Auditing Lecture A1
|What is the objective of the independent audit? ||The objective of the independent audit is to express an opinion stating whether the financial statements, taken as a whole, are fairly presented in all material respects in conformity with accounting principles generally accepted in the United States of A|
|Which standards provide the most authoritative auditing guidance and who issues them? ||Statements of Auditing Standards (SASs),issued by the AICPA Auditing Standards Board.|
|What are the three general standards? (TIP) ||The auditor must have adequate technical TRAINING and proficiency to perform the audit.
The auditor must maintain INDEPENDENCE in mental attitude in all matters relating to the audit.
The auditor must exercise due PROFESSIONAL CARE in the planning a|
|What are the three standards of fieldwork? (PIE) ||The auditor must adequately PLAN the work and must properly supervise any assistants.
The auditor must obtain a sufficient understanding of the entity and its environment, including its INTERNAL CONTROL, to assess the risk of material misstatement of|
|What are the four standards of reporting? (All CPAs Do Ok) ||The auditor must state in the auditor's report whether the financial statements are presented in accordance with generally accepted ACCOUNTING PRINCIPLES.
The auditor must identify in the auditor's report those circumstances in which such principles h|
|Explain the differences between auditing standards and auditing procedures. ||Auditing standards measure the quality of the performance of the audit.
Auditing procedures are the acts to be performed during the audit.|
|What should be included in the introduction paragraph of the auditor's standard report? ||A statement that:
- The financial statements identified in
the report were audited.
- The financial statements are the
responsibility of management.
- The auditor's responsibility is to
express an opinion based on the audit.|
|What should be included in the scope paragraph of the auditor's report? ||Statements that:
- The auditors was conducted in accordance with auditing standards generally accepted in the United States of America.
- The auditor was planned and performed to obtain reasonable assurance that the financial statements are free of m|
|What should be included in the opinion paragraph of the auditor's standard report? ||A statement that:
- In the auditor opinion, the financial statements identified in the introductory paragraph are presented fairly in all material respects.
- The financial statements are in conformity with accounting principles generally accepted in|
|What is the content and format of the standard auditor's report? || Independent Auditor's Report
To the Stockholders and Board of Directors of X Company:
We have audited the accompanying balance sheet of X Company as of December 31, Year 1, and the related statements of income, retained earnings, and ca|