Summary: Auditing: A Risk Based-Approach | 9781337619455 | Karla M Johnstone, et al

Read the summary and the most important questions on Auditing: A Risk Based-Approach | 9781337619455 | Karla M Johnstone; Audrey A. Gramling; Larry E. Rittenberg

• 1 Quality Auditing: Why it Matters

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• From which factors does the need for independent assurance arises?

  - Potential bias
  - Remoteness
  - Complexity
  - Consequences

• Financial Statement Audit

  A financial statement audit is a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria; and communicating the results to interested users.

• Unqualitfied audit report

  When the auditor had no objections about management's financial statements or internal controls, the auditor issues an unqualified audit report.

• Which parties are involved in preparing and auditing financial statements and related disclosures?

  - Management: preparing and presenting FS; designing, implementing and maintaining internal control over financial reporting; providing auditors with information relevant to FS and IC
  
  - Internal audit function: provides internal assurance on internal controls and reports
  
  
  - Audit committee: oversees both management and the internal auditors; they also hire and oversee the external auditors
  
  
  - External auditer: provides independent audit of internal controls and financial statements.

• Organizational hierarcy of audit firms

  1. Partners
  2. Managers
  3. Seniors
  4. Staff auditors
  5. Interns

• Which skills do auditors need?

  Technical knowledge, leadership, teamwork, communication, decision-making, critical thinking and general professionalism.

• What is a quality audit?

  An audit performed in accordance with generally accepted auditing standards (GAAS) to provide reasonable assurance that the audited financial statements and related disclosures are 1) presented in accordance with GAAP and 2) are not materially misstated whether due to errors and fraud.

• What are, according to the Financial Reporting Council's Audit Quality Framework, the five primary drivers of audit quality?

  1. Audit firm culture
  2. The skills and personal qualities of audit partners and staff
  3. The effectiveness of the audit process
  4. The reliability and usefulness of audit reporting
  5. Factors outside the control of auditors that affect audit quality.

• AICPA Principles of Professional Conduct

  - Responsibilities
  - Public interest
  - Integrity
  - Objectivity and independence
  - Due care
  - Scope and nature of services

• What can influence the Independence Rule?

  - Financial Interest
  - Employment of family members
  - Loans
  - Performance of other nonaudit services
  - Network firms