Accounting Vs Auditing Flashcards
FINANCIAL ACCOUNTING
-preparation and distribution of the general-purpose, historical financial statements (balance sheet, income statement, statement of cash flows, and statement of retained earnings)
- users want to evaluate if the management has performed well
- users need to know if the financial statements are reliable
AUDITING
-auditor must provide impartial/independent report
-PURPOSE OF AUDIT
“The purpose of an audit is to provide financial statement users with an opinion by the auditor on whether the financial statements are presented fairly, in all material respects, in accordance with the applicable financial reporting framework. An auditor’s opinion enhances the degree of confidence that the intended users can place in the financial statements”
STANDARDS FOR FINANCIAL STATEMENTS
- financial reporting framework: US GAAP, IFRSs (International financial reporting Standards) issued by IASB (International accounting standard boards)
- in US, reporting framework can be either IFRS or US GAAP
-Standard setters with US GAAP (depends upon nature of reporting entity)
FASAB- federal governmental entities
GASB- state and local govts
FASB- corporations
STANDARDS FOR AUDITOR
-OUTSIDE USA
ISAs “International standards on Auditing” issued by International Auditing and Assurance Standards Board within IFAC (International Federation of Accountants).
-WITHIN USA (depending upon nature of reporting entity)
GAGAS (generally accepted govt aud standards) issued by US GAO - govt entities
Aud Standards of PCAOB (Public Comp account oversight board)- public comp (issuers of security to public)
AICPAs GAAS - private comp (non-issuers)
