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Flashcards in Auditing and More White Book Hogan Deck (23)
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What is auditing?

Auditing is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic events to ascertain the degree of correspondence between the assertions and established criteria and communicating the results to interested users.


What is the audit process?

Accept or retain a client
Plan the engagement
Gather and assess evidence
Report results


Statement on Auditing Standard (SAS) are prepared by and apply to?

Prepared by ASB of the AICPA and apply to nonissuers


Audit Standard (AS) is prepared by and apply to?

Prepared by PCAOB and apply to issuers


International Standard on Auditing(ISA) prepared by and apply to?

Prepared by IAASB of the IFAC (international auditing and assurance standards board) apply to Foreign Companies.


Governmental Auditing Standards (GAS) prepared by and apply to?

Prepared by GAO (U.S. Government accountability office) apply to Government entities and entities that receive government awards/funds.


Statement on Standards for Attestation Engagements (SSAE) Prepared by and apply to?

Prepared by AICPA and apply to Attesting to Info other than historical F/S


Statement on Standards for Accounting and Review Services (SSARS) prepared by and apply to ?

Prepared ARSC of the AICPA and apply to nonissues. Compilations (assembling F/S, with no assurance), and review (with limited assurance)


Do you need to be independent for consulting services?

Do not need to be independent.


IAASB writes

International auditing standards


IASB writes

international accounting standards


Is opinion on Internal control required for international reports?

No, international do not require audit of IC, so no opinion on IC is required.


For international standards, is and auditor required to confirm AR?

No, this requirement is not in the ISA


For international standards, is inquiry of client's lawyer required?

Not a specific requirement in the ISA's (unless auditor assesses a risk of material misstatement)


SOX only applies to?

Public companies.


To help maintain independence, there is a cooling off period before an auditor can assume a key financial reporting role at the audit client, how long is the waiting period?

1 year cooling off period


A public company must have an audit committee that is:

Comprised exclusively of outside/independent directors
Should have at least 1 financial expert (need not be a CPA)
Hires and fires the auditor
Oversees the company's accounting policies
Preapproves any acceptable non audit services
Oversees internal audit activities and reports
Publicly reports its charter/duties


How often must an engagement audit partner, and concurring partner rotate off the audit?

After 5 years.


What is whistle blowing protection?

Company can't retaliate against the employee- cannot unduly punish/ fire for "blowing the whistle" on fraud or other wrongful conduct.


SOX prohibited services(If audit a public company, you can not also do)?

Bookkeeping or other services relating to the F/S or accounting records
Financial info systems design and or implementation
Appraisal services
Internal audit outsourcing services
Management and human resource functions
Actuarial services
Investment or broker-dealer services
Certain tax services, such as tax planning for potentially abusive tax shelters
Other service that would affect independence as determined by the PCAOB.


how long must an auditor retain workpapers?

for at least 7 years.


The SEC appoint the PCAOB's five board members which consist of?

2 CPAs and 3 non CPAs


What is the nature and timing of communications between an accounting firm performing an initial audit of an issuer and the issuer's audit committee?

Prior to accepting the engagement, the firm should describe in writing all relationship that, as of the date of the communication, may reasonably be thought to bear on independence.