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AUD Study Notes

AUD Study Notes

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Published by CPA Chess
Auditing & Attestation Study Notes
Auditing & Attestation Study Notes

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Published by: CPA Chess on Sep 28, 2008
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12/02/2012

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Auditing & Attestation
 
I.
 
Engagement plan, Client acceptance and agreement
A.
 
Determine Nature and Scope1.
 
GAAS: board guidelines ad detailed practices and procedures – Chap 281)
 
GAAS Hierarchy: a) FASB stmt & interpretations
b) FASB Technical Bulletins, AICAP A&AGuides; c) AICPA Practice Bulletins; d) AICPA Accounting Interpretation2)
 
GAAS Standard (audit standard)a)
 
General (TIP) – training, independence, performance;b)
 
Field Work (SEE) – supervision & planning/ entity and its environment; evidencec)
 
Reporting (ACDE) – accounting = U.S GAAp; consistency; disclosure; expressing an opinion.3)
 
Date of report: no earlier than the last date of obtaining evidence4)
 
Going concern:5)
 
Supplementary info & Segment info2.
 
Std for Accounting and Review Services (SSARS) – Chap 311)
 
Authorization Guidance Hierarchy: a) SSARS; b) Interpretative Publication; 3) other publicationNot precluded from issuing report on one F/S and not the others2)
 
Compilation:a)
 
Independence is not required; explicitly in the report only when lack of –b)
 
Reporting or non-reporting optionsc)
 
Limited to presenting, info that is rep of mgmt “scope limit” d)
 
Allow to omit substantially all disclosure if not misleading3)
 
Review:a)
 
Independence reqb)
 
Inquiry or analytics (ratio analysis)c)
 
Disclaim of opiniond)
 
Not allow to omit substantially all disclosure if not misleading & scope limit
 
4)
 
Comparative F/Sa)
 
Predecessor’s report reissuedb)
 
Should not issue CFS when statement for one period omit substantially all of the disclosureby GAAPc)
 
The same opinion is not req for all stmt3.
 
Std for Attestation Engagements (SSAE) – Chap 31a)
 
Examination; Reviews; Agree-upon procedures – no assuranceb)
 
Type: Financial forecast/projection(prospective F/S); Pro-Forma F/S; I/C over F/R; Compliancewith contract; Mgmt D&A4.
 
Compliance Auditing Applicable to Govt Entity and other Recipients of Govt (Government AuditStandard) – Chap 291)
 
Type: Financial Audit; Attestation; Performance Audit2)
 
Req. a written report on the consideration of I/C on all audits3)
 
 “Single Audit Act” 
 
Threshold: non-federal entity, >=$500K within a fiscal year
 
Compliance reporting: allowability of expenditures & eligibility5.
 
Other Assurance Services (Chap.29)1)
 
Audit of Internal Control (I/C on financial reporting):*** Auditor’s opinion relation to effectiveness of company’s ICOFR as of “ a point of time” and “ takenas a whole” a)
 
Mgt responsibility: effectiveness of company’s ICOFR; evaluation/ evaluation with sufficientevidence; written assessment of ICOFRb)
 
Auditor responsibility: express opinion on mgmt’s assessment of effectiveness of ICOFRc)
 
Test & evaluate design effectiveness: design eff to prevent/detect error or fraudd)
 
Test &evaluate operation effectiveness: operating as designed, authority& qualification toperform control effectively1.
 
Appropriateness of engagement to meet clients needs B. Assess engagement risk and CPA’s firm’s ability to perform the engagement (Chap 21)1.
 
Engagement responsibilitiesa)
 
Auditor: F/S misstmt GAAS); discover errors/ fraud/illegal/IC deficiency come to attention
 
b)
 
I/C or A/C: internal Controlc)
 
Mgmt: prevent & detect fraud/illegal; establish& maintain I/C, legal issues, adjust Misstmt2.
 
Staffing and Supervision Req3.
 
Quality Control Stardards*** related to CPA firm’s practice as a whole while GAAS related to individual audit engagementa)
 
Objective: meeting responsibility to provide profe services conform with prof stdb)
 
Responsibility: all firm personnel should comply; design & maintain – personnel neededc)
 
Elements(IM APE): independence, integrity & objectivity; Monitoring; Acceptance & Continuance of clients; Personnel Mgmt; Engagement Perf d)
 
Personnel Mgmt(HEAD): Hiring; Assignment of Personnel to Engagements, Advancement ,Prof Development4.
 
Mgmt Integrity
impact on mgt rep5.
 
Research Info sources for planning and performing the engagementC. Communicate with Predecessor A/C or Auditor D. Decide whether to accept/continue (Chap 22) E. Engagement Ltr (Chap 22)
 
Objective of audit, mgt & auditor’s responsibilities F. Obtain an understanding of the client’s operation, business and industry (Chap 22)
 
I/C to identify type of material factors that affect RMM design T.O.C G. Perform analytical proceduresa)
 
Purpose: planning (req.); substantive testing (not req.); overall review (req)b)
 
Plausibility, predictability, and precisionc)
 
Benford’s law 

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