Notes chapter 2 principles of auditing
Principles of financial audit
Information concerning subsequent events v. Accountant believes that client would not use report to obtain credit D. Reading the Financial Statements a. Free from material errors arithmetic, clerical, GAAP related 4. Restricted Use: Generally it is only for use of involved parties b. A basis of accounting that the entity uses to file its income tax returns c. Not provide audit clients any tax services for confidential or aggressive tax transactions f. Reference to the specific agreement iv. Compliance with contractual or regulatory requirements related to audited financial statements iv.
Piecemeal opinions should not be expressed when the auditor has expressed an adverse opinion or disclaimed an opinion i. General Rule: a. GAAS vs.
Oral communication must be documented. Maintaining records showing which personnel were previously employed by clients or have relatives holding key positions with clients b.
Restricted Use: only for involved parties c. Develop expectation and compare recorded amounts to that expectation b.
Principles of auditors
Reporting on a Review. Quality Control Standards a. Continuous Monitoring 1. Understanding with the Client Must be Established a. Financial presentations to comply with contractual agreements or regulatory provisions v. If they discover info is incorrect, they should obtain revised info from client. Based on inquiry and analytical procedures by CPA C. Representations about the completeness of information iv. Add separate paragraph to end of report to disclose the GAAP departure 2. Accountant should consider whether it might be prudent to issue a compilation report to clarify that no assurance is being provided, even if report not required C. Same as standard report c. Reviewing the FS and credit rating of the proposed client b. Such policies should encompass all phases of design and execution of the engagement — planning, performing, supervising, reviewing, documenting, communicating results, and consulting with individuals having appropriate knowledge, competence, judgment, and authority a. Cica"s first generally accepted auditing standards were first written as short statement of 8 standards.
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