Question | Answer |
An auditor is | (independent certified public account) checks that the financial statements comply with generally accepted accounting principals (GAAP). |
An auditor is hired by | the management (but supposed to be independent and serve the stockholders and other users of the statements). |
An auditor's job is to | examine company’s accounting n internal control systems, confirm assets n liabilities, and ensure there are no errors in the financial statements. 2. Must agree that the management’s choice of accounting principles n estimates are appropriate/reasonable. |
PCAOB | Public Company Accounting Oversight Board |
COSO Opinion | The PCAOB Auditing Standards No. 2 |
Public Company Accounting Oversight Board (PCAOB) | established in 2002 following the Sarbanes-Oxley Act in order to monitor, regulate, inspect, and discipline audit and public accounting firms of public companies. |
The PCAOB Auditing Standards No. 2 (COSO Opinion) | makes it so that auditors have to include additional info in their opinion report regarding the auditee’s internal controls, and discuss about the company’s internal controls over financial reporting. |
auditor’s report/auditor’s opinion | issued as a part of a company’s audited financial report, 1. Says if the statement complies with accounting principals 2.says which principals are inconsistent between reports 3.says the statement is adequate unless otherwise stated in the report |
4 types of auditor’s reports | unqualified opinion report, qualified opinion report, adverse opinion, disclaimer of opinion |
Unqualified opinion report | issued when everything is fairly presented in the statements |
qualified opinion report | when there are one or two situations that do not comply with accepted accounting principles, but the rest of the financial statements are fairly presented. |
Interim reports (10-Q) | i.Publically held companies must file them quarterly 1.less detailed than annual financial statements ii.Typically not audited iii.Contains basic financial statements, unedited footnotes to financial statements, and md |
Disclaimer of opinion: | Issued when an auditor could not form an opinion and therefore refuses to present on. Could happen when an auditor was not able to complete the auditing work. |
Interim reports | (10-Q) |
adverse opinion | when financial statements are materially misstated |