...Threats to Compliance With The Fundamental Principles 1. Self-interest threat – the threat that a financial or other interest will inappropriately influence the professional accountant’s judgment or behavior. Examples of the circumstances that may create self-interest threat include: a. A direct financial interest or material indirect financial interest in a client b. A loan or guarantee to or from a client or any of its directors or officers c. Undue independence on total fees from a particular client d. Concern about the possibility of losing the engagement e. Having a close business relationship with a client f. Potential employment with a client g. Contingent fees relating to an engagement 2. Self-review threat – the threat that a professional accountant will not appropriately evaluate the results of a previous judgment made or service performed in forming a conclusion about the subject matter of the engagement. Examples of the circumstances that may create self-review threat include: a. A member of the engagement team being, or having recently been, a director or officer of the firm. b. A member of the engagement team being, of having recently been, an employee of the client in a position to exert direct and significant influence over the subject matter of the engagement. c. Performing services for a client that directly affect the subject matter of the engagement. d. Preparation of original data used to generate financial...
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...01 An Introduction to Assurance and Financial Statement Auditing True / False Questions 1. | Independence standards are required for audits of public companies, but not for audits of private companies. True False | 2. | Decision makers demand reliable information that is provided by accountants. True False | 3. | Information asymmetry seldom occurs. True False | 4. | Conflicts of interest often occur between absentee owners and managers. True False | 5. | Auditing services and attestation services are the same. True False | 6. | Auditing is a type of attest service. True False | 7. | Testing all transactions that occurred during the period is cost prohibitive. True False | Multiple Choice Questions 8. | Why do auditors generally use a sampling approach to evidence gathering? A. | Auditors are experts and do not need to look at much to know whether the financial statements are correct or not. | B. | Auditors must balance the cost of the audit with the need for precision. | C. | Auditors must limit their exposure to their auditee to maintain independence. | D. | The auditor's relationship with the auditee is generally adversarial, so the auditor will not have access to all of the financial information of the company. | | 9. | Which of the following statements best describes a relationship between sample size and other elements of auditing? A. | If materiality increases, so will the sample...
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...continue to be held accountable for the accuracy of their financial statements, and the performance of their company. To assure the accuracy of a publicly traded company’s financial status reporting, an additional requirement of an outside industry experienced auditing firm is needed, as well as performance based pay contracts for publically traded companies’ officers. The goal is simple, change the mindset of CEO’s, boards of directors (BOD’s), and shareholders by teaching them the fundamentals of business ethics. To obtain our goal, we must first have a basic understanding of existing legislation and the willingness to create new legislation for the betterment of America. To begin, a discussion in regards to the Sarbanes-Oxley Act is important for the purposes of an overview of existing legislation. In the past the US government has relied on the states to monitor and enforce the rules of auditors. Typically public accountants were licensed by the states to audit corporate financials; however the states had very little, if any, money to provide the necessary funds for enforcement. “Public accountants were licensed by the states, but states devote few resources to supervising auditors; federal regulation of auditing was light; and no federal agency supervised auditors. A Public Oversight Board for auditors was created in 1978, but it was dominated by accountants, funded by the audit industry, and had no full-time directors, no inspection authority, and no rule-making authority...
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...independent expert of a particular activity or event. There are many types of audits such as financial, operational, technological etc. The most popular reference to audits, however; are the ones that examine financial statements. Auditing is the examination and systematic structural evaluation of an organized business. The evaluation is made up of operations within the business organization and the products and developments of production occurring within the business system. An investigation into past history of a business is involved in auditing. Records and data about a company are also involved, in order to measure and discover the legality of the business's transactions operations, tax reporting, and thorough handling of finances. To be blunt, audits test the financial legitimacy claimed by a business entity. According to R. Gene Brown’s “Changing Audit Objectives and Techniques”, (The Accounting Review, Vol. 37, No. 4), reviewing the history of auditing helps to provide a basis for analyzing and interpreting the changes which have occured in audit objectives and procedures over the years. Fundamentally, this review shows a recent significant correlation between expanded reliance on internal controls and a decrease in detailed testing. The future of auditing will probably consist primarily of a procedural or systematic review, with the analysis of effectiveness of internal controls providing the major basis for the procedural evaluation. Various arguments seem to support this view...
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...Accounting for Management Use Bertol (1996) Fundamentals of Accounting Cabrera, Ledesma, Lupisan (2010) Fundamentals of Accounting Principles Chua Jr., Arenas, Villarina (2007 CPA Examination in Practical Accounting Dayag Sr. (2001) Intermediate Accounting Philippine Edition Alindada, Ledesma, Lupisan (2007) Constructive Accounting Kimwell (1998) PFRS CPE Committee, ASC (2008) CPA Review Financial Accounting And Reporting Hidalgo (1996) Financial Accounting Padilla (1996) Philippine Standards on Accounting CPE Committee (2008) Government Accounting Probre, Magno (1987) Government Accounting Punzalan, Cardona (20110 Partnership and Corporation Accounting Ballada, Ballada (2009) Partnership and Corporation Accounting Cruz-Manuel (2008) Partnership and Corporation Accounting Valencia, Roxas, Asuncion (2006) Applied Auditing Cabrera (2011) Practical Accounting Punzalan (2003) College Accounting Hanna (2005) Advance Accounting Mejorada (2006) Bookkeeping Mejorada (2007 Cost Accounting Mejorada (2000) The Accounting Process Defianco, Mercado (2005) Managerial Accounting Louder Back, Holmen (2003) Managerial Accounting Weygandt, Kimmel, Kieso (2008) Auditing and Assurance Services Ricchiute (2003) Cost Accounting Carter (2010) Cost Accounting Barfield, Kinney, Raiborn (2011) Auditing and Assurance Services Stuart (2012) Auditing Taylor, Glezen (1997) CPA Exam Review Delaney...
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...CASE STUDY PA503 FUNDAMENTALS OF AUDITING Audit Firm Contact Number JABATAN PERDAGANGAN Programme Section CHAPTER 1 CHAPTER 2 Email Materiality and Audit Risk Corporate Governance PROBLEM SOLVING CLO2 | LD2/P3 Instruction: Please answer ALL questions. | Part 1 NEW CLIENT ACCEPTANCE DECISION Learning Objectives After completing and discussing this case, you should be able to: 1. Understand the types of information relevant to evaluating a prospective audit client 2. List some of the steps an auditor should take in deciding whether to accept a prospective client 3. Identify and evaluate factors important in the decision to accept or reject a prospective client 4. Understand the process of making and justifying a recommendation regarding client acceptance INTRODUCTION Your accounting firm is a medium-sized, accounting firm in Malaysia, formed in 2012, mainly provides auditing and tax services. But it has recently had success in building the information-systems-consulting side of the business. Recently, your group has been assigned for the first time to perform audit engagement procedures for a small and medium-sized company in Malaysia. One of team member has been a senior auditor for the past three years. Your first assignment is to assist an audit partner on a client acceptance decision. The partner explains to you that the prospective client, Unggul Holdings Berhad, is a medium-sized textile company. The partner recently met the...
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...AUDIT CRUNCH: REFORMING AUDITING 3 Fundamental Flaws in Current Audit Practice 1st point From this journal, it mainly focuses on the debating of three issues which are deeply embedded in the current auditing practices. Firstly, auditing model is one of the fundamental issues that exist in the auditing practices. It makes auditors’ financially dependent upon companies and persuades them to prioritize their own economic interest at the expense of other parties which may have an interest in audits. This is because auditors are remunerated by the client company rather than by an independent body and resulting the auditors are not able to retain sufficient distance in delivering independent audit. Auditing firms used their control of the auditing markets to colonies adjacent a market to sell consultancy services to audit clients where it causes the auditing model in practice is further complicated. With this, it will increase the auditor fee dependency upon companies and hence cause impairment in the independence of an auditor. The current auditing model is flawed and cannot be repair as auditors are generally banned from selling consultancy services to audit clients. Potential Solution The legislators should be allowed to appoint auditors of major companies. Auditors will not fear of losing the job as they don’t have to socialize their client. Although the fees could come from client but legislator or government are the one selecting auditors for work. This is to segregate...
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...[pic] SCHOOL OF ACCOUNTANCY COLLEGE OF BUSINESS UNIVERSITI UTARA MALAYSIA COURSE CODE : BKAA3023 COURSE NAME : AUDITING AND ASSURANCE II PRE-REQUISITE : AUDITING AND ASSURANCE I _____________________________________________________________________ 1. SYNOPSIS This is a continuation of Audit and Assurance 1. It intends to strengthen and enhance the students’ understanding in auditing. Among the topics that will be discussed are code of ethics, auditors’ liability and in-depth explanations on analytical procedures, computer assisted audit techniques, audit sampling, materiality and audit risk, group audit and current issues facing the auditing profession. This course will justify other activities than financial statement audit that can be performed by a public accountant like performance/operational audit, internal audit and compliance audit. 2. COURSE OBJECTIVES This course intends the student: 1. To comprehend applicable regulations, legal responsibilities and ethical standards and current issues facing the audit profession. 2. To appreciate the concepts of internal control system and the use of computer assisted audit techniques in auditing a computerised environment. 3. To understand and apply audit risk, materiality, and statistical and non statistical audit sampling techniques. 4. To be familiar with related issues in audit completion, group audit, internal audit and related audit services and other services that...
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...Recognized Courses in Accounting/Tax Research and Analysis and Accounting/Business Communications September 3, 2014 The Texas State Board of Public Accountancy requires each candidate to complete a minimum of two semester hours in accounting research and analysis or tax research and analysis from a recognized college or university. The semester hours may be obtained through a discrete course or offered through an integrated approach. If the course content is offered through integration, the college or university must advise the Board which course(s) contain the research and analysis content. Courses identified through integration must dedicate 1 semester hour, or quarter hour equivalent, to research and analysis. Courses used to meet this requirement may not be used to meet the requirement for accounting or business communications described below. Course(s) identified by a university to meet the requirements for research and analysis in accounting or taxation should primarily address the identification, organization, and integration of diverse sources of information such as authoritative literature and pronouncements, to reach a conclusion or make a decision; and should analyze accounting and taxation issues by reviewing information, using empirical data and analytical methods, recognizing data in patterned activities, forecasting, and integrating data. CPAs may be asked to conduct research and analysis when providing attest services, professional accounting...
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...Accredited Tertiary Courses Listing 2012 Accredited Tertiary Courses Listing 2012 – as at 26 September 2012 1 2012 Accredited Undergraduate Courses AUSTRALIAN CAPITAL TERRITORY The Australian National University University of Canberra NEW SOUTH WALES Australian Catholic University Australian Institute of Higher Education Avondale College Charles Sturt University Kings Own Institute Macquarie University Southern Cross University Top Education Institute The University of New England The University of New South Wales The University of Newcastle The University of Sydney University of Technology, Sydney University of Western Sydney University of Wollongong Williams Business College NORTHERN TERRITORY Charles Darwin University QUEENSLAND Australian Catholic University Bond University Central Queensland University Christian Heritage College Griffith University James Cook University Queensland University of Technology The University of Queensland The University of Southern Queensland University of the Sunshine Coast SOUTH AUSTRALIA Flinders University Kaplan Business School The University of Adelaide University of South Australia Open Universities (conferred by Uni of SA) TASMANIA University of Tasmania VICTORIA Australian Catholic University Cambridge International College Carrick Higher Education Deakin University Holmes Institute Holmesglen Institute of TAFE La Trobe University Melbourne Institute of Technology Monash University Northern Melbourne Institute of TAFE RMIT...
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...organization. Mistakes Made within the Organization Arthur Andersen quickly fell victim to accounting scandals within the accounting practice. The first mistake made within the organization was due to financial conflicts between the auditing department and the consulting department. Some of the consulting clients were also auditing clients and when the consulting departments profits exceeded the auditing departments profits, this created a conflict of interest. Maintaining the separation between these departments and the funds would have alleviated this issue. Another mistake made by the organization was the unethical act of forcing auditors to sell consulting contracts to their clients. This led to the largest mistake of reporting false information; the SEC charged Arthur Andersen with obstruction of justice, as the organization was found guilty of falsifying documents relating to Enron’s financial records. Actions to Prevent the Organizational Failure Leadership within Arthur Andersen had several options available to prevent the organization from failing. First, a code of conduct should have been developed and implemented, requiring all employees to abide by this code. Additionally, the company should have kept the consulting and auditing departments separate, ensuring the profits remained separate as well. They...
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...SYLLABUS AKU 3301 – AUDITING 1 Prerequisite: AKU 2101 Credit Hours: 3 Instructor: Sugiarto Room: First Floor Southwing, SMS: 08122740472 Course Description This course is the first course in auditing subject. This course has an overall objective to help students to learn the basic concepts and practices of auditing and assurance services as well as to understand the auditor ethics and responsibilities. Also, it helps students to understand the basic concepts that underlie the audit process and how to apply those concepts to various audit assurance services. Through the first part of auditing course, much attention is given to the conceptual, theoretical and practical aspects of auditing financial statements. This course will also examines auditing theory and practice, emphasizing audit standards in Indonesian context, audit risks, materiality, characteristics of evidence, internal controls, auditors’ reports and professional ethics, sampling, and audit programs. Course Objectives After completion of this course, students are expected to be able to: 1. Understand why there is a demand for auditing and assurance services 2. Differentiate between auditing and accounting 3. Understand the relationship among auditing, attestation, and assurance services 4. Know the different types of auditors and their types of services 5. Understand the issues currently affecting...
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...How Sarbanes-Oxley Has Impacted the Auditing Profession Auditing (BME-214024-02-11FA1) Table of Contents Introduction 3 Internal System and Process Collaboration Is Critical For SOX Compliance 3-5 Analyzing SOX by Section to Assess the Impact on Auditors: Section 302 5 Section 404 5-6 Section 409 6-7 Section 802 7 SOXs’ Impact on the Audit Profession 7-8 Conclusion 8-9 References 10 Introduction In the past decade or so government-mandated compliance legislation within the auditing profession, such as the Sarbanes-Oxley Act of 2002, has created a significantly greater amount of opportunities for providing services. However, it has also introduced an entirely new and higher level of complexity as a result. In this paper I will evaluate how the Sarbanes-Oxley Act has and is continuing to influence the auditing profession, specifically concentrating on how the advantages and disadvantages of the Sarbanes-Oxley Act are impacting this profession today and in the future. Although Governance, Risk and Compliance has grown significantly as a framework for ensuring corporate-wide compliance with government-based reporting and auditing, there is still a considerable gap between actual auditing practices and performance to standards (Jelinek, Jelinek, 223). The lack of internal controls over the auditing process has created significantly more work for companies to ensure...
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...the values and principles, which should guide the daily work of auditors. The Code of Ethics states the principles and expectations governing the behavior of individuals and organizations in the conduct of internal auditing. It describes the minimum requirements for conduct, and behavioral expectations rather than specific activities. Fundamental Principles The Code of Ethics mandates that internal auditors behave and practice with integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. These are the fundamental principles of professional ethics and all members of the professional accounting bodies are to comply with these principles (APES 110, S.100.4). Purpose of the Code of Ethics Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. A code of ethics is necessary and appropriate for the profession of internal auditing, founded as it is on the trust placed in its objective assurance about governance, risk management, and control. The Code of Ethics extends beyond the definition of internal auditing to include two essential components: * Principles that are relevant to the profession and practice of internal auditing; * Rules of Conduct that describe behavior norms expected of internal auditors. These rules are an aid to interpreting the Principles into practical applications and are intended to guide the ethical conduct of...
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...ACC305 – Auditing and Professional Practice Unit Outline – 2015 Unit Coordinator: Dr Chun Jiang (PhD, FCPA) 1|P age Introduction Welcome to Elite Education and ACC305 – Auditing and Professional Practice. This document provides you with information relevant to successful completion of this unit; including schedule of lecture topics, prescribed texts, assessment policies, assessment tasks, examinations, academic and administrative contacts and online learning support facilities. Student Handbook and Administration Office The Elite Student Handbook provides valuable general information for students and a printed copy will be provided to you. In addition, the Institute staff are available to assist you personally during office hours. Office Contact Details: Elite Education Institute 1 James Place, North Sydney, NSW 2060 Tel: 02 9212 2120 Unit Overview This unit introduces the major conceptual and technical aspects of auditing and assurance services. Accordingly, the unit provides critical insights into the auditor's legal and societal role, the underlying conceptual theory of auditing, professional auditing techniques, and contemporary auditing issues. The core theme of this unit is the external audit of corporations, from initial planning to final reporting in the context of a professional environment. Assumed Knowledge Prerequisite: ACC101 – Fundamentals of Accounting I, ACC102 – Fundamentals of Accounting II, and ACC204 – Advanced...
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