Chapter 2 - Professional Standards Flashcards
ASB is for ____ entities
private
three types of professional standards principles
responsibilities, performance, reporting
PCAOBs and ASB principles are…
similar
GAAS stands for…
generally accepted auditing standards
what does GAAS do?
identify necessary qualifications and characteristics of auditors and guide the conduct of audit
simple gaas definition
who can audit? how to audit?
purpose of GAAS
to achieve the following objective of an audit
1. obtain reasonable assurance that there is no material misstatement
2. report on the f/s and communicate in accordance of audit findings
sources of GAAS
ASB, PCAOB, IAASB, etc.
what does GAAP tell us?
how to record transactions, present f/s, and disclose other financial information
what is the foundation of an audit?
fundamental principles
three components of GAAS
fundamental principles, PCAOB auditing standards and ASB statements on auditing standards, interpretive publications
interpretive publications guide..
application of GAAS
PCAOB auditing standards and ASB statements on auditing standards are…
requirements supporting principles
simple definition of responsibilities principle
who can audit
4 parts of responsibilities principle
- competence and capabilities
- independence
- due care
- professional skepticism and judgement
competence and capabilities also means…
experience and expertise
two types of independence that an auditor must be
in fact and in appearance
independence in fact means…
you are independent
independence in appears means…
you appear independent
you cannot measure which type of independence?
in fact
what relationship should be independent?
financial and managerial
due care is…
level of performance by reasonable auditor in similar circumstances
skepticism is…
appropriate questioning and critical assessment of evidence
judgement is…
using knowledge, training, and experience in making informed decisions during an audit
