CH 1 - Pre planning Flashcards
How often does the SEC required publicly traded companies to release FS?
Every 3 months
Who does the PCAOB report to?
SEC
What type of standards does the PCAOB establish relating to preparation and issuance of audit reports for issuers?
Auditing standards (NOT accounting standards)
Define Professional Skepticism
- unbiased and objective view with respect to the audit
- Belief that management is neither honest not dishonest and that evidence must be gathered to support managements financial statements
Define Professional judgement
Professional judgement is what the auditor relies on to determine whether the auditor is independent
When performing auditing procedures: What is similar between might, could, and presumptively mandatory?
The auditors have responsibility to consider and will use judgment to determine whether to perform
Relating to Audit procedures: Define unconditional
Auditor judgement is not exercised and will be performed
When is professional judgement necessary? (3)
When making decisions on
1 . Independence
2. Materiality
3. Audit risk
What is an attestation engagement?
Attestation is one which the CPA is engaged to issue an examination, a review, or on AUP on subject matter or an assertion about subject matter that is responsibility of another party
In a publicly traded company, who is the audit committee made up of?
Made up of the members of the BoD (not officers or employees)
In an audit, who is not allowed to own material indirect financial interest in the client company without violating independence?
Covered member, spouse and dependent, and audit firm
What are prospective financial statements?
They describe (to the best of the responsible party’s knowledge an belief) an entity’s financial position, results of operations, and cash flows.
What is an Agreed Upon Procedure?
An attestation engagement which practitioner performs specific procedures on subject matter or assertion and reports findings without providing an opinion or conclusion on it.
What are pro-forma
A presentation that shows what the significant effects on historical financial information might have been had a consummated or proposed transaction occurred at an earlier date is referred to.
What is the difference between attestation engagements and quality control standards
Attestation apply to individual attestation engagements
Quality control standards apply to the firm attestation practice as a whole
