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19 Cards in this Set
- Front
- Back
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What is Auditing |
obtaining and gathering evidence of the financial statement and footnote disclosure about economic events to make sure it corresponds with the GAAP and then giving it out to creditors and investors. |
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Assurance services |
Improves the quality of information for decision makers (Example; Surveys tell) |
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attestation engagement |
Reviewing a subject matter does not include the financial statement such as the internal control matters, break even analysis and historical or prospective performance |
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Sarbanes-Oxley Act of 2002 |
In fact, Section 302 of the Act states that the key company officials must certify the financial statements. That is, the company CEO and CFOmust sign a statement indicating: 1. They have read the financial statements. 2. They are not aware of any false or misleading statements (or any keyomitted disclosures). 3. They believe that the financial statements present an accurate picture ofthe company’s financial condition. |
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Existence or occurrence |
Asset and Liability actually exist and have occurred |
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Rights and obligations |
The company has a legal claim on all asset and revenue, also has the legal responsibility for all liabilities and expenses |
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Completeness |
all balances and transaction have been recorded in the financial statements |
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Valuation or allocation |
this is regarding all the percentage methods and if they have been recorded in accordance with the GAAP |
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Presentation and disclosure |
All require account that has to been disclosed int he footnote is there |
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Assertion about events and transaction |
Occurrence- Transactions that have made events come have actually occurred Completeness and Cutoff- All Transaction have been recorded in it proper period and recorded Accuracy- Transactions are recorded at correct amount Classification- Transaction have been recorded tot he right account |
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Assertions about presentation and Disclosure |
Occurance and rights and obligation Completeness Classification and Understandability- Everything has been grouped together and the person reader can understand Accuracy and valuation |
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Assertions about account balances |
Existence Rights and obligations Completeness Accuracy and valuation |
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Professional Skepticism |
Auditor must question the management and integrated them in a way they get the full answers |
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Types of audit |
Financial Optional Compliance Forensic |
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GAAS |
Making sure the financial statements are free of material misstatements |
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Responsibilities Principle |
Competence and Capabilities- To be experience and be willing to learn has to rules change Independence in fact- Not have any stock in the company Independence in appearance- Not have any relatives close to you in the company Due care- How well you perform in similar circumstances Professional skepticism and judgment |
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Perform Principle |
To provided reasonable assurance that financial statements do not contain material misstatements Planning and Supervision- Preparation of audit plan Materiality- Decisions of financial statement users, it is considered throughout the whole audit Risk assessment- Understanding the business and environment including the internal control. Audit Evidence- Sufficient-Quantity( How many transactions, Appropriate- Quality( What level of reliability needed? source?) |
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Reporting Principle |
Expresses an opinion on entity's financial statements |
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Types of audit opinions |
Unmodified- financial statements are good with rules of GAAP Qualified- expected for something, financial statements are good with rules of GAAP Adverse- Financial statements are not good with rules of GAAP Disclaimer- The auditor does not express an opinion |
