Accounting VS Auditing

Question 1

Who are potential users of F/S?

Answer 1

Investors

Major business “partners”

• Employees
• Customers
• Suppliers

Competitors

Regulators (SEC, FTC)

Management of the business

Question 2

What do users do with the F/S they receive?

Answer 2

Evaluate management’s performance with information that management itself has been prepared.

Question 3

What are the two distinct aspects of an audit engagement?

Answer 3

Fieldwork stage- Systematically gathers evidence to evaluate assertions against criteria (GAAP)

Reporting Stage- Communicates the results

Question 4

What are the destinct standard setting bodies in the United States?

Answer 4

FASB- For businesses
GASB- For State & Local Government Entities
FASAB- For Federal Governmental Entities

Question 5

What are the standard setting bodies for auditing in the United States?

Answer 5

ASB- for “non-Issuers” (Private companies, GAAS)

PCABOB- “for issuers” (for public companies)

GAO- For governmental entities

Question 6

What is the audit standard setting international bodies?

Answer 6

Issues International Standards on Auditing (ISAS)