...Overview of Auditing Standards Ethical Standards Ethical Standards (FRS, 2010) is issued by Auditing Practices Board. Its responsibilities are set up standards and guidance for auditing work. According to this standard, APB tries to enhance confidence on auditing process for public. ESs includes five requirements that auditors must adhere to and its primary objective is to give ‘true and fair’ opinions on financial statement. The credibility of audit opinions depends on the integrity, objectivity and independence of the auditor. Accordingly, it requires the quality of audit more stringent, especially the independence of auditors’ assurance. ES2 illustrates the guidance on some particular circumstances, which may generate threats to the independence and objectivity of auditors. ES3 states that senior positions have collaborated with audit engagement for a continuous period should be rotating. ES4 explains that there is no relationship between audit opinion and audit fees or other remuneration. ES5 shows that audit firm should consider whether non-audit service have significant effect on the threats to the auditor’s objectivity or independence. International Standards on Auditing ISA (FRS, 2009) copes with independent auditor’s overall responsibilities when implementing auditing process. These professional standards establish objectives of independent auditors together with explain the scope and nature of auditing process, which is designed to enable auditors to achieve...
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...INTERNATIONAL STANDARD ON AUDITING 500 AUDIT EVIDENCE (Effective for audits of financial statements for periods beginning on or after December 15, 2009) CONTENTS Paragraph Introduction Scope of this ISA ........................................................................................ 1−2 Effective Date ............................................................................................. 3 Objective .................................................................................................... 4 Definitions .................................................................................................. 5 Requirements Sufficient Appropriate Audit Evidence ....................................................... 6 Information to Be Used as Audit Evidence ................................................. 7−9 Selecting Items for Testing to Obtain Audit Evidence ................................ 10 Inconsistency in, or Doubts over Reliability of, Audit Evidence ................ 11 Application and Other Explanatory Material Sufficient Appropriate Audit Evidence ....................................................... A1−A25 Information to Be Used as Audit Evidence ................................................. A26−A51 Selecting Items for Testing to Obtain Audit Evidence ................................ A52−A56 Inconsistency in, or Doubts over Reliability of, Audit Evidence ................ A57 International Standard on Auditing (ISA) 500, “Audit...
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...Auditing standards history in the United States Auditing profession has relied on agreed upon procedures at the beginning of its emergence. The current formal audit practice has evolved relatively recently. The story of how auditing evolved started in the early 20th century with the growth of industrial revolution, when firms entered the stock market which was unregulated at the time a growing need evolved to detect fraud and make more reliable financial statements as investors began to depend on financial reports. Federal Trade Commission requested AICPA to provide guidance to accountants and auditors in 1917 as a response AICPA issued a series of recommendation to the accounting community on financial reporting and auditing. In 1929 the AICPA issued a specific guide for auditing (Verification of Financial Statements) and it stated that the extent of the work is a responsibility of the auditor which is one of the most important auditing concepts even now. In 1936 AICPA issued Examination of Financial Statements by Independent Public Accountants, a guide on performing audit procedures on small and mid-sized companies. The SEC which was created in 1934. A part of its duties was to oversight the auditing profession, and it required the companies to send periodic reports in accordance with GAAP and to provide assurances with their reports. Auditing standards issuance used to be triggered by financial fraud events or crimes. Statement on Auditing Procedure (SAP) No. 1 in October...
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...Auditing Standards Essay: Auditing Planning Broadly speaking, audit planning is specific guidelines for auditor to perform an audit. Audit planning is usually conducted at the beginning stage of audit process. AICPA (American Institute of Certificate Public Accounting), PCAOB (Public Company Oversight Board), and IFAC (The International Federation of Accountants) are organizations or non-profit corporations who contributes to developing standards and guidance in auditing area, including standards for audit planning. Thus, this essay will discuss the requirement, and compare and contrast, of standards and guidance for auditing planning that has been issued by them; as well, analyze the impact on the performance of the audit. AICPA, by its publication titled AUC Section 300, addresses guidance for auditors in planning an audit. This contains introduction, objective, requirements, and application and other explanatory material. First, the introduction part includes the scope in planning the audit, the role and timing of planning, and the effective date of this standard. The scope of planning an audit explains the responsibility of the auditor to plan an audit of financial statement. This section also mentioned to refer to section 600, Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors) for further information related to the auditor’s responsibility. The role of planning and timing explains the adequate benefit in planning...
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...Effects of Auditing Standards Business auditors are a valuable and much needed method of making sure that business and corporations operate within the law. Auditing businesses is the best method to determine if a business is keeping their methods legitimate and that they are not doing anything illegal such as falsifying profit reports. Standards for all manner of businesses from the small store to the international multi-million dollar industry are getting higher and frankly, this is a change that, in light of catastrophes like the collapse of WorldCom, was a long time coming. Introducing the reality of auditing standards mostly, auditors only bother paying attention to transactions that appear to be out of the norm (Glater, 2002). The tedious run of the mill activities of a business do not really get that much attention. However, if something seems off or out of the ordinary, an auditor should take a closer look. If an irregularity or discrepancy is found, then the auditor should make a judgment on whether or not to investigate further (Glater, 2002). Investigating smaller transactions can be costly and time consuming but there are certain guidelines an auditor should use to help make that determination. For example, one criterion would be if the business had an incentive for falsifying profits to the public, due to falling stock prices and other similar situations. Auditors are now utilizing computer software when it comes to some of their investigations. Access to computerized...
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...Accepted Auditing Standards Joey Wines Franciscan University Generally Accepted Auditing Standards Generally Accepted Auditing Standards, also known as GAAS, is a rather broad topic with many guidelines to follow. An independent auditor plans, conducts, and reports the results of an audit in accordance with generally accepted auditing standards. A short definition of GAAS is the set of systematic guidelines used by auditors when conducting audits on companies' finances, ensuring the accuracy, consistency and verifiability of auditors' actions and reports (Investopedia). There are a total of 10 standards that are broke up into three main sections. These three sections include the general standards, standards of fieldwork and standards of reporting. Each section is littered with requirements that the auditor and the subject company must meet (Investopedia). In short, an auditor must adequately plan the audit in advance, be independent of the client at all times, and always obtain reliable evidence (Investopedia). The companies must present their financial statements in accordance with GAAP, remain consistent in their reporting, and explicitly disclose all pertinent information (Investopedia). Auditing procedures differ from auditing standards. Auditing procedures are acts that the auditor performs during the course of an audit to comply with auditing standards. The first section I will talk about for the Generally Accepted Auditing Standards are the general standards. This...
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...Generally Accepted Auditing Standards Paper ACC/491 Contemporary Auditing Santos Alarcon January 11, 2015 Describe the elements of GAAS? Generally Accepted Auditing Standards (GAAS) are “sets of standards against which the quality of audits are performed and may be judged” (Generally Accepted Auditing Standards, 2014). According to AU Section 150, there are three general standards, three fieldwork standards, and four reporting standards. In the United States, these standards are developed by the Public Company Accounting Oversight Board since the passage of the Sarbanes-Oxley Act in 2002. The three general standards require the auditor to remain mentally independent in all matters related to the audit, to have technical training that is adequate and proficient to perform the audit, and to exercise professional care while performing the audit, and also while preparing the report. The three fieldwork standards require the auditor to properly plan the work and to supervise assistants, to sufficiently understand the company and its environment, and to obtain enough audit evidence to support a reasonable basis for an opinion regarding the financial statements under audit. The four standards of reporting require the auditor to state in his/her report whether the financial statements are presented in accordance with GAAP, they have to identify when GAAP principles have not been consistently observed, they have to include in the auditor’s...
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...Generally Accepted Auditing Standards ACC/490 June 25, 2012 Generally Accepted Auditing Standards The auditing and accounting profession has various standards and regulations that must be followed. The standards and regulations were put into place to ensure that reports are unbiased and accurate. The Generally Accepted Auditing Standards create stipulations on the accuracy, consistency, and verifiability of the information. The Sarbanes-Oxley Act of 2002 and the Public Company Accounting Oversight Board has standards in place to regulate financial reporting and ensure accuracy. The Generally Accepted Auditing Standards is “a set of systematic guidelines used by auditors when conducting audits on companies’ finances, ensuring the accuracy, consistency and verifiability of auditors’ actions and reports” (Investopedia, 2012. p. 1). Following the guidlelines set forth by the Generally Accepted Auditing Standards allows auditors to reduce the chance of overlooking information. The Generally Accepted Auditing Standards are divided into three sections: general standards, standards of fieldwork, and standards of reporting. Each of these three sections has specific standards an auditor must follow for each step in the auditing process. The general standards address the auditor’s qualifications and the standards that are required. The general standards require that the audit must be performed by a qualified individual who has received the proper training. The auditor...
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...Generally Accepted Auditing Standards Paper Gary Varnell University of Phoenix ACC 490 Auditing Aaron Strenkoski July 11, 2011 Introduction This paper is designed to explain the nature and functions of auditing, relate these functions to the audit functions of the Shawnee News-Star, describe the elements that make up the Generally Accepted Auditing Standards and how these standards apply to financial, operational, and compliance audits. This paper will also explain the effect that the Sarbanes-Oxley Act of 2002 as well as the Public Company Auditing Oversight Board (PCAOB) will have on the audits of companies that are publicly traded, and will also discuss the additional requirements that are placed on auditors as a result of the Sarbanes-Oxley Act as well as the actions of the PCAOB. Auditing is defined as “ 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” (Boynton & Johnson 2006, p. 6). The auditing process begins with the auditor obtaining information of an entity and evaluating, in an unbiased manner, this information as it relates to the processes, economic transactions and procedures of the entity. When evaluating this information, the auditor must ensure that the information complies with Generally Accepted Accounting Principles (GAAP) and any...
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...Generally Accepted Auditing Standards Auditing is a vital role within for-profit organizations, non-profit organizations, government, and the economy. With many standards, rules, procedures, and regulations placed on auditing financial reports for organizations, one would obtain an understanding as to the Generally Accepted Auditing Standards (GAAS). These GAAS were collaborated by members of the American Institue of Certified Public Accounting (AICPA) in the 1940's. In the 1940's, three guidelines to include General Standards, Standards of field work, and Standards of reporting. Each of these topics includes details as to the "flow" of the auditing process. After the Sarbanes-Oxley Act of 2002, (SOX), the regulations were increased with detail, and offered more insight as to the consequences of not following the "rules". The Public Company Accounting Oversight Board, (PCAOB), obtained more duties to assist in reviewing material relevant to auditing and auditors. One of the points one may find interesting is the importance of the regulations lack of required documentation. Rather than placing detailed requirements on included reports it lays a framework of guidelines of which to include, and what material needs to be disclosed. The main purpose for the regulations is to promote full disclosure and transparency, a common element which was missing prior. Commonly, many find the regulations to apply to for-profit and publicly traded organizations, however; many are inclusive...
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...REGISTERED STUDENTS MICPA EXAMINATION ACCOUNTING AND AUDITING STANDARDS The Institute’s Examination Regulations and Syllabus state that: (a) Questions involving knowledge of accounting and auditing should be answered in accordance with the requirements of approved accounting standards, approved auditing standards/guidelines and the relevant legislation; Questions involving knowledge of new approved accounting standards, approved auditing standards/guidelines and exposure drafts will not be set until at least 6 months have elapsed since the last day of the month in which the statement became effective or was published. (b) The list of accounting standards, auditing standards and other technical pronouncements, which are currently examinable in the Institute’s examination, are set out below. I. Approved Accounting Standards The Companies Act 1965 requires that approved accounting standards are to be applied to the financial statements of all companies. Approved accounting standards are issued by the Malaysian Accounting Standards Board (MASB), which is established under the Financial Reporting Act 1997. For the purposes of the MICPA pronouncements are examinable : examination, the following accounting (i) (ii) (iii) MASB approved accounting standards and other pronouncements issued by MASB; Malaysian Accounting Standards (MAS) issued by MICPA, which have not been replaced by MASB approved accounting standards; Technical Bulletins (TB) issued by MICPA, which are to...
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...Suretta Smith ACC/491 Generally Accepted Auditing Standards Paper September 25, 2012 Instructor: Santos Alarcon, Jr. Abstract The purpose of this paper will be to describe the nature and functions of auditing. The following will be addressed in this paper: description of the elements of the Generally Accepted Auditing Standards (GAAS), description how these standards apply to financial, operational, and compliance audits, explanation of the effect that the Sarbanes-Oxley Act of 2002, and the Public Company Accounting Oversight Board (PCAOB), will have on audits of publicly traded companies and the discussion on the additional requirements that are placed on auditors from this Act, and the actions of the PCAOB. The generally accepted auditing standards (GAAS) were implemented by the Public Company Accounting Oversight Board (PCAOB), in April of 2003. The standards were also adopted by the Auditing Standards Board of the American Institute of Certified Public Accountants, which consists of ten standards that establishes the framework for conducting audits. However, the auditing standards are not detailed but guidance on what should be included in the financial statements (Boynton & Johnson, 2006). The GAAS consist of three categories that incorporate the ten standards which are general standards, standards of field work, and standards of reporting. General standards. under the general standards category, it informs about the characteristics of adequate...
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...Generally Accepted Auditing Standard Paper ACC/491 Generally Accepted Auditing Standards Paper Auditing is defined as “a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between the assertions and established criteria and communicating the results to interested users” (Louwers, Ramsay, Sinason, & Stawser, p. 3). This is basically saying that auditors are given the job of ensuring that all processes are recorded correctly and obtained for the required amount of time. I will discuss the nature and functions of auditing, while giving examples from my current employer, Capital One. I will then describe the elements of the Generally Accepted Auditing Standards, and also tell how these standards apply to financial, operational and compliance audits. I will explain the effect that the Sarbanes-Oxley Act of 2002 and the Public Company Accounting Oversight Board will have on audits on publicly traded companies. Last, I will discuss the additional requirements that are placed on auditors from the Sarbanes-Oxley Act and the actions of the Public Company Accounting Oversight Board. The auditing process can be very tedious. As an auditor, you must pay close attention to detail. As a Lead Teller with Capital One, I have the responsibility of not only ensuring that all processes are done correctly and retained for the amount of time specified by the company...
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...U.S. VS. International Auditing Standards 4-22-08 In the last few years, the world's financial centers have grown increasingly interconnected. This increase in the global business climate can attributed in part to dramatic changes in the business and political climates, increasing global competition, the development of more market-based economies, and rapid technological improvements. With the seemingly unlimited advances in technology, it has become feasible and in most cases very necessary for companies to expand their business operations overseas. This smaller global business environment has led to numerous changes in U.S. Accounting Standards as well as International Accounting Standards. It is needless to say that foreign and domestic auditing standards would have to undergo change as well. Generally Accepted Accounting Principles are broad concepts, evolving from the actual accounting profession. Now, accountants all know that “generally accepted accounting principles” are far from being a clearly defined, comprehensive set of rules which will insure the identical accounting treatment of the same kind of transaction in every case in which it occurs. Auditing in the United States was patterned after early English practices in this countries infancy but was eventually influenced less by the English and more by professional accounting societies. The first national U.S. accounting firms were established by British accountants who brought discipline, professional...
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...Financial Management includes the following 5 functions * Financing function- raising capital to support firms operations and investment programs * Capital budget function- selecting the best projects in which to invest firm resources, based on a consideration of risks and return * Financial management function- managing firms interna; cash flows and its capital structure to minimize the financing costs and ensure that the firm can pay its obligations when due * Corporate goverance function- developing an ownership and corporate governance system for the firm that will ensure that managers act ethically and in the best interest of stakeholdes * Risk management function- managing the firms exposure to all types of risk Working capital management 1) Working capital management involves managing and financing the current assets and current liabilities of the firm. Primary focus of working capital management is managing inventories and receivables. a) Managing the firms cash conversion cycle- is the length of time between when the firm makes payments and when it receives cash inflows (1) Can be analyzed by using the flowing 3 periods (a) Inventory coversion period (b) Receivables collecton period (c) Payables deferral period i) Inventory coversion period- average time required to convert materials into finished goods and sell them. IVP= avg inventory/ COGS per day ii) Receivables...
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