CFA-Accounting
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| An auditor is | (independent certified public account) checks that the financial statements comply with generally accepted accounting principals (GAAP).
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| An auditor is hired by | the management (but supposed to be independent and serve the stockholders and other users of the statements).
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| 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.
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| PCAOB | Public Company Accounting Oversight Board
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| COSO Opinion | The PCAOB Auditing Standards No. 2
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| 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.
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| 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.
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| 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
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| 4 types of auditor’s reports | unqualified opinion report, qualified opinion report, adverse opinion, disclaimer of opinion
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| Unqualified opinion report | issued when everything is fairly presented in the statements
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| 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.
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| 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
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| 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.
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| Interim reports | (10-Q)
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| adverse opinion | when financial statements are materially misstated
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