintained adequate internal controls (per COSO) over financial reporting? Operational

  5. Financial Statement Audits Why are audits necessary? Who benefits from audited financial statements?

  6. Independent Auditor Relationships Management • Responsible for f/s • Assumption of management honesty • Need for professional skepticism • Is not “the client” Board of Directors • Act on behalf of owners • Has oversight over management • Audit committee

  7. Assurance Services Performed by CPA Firms Assurance Services are independentprofessional services that improve the quality of information, or its context, for decision makers. • What does independence mean? • What makes a CPA a professional?

  8. Primary Assurance and Accounting Services Performed by CPA Firms Attestation: CPA firm issues a written communication expressing a conclusion about the reliability of a written assertion that is the responsibility of another party. a. Audit or Examination – positive assurance b. Review – negative assurance c. Agreed Upon Procedures – negative or positive assurance Accounting & compilations: NO assurance

  9. Limitations of a Financial Statement Audit Economic limits: 1. Reasonable Cost 2. Reasonable Length of Time Limitations associated with the established accounting framework: 1. Alternative Accounting Principles 2. Accounting Estimates

  10. Who’s Who in the Accounting Oversight Zoo??? Who does the work? • CPA Firms Who licenses CPAs? • State Boards of Accountancy Who sets GAAP? • FASB • GASB • SEC and PCAOB Who sets GAAS and Ethical Standards? • AICPA • SEC and PCAOB Who monitors quality • CPA Firms: internally, for each other • PCAOB

  11. Quality Control • Quality control standards (AICPA established, PCAOB ratified) • Independence, integrity & objectivity • Personnel Management • Acceptance and continuation of clients and engagements • Engagement performance • Monitoring • PCAOB inspections for registered firms

  12. Relationship Between Accounting and Auditing(Fig 2-1)

More Related