auditoria chapter 02
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PPT audit chapt 2TRANSCRIPT
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Modern Auditing:Modern Auditing:Assurance Services and the Assurance Services and the
Integrity of Financial Reporting, 8Integrity of Financial Reporting, 8thth EditionEdition
Modern Auditing:Modern Auditing:Assurance Services and the Assurance Services and the
Integrity of Financial Reporting, 8Integrity of Financial Reporting, 8thth EditionEdition
William C. BoyntonWilliam C. BoyntonCalifornia Polytechnic State California Polytechnic State
University at San Luis ObispoUniversity at San Luis Obispo
Raymond N. Raymond N. JohnsonJohnson
Portland State UniversityPortland State University
Chapter 2 – Auditors’ Responsibilities and Reports
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Chapter 2 OverviewChapter 2 OverviewChapter 2 OverviewChapter 2 Overview
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Relationship Between Relationship Between Accounting and AuditingAccounting and AuditingRelationship Between Relationship Between
Accounting and AuditingAccounting and Auditing
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Important Fundamental Important Fundamental ConceptsConcepts
Important Fundamental Important Fundamental ConceptsConcepts
• Verifiability
• Fair Presentation
• Professional Judgment
• Materiality
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Independent Auditor Independent Auditor RelationshipsRelationships
Independent Auditor Independent Auditor RelationshipsRelationships
• Management
• Board of Directors and Audit Committee
• Internal Auditors
• Stockholders
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1. It is the responsibility of management to complete all of the following except:
A. Assess the risk of material misstatement in the financial statements
B. Measure and record transaction dataC. Classify and summarize recorded dataD. Prepare financial statements per GAAP
A. Assess the risk of material misstatement in the financial statements
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2. Items that are considered to be _____, are significant to financial statement users.
A. VerifiableB. MaterialC. Fairly PresentedD. Recorded
B. Material
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Generally Accepted Auditing Generally Accepted Auditing Standards (GAAS)Standards (GAAS)
Generally Accepted Auditing Generally Accepted Auditing Standards (GAAS)Standards (GAAS)
• General Standards
• Standards of Field Work
• Standards of Reporting
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GAAS – General StandardsGAAS – General StandardsGAAS – General StandardsGAAS – General Standards
• Adequate Technical Training and Proficiency
• Independence in Mental Attitude
• Due Professional Care
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GAAS – Standards of Field GAAS – Standards of Field WorkWork
GAAS – Standards of Field GAAS – Standards of Field WorkWork
• Adequate Planning and Proper Supervision
• Understanding the Entity, Environment, and Internal Control
• Sufficient Competent Audit Evidence
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GAAS – Standards of ReportingGAAS – Standards of ReportingGAAS – Standards of ReportingGAAS – Standards of Reporting
• Financial Statements Presented in Accordance with GAAP
• Consistency in the Application of GAAP
• Adequacy of Informative Disclosures
• Expression of Opinion
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Additional StandardsAdditional StandardsAdditional StandardsAdditional Standards
• Statements on Auditing Standards– AICPA website : Audit and Attest St
andards
• PCAOB Auditing Standards– Public Companies Accounting Overs
ight Board website
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3. General Standards include all of the following except:
A. Adequate TrainingB. IndependenceC. Understanding the EntityD. Due Professional Care
C. Understanding the Entity
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4. These standards pertain specifically to the conduct of the audit at the entity’s place of business.
A. General StandardsB. Standards of Field WorkC. Standards of ReportingD. Statement on Auditing Standards
B. Standards of Field Work
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Assurance Provided by an Assurance Provided by an AuditAudit
Assurance Provided by an Assurance Provided by an AuditAudit
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The Auditor’s Standard Report The Auditor’s Standard Report – Unqualified Opinion– Unqualified Opinion
The Auditor’s Standard Report The Auditor’s Standard Report – Unqualified Opinion– Unqualified Opinion
• Title and Address
• Introductory Paragraph
• Scope Paragraph
• Opinion Paragraph
• Firm’s Signature and Date
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Departures from the Standard Departures from the Standard ReportReport
Departures from the Standard Departures from the Standard ReportReport
• Standard Report with Explanatory Language
• Qualified Opinion
• Adverse Opinion
• Disclaimer of Opinion
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Types of Auditor’s Reports and Types of Auditor’s Reports and CircumstancesCircumstances
Types of Auditor’s Reports and Types of Auditor’s Reports and CircumstancesCircumstances
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Typical Report ProfilesTypical Report ProfilesTypical Report ProfilesTypical Report Profiles
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The Auditor’s Standard Report The Auditor’s Standard Report on Internal Controlson Internal Controls
The Auditor’s Standard Report The Auditor’s Standard Report on Internal Controlson Internal Controls
• Title and Address
• Introductory Paragraph
• Scope Paragraph
• Definition Paragraph
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The Auditor’s Standard Report The Auditor’s Standard Report on Internal Controls (cont.)on Internal Controls (cont.)
The Auditor’s Standard Report The Auditor’s Standard Report on Internal Controls (cont.)on Internal Controls (cont.)
• Inherent Limitations Paragraph
• Opinion Paragraph
• Explanatory Paragraph
• Firm’s Signature and Date
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Defining Criteria for Defining Criteria for Departures from the Standard Departures from the Standard
ReportReport
Defining Criteria for Defining Criteria for Departures from the Standard Departures from the Standard
ReportReport
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Departures from the Standard Departures from the Standard Report on Internal ControlsReport on Internal Controls
Departures from the Standard Departures from the Standard Report on Internal ControlsReport on Internal Controls
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5. All of the following are components of assurance provided by an audit except:
A. Auditor independenceB. Reasonable assuranceC. Detecting and reporting illegal actsD. Guaranteed accuracy of financial
statements
D. Guaranteed accuracy of financial statements
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6. The standard report includes all of the following except:
A. Introductory ParagraphB. Scope ParagraphC. Explanatory Language ParagraphD. Opinion Paragraph
C. Explanatory Language Paragraph
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7. This opinion states that the auditor does not express and opinion on the financial statements.
A. Unqualified OpinionB. Qualified OpinionC. Adverse OpinionD. Disclaimer of Opinion
D. Disclaimer of Opinion