... 2. Understand drivers for audit regulation. 3. Understand the role of public oversight. 4. Distinguish between different audit firms. 5. Identify some current developments in the audit market. 6. Portray the series of industry codes of conduct and guidance 2.2 Introduction The emergence of today’s auditors happened during the Industrial Revolution that started in Great Britain around 1780. This revolution led to the emergence of large industrial companies with complex bureaucratic structures and, gradually, the need to look for external funds in order to finance further expansion: the separation between capital provision and management. Both developments resulted in demand for the services of specialists in bookkeeping and in auditing internal and external financial representations. The institutionalization of the audit profession was then merely a matter of time. Management Controls Operations and Communications Management has control over the accounting systems and internal controls of the enterprises that auditors audit. Management is not only responsible for the financial and internal control reports to investors, but also has the authority to determine the precise nature of the representations that go into those reports. However, management can scarcely be expected to take an impartial view of this process. Communications to Stakeholders – the Financial Statements The financial statements measure the financial and non-financial performance and financial...
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...every business is operating via Internet as we are facing constant technological improvements throughout the past couple of decades. That being said, the potential of cybercrimes being committed drastically increased, as the cyber criminals have been able to break into the companies’ systems and manipulate and extract crucial data sets. This article is focusing on chronological development of the new area of accounting, forensic accounting. Forensic accounting is primarily focused on fraud protection, investigation of the security breaches and any other malicious activities against a company and its confidential data. At the very beginning of the twentieth century forensic accounting was not recognized as a separate practice area from auditing. As the passage of time, forensic accounting became a more distinct practice area. The development of computers and the internet caused forensic accounting to expand and become a separate field which deals with investigating activities and fraud protection rather than stating an opinion on whether or not the financial statements are in accordance with GAAP. Continually, auditors are focusing on the fair representation of financial statements and giving an opinion without an intent to search for detecting fraudulent activities. Forensic accounting as a part of the accounting profession was mentioned for the first time in early 1900’s. During its early phase it was believed that the auditor’s responsibility was to detect and prevent fraud...
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...Committee to explain the background to the development of the revised code and to give our readers a brief overview of what it covers. Many Irish Chartered Accountants are probably only vaguely aware of the existence of IFAC - the International Federation of Accountants - as a global body that sets professional standards for the accountancy profession and of which their Institute is a member. A much smaller number would have any detailed knowledge of what these professional standards cover or of how they impact on local requirements as promulgated by their own Institute. This article is about ethical matters and the activities of the IFAC Ethics Committee. Besides ethics, IFAC Boards and Committees develop international standards on auditing and assurance (ISAs), on education and on public sector accounting. Each of the member bodies of IFAC - there are 163 currently from all parts of the globe - undertakes to use their best endeavours, subject to national laws and regulations, to implement the standards issued by IFAC in each of these fields. So, ICAI - and indeed, the other UK and Irish based accounting bodies that have members in Ireland - have obligations to promulgate IFAC standards and to monitor their members' performance against them. In the case of ethics, 2005 has been an important year for IFAC activities. After three years of drafting, consultation, exposure and revision the IFAC Ethics Committee finally released a new Code of Ethics at the end of June 2005....
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...Where the firm obtains information that would have caused it to decline an engagement if that information had been available earlier, policies and procedures on the continuance of the engagement and the client relationship should include consideration of: (a) The professional and legal responsibilities that apply to the circumstances, including whether there is a requirement for the firm to report to the person or persons who made the appointment or, in some cases, to regulatory authorities; and (b) The possibility of withdrawing from the engagement or from both the engagement and the client relationship. 35. Policies and procedures on withdrawal from an engagement or from both the engagement and the client relationship address issues that include the following: • Discussing with the appropriate level of the client’s management and those charged with its governance regarding the appropriate action that the firm might take based on the relevant facts and circumstances. • If the firm determines that it is appropriate to withdraw, discussing with the appropriate level of the client’s management and those charged with its governance withdrawal from the engagement or from both the engagement and the client relationship, and the reasons for the withdrawal. • Considering whether there is a professional, regulatory or legal requirement for the firm to remain in place, or for the firm to report the withdrawal from the engagement, or from both the engagement and the client...
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...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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...1 Session 4 Audit Planning; Materiality and the audit risk model Auditing: Principles and Methods 2 After studying this session you should be able to: 1. Discuss why adequate audit planning is essential 2. Make client acceptance decisions and perform initial audit planning 3. Gain an understanding of the client’s business and industry 4. Assess client business risk 5. Perform preliminary analytical procedures 6. Apply the concept of materiality to the audit 7. Define risk in auditing and the audit risk model Auditing: Principles and Methods 3 8. Consider the impact of engagement risk on acceptable audit risk 9. Discuss the relationship of risks to audit evidence 10. Answer the Review Questions Auditing: Principles and Methods 1. Audit Planning 4 Why is adequate audit planning essential? “The auditor must adequately plan the work and must properly supervise any assistants”. There are three main reasons why the auditor should properly plan engagements: to enable himself to obtain sufficient appropriate evidence, to keep audit cost reasonable and to avoid misunderstanding with the client. Auditing: Principles and Methods 1. Audit Planning 5 An important part of audit planning is assessing acceptable audit risk and inherent risk because it helps determine the amount of evidence that will need to be accumulated and staff assigned to the engagement. Acceptable audit risk is a measure of how willing the auditor is to accept that the FSs...
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...Auditing in Islamic Methodology Compiled By Dr. Hussien Shehata Prof. of Accounting Al-Azhar University In The Name Of ALLAH The Most Beneficent The Most Merciful Allah said in the holly Quran : " Allah has been a Watcher over you " ( Wemen:1 ) " إن الله كان عليكم رقيبا " ( سورة النساء : 1 ) Prophet Mohammed ( PBUH. ) says : when He has been asked about IHSAN : " …….then tell me about IHSAN : He said : it is to worship Allah as though you are seeing Him , and while you see Him not you truly, He sees you… " ( Related By Muslim ). سئل رسول الله صلى الله عليه وسلم عن الإحسان , فقال : " أن تعبد الله كأنك تراه , فإن لم تكن تراه فإنه يراك ............." ( رواه مسلم عن إبن عمر رضى الله عنه ) Auditing in Islamic Methodology CONTENTS Preface - Meaning of Auditing in Islamic Methodology. - Objectives of Auditing in Islamic Methodology. - Features of Auditing in Islamic Methodology... - Principles of Auditing in Islamic Methodology. - Standards of Auditing in Islamic Methodology. - Reports of Auditing in Islamic Methodology. PREFACE Moslems – certainly believe that, Islam is a way of life, it is a believe, jurisprudence, a state, strength, a sward, etc. It is a whole system. They also believe that Islamic jurisprudence is universal for all mankind, perfect and comprehensive for all things and affairs, permanent for all times and indivisible and inseparable. It should be applied...
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...Medium 5. The American Institute of Certified Public Accountants has the primary authority to establish accounting standards. Answer: False Difficulty: Easy 6. An annual peer review is a requirement of the AICPA. Answer: False Difficulty: Medium 7. Many small companies elect to have their financial statements reviewed by a CPA firm, rather than incur the cost of an audit. Answer: True Difficulty: Easy 8. Staff assistants in CPA firms generally are responsible for planning and coordinating audit engagements. Answer: False Difficulty: Easy Whittington, Principles of Auditing, Fifteenth Edition 1 Chapter 1 The Role of the Public Accountant 9. The Sarbanes-Oxley Act requires that auditors of publicly traded companies in the United States perform an integrated audit that includes providing assurance on both the financial statements and on compliance with laws and regulations. Answer: False Difficulty: Medium 10. Auditing is frequently only a small part of the practice of local CPA firms. Answer: True Difficulty: Medium Multiple Choice Questions 11. A summary of findings rather than assurance is most likely to be included in a(n): A) Agreed-upon procedures report. B) Compilation report. C) Examination report. D) Review report. Answer: A Difficulty: Medium 12....
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...The reason for IFI or any regulatory body considering the ‘enjoining what is good and forbidding what is evil’ to be one of the basic principles of IFI Shariah Audit is due to ensures acceptance, validity and enforceability of contracts from Shariah point of view. Stating by Islamic Financial Services Board (IFSB), Shariah compliance actually is a central in assuring the integrity and credibility of the Institutions offering auditing. They state that Shariah non-compliance risk is the risk that arises from auditing failure to comply with the Shariah rules and principles determined by the relevant body in the jurisdiction in which the auditing operate. According to these standards, Shariah compliance is critical to audits’ operations and such compliance requirements must permeate throughout the organization and activities. As a majority of the auditors use Shariah-compliant auditing services as a matter of principle, the clients’ perception regarding audits’ compliance with Shariah rules and principles is of great importance to their sustainability. In this regard, Shariah compliance falls within a higher priority category in relation to other identified risks. They accordingly, require that auditing shall have in place adequate systems and controls, including Shariah Board, to ensure compliance with Shariah rules and principles. In other words, it could be said that IFI needs to be responsible for appointing people to carry out the responsibility of enjoining good, whenever...
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...Chapter 1 An Introduction to Assurance and Financial Statement Auditing * Key Term * Assurance Services (鉴证业务): Independent professional services that improve the quality of information, or its context, for decision makers. Encompasses attest services and financial statement audits * Reporting not only on the reliability and credibility of information, but also on the relevance and timelines. * Attest (声明): A service when a practitioner (从业者) is engaged to issue or does issue a report on subject matter, or an assertion about subject matter, that is the responsibility of another party. Encompasses financial statement audits. * A broader auditing service, including not only economic events or actions. * Financial statement auditing is a specialized form of an attest service * Audit evidence (审计证据): All the information used by the auditor in arriving at the conclusions on which the audit opinion is based. Audit evidence includes the information contained in the accounting records underlying the financial statements, as well as other information. * Sufficiency: The quantity of evidence the auditor obtains * Appropriateness: The quality * Relevance: Whether the evidence is relevant to the specific management assertion being test * Reliable: The diagnosticity (可诊断性) of the evidence * Audit risk: The risk that the auditor expresses an inappropriate audit opinion when the financial statements are materially misstated. * The auditor...
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...Nature of Auditing and the Public Accounting Profession 1. Auditing neither creates goods nor adds utility to existing goods and therefore does not add value to business. Auditing exists only because it has been legally mandated. Auditing exists because it is needed by the company. It is beneficial to users who need assurance if their financial statements reflect economic conditions that occurred in a period. Without reliable information, companies might make less effective decisions which are risky for the value of business. It may neither create goods nor add utility to goods but it adds value to business because it is a source of information for a business’ decisions. 2. The failure of the public accounting profession to warn us of the problems that existed in the economy is an example of a profession not adding utility to society. Accounting records, classifies, and summarizes economic events to provide financial information for decision making. It does not study the problems in the economy but it helps management to make effective decisions despite economic problems. That way, accounting profession is an added utility to society. 3. The only reason I would hire an auditor is with the expectation that the auditor search for and find any fraud that might exist within my company. Searching for fraud should be the primary focus of an audit. Fraud involves deception that can result to material misstatements of financial information and is not good for...
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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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...Chapter 2 The CPA Profession Review Questions The four major services that CPAs provide are: 1. Audit and assurance services Assurance services are independent professional services that improve the quality of information for decision makers. Assurance services include attestation services, which are any services in which the CPA firm issues a report that expresses a conclusion about the reliability of an assertion that is the responsibility of another party. The four categories of attestation services are audits of historical financial statements, attestation on the effectiveness of internal control over financial reporting, reviews of historical financial statements, and other attestation services. Accounting and bookkeeping services Accounting services involve preparing the client's financial statements from the client's records. Bookkeeping services include the preparation of the client's journals and ledgers as well as financial statements. Tax services Tax services include preparation of corporate, individual, and estate returns as well as tax planning assistance. Management consulting services These services range from suggestions to improve the client's accounting system to computer installations. 2-1 2. 3. 4. 2-2 The major characteristics of CPA firms that permit them to fulfill their social function competently and independently are: 1. Organizational form A CPA firm exists as a separate entity to avoid an employer-employee relationship with its clients...
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...Journal Article Review Kas Internal Auditing (ACC 4012) Article: Code of Ethics for Internal Auditors Harmonized with the International Standards for Internal Audit Summary In the article titled “Code of ethics for internal auditors harmonized with the international standards for internal audit” by George Calota was published in 2008. The article was written to explain how Code of Ethics influences the roles of internal auditors when unified with the International Standards for Internal Audit. This study was carried out to allow both internal and external auditors, private and public business owners with an audit board, within their working environment to be aware of how an internal auditor is supposed to carry out their job and the polices which they should follow. The author’s main focus was on The Josephson American Ethics Institute ethical principles, Romania’s personal ethical principles and its similarities to the fundamental principles of the code of ethics and most of all, how the fundament principles of ethics and professional behaviors for internal auditors are harmonized with the international standards for auditing (Integrity, objectivity, confidentiality and competence). The author seemed to be highly qualified to tackle this particular issue. He is an experienced internal auditor, who has worked with the Ministry of Economy and Finance and also The Central unit for harmonizing the internal audit from Romania. Issues In the article, the author made mention...
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...REPORT OF COOPER AUDITING FIRM OF APOLLO SHOES, INCORPORATED To: The Board of Directors and Shareholders of Apollo Shoes, Incorporated The ____ Auditing Firm audited the balance sheets of Apollo Shoes, Inc. beginning December 31, 2008 and 2009 and the reports shared to the revenue, complete revenue, investors’ equity, and cash-flow for the period of two years that ended on December 31, 2008. ___ Auditing Firm has evaluated the manager’s statements of Apollo Shoes, Inc. that is placed with the attached Management’s Report in the part of the Internal Control-Over Financial Reporting. In this part, Apollo Shoes, Incorporated has retained effective internal control over financial reporting beginning December 31, 2008, the concern of a variety of standards, of the Internal Control Integrated Framework distributed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Apollo Shoes’ organization has a responsibility to uphold accurate financial statements, keeping effective internal control over financial reporting, and evaluation of internal control over the financial reporting system. __ Auditing Firm is accountable for issuing a professional judgment that will exemplify a complete evaluation of the financial statements, organization’s evaluation, and efficiency and success of the organizations internal control over financial reporting according to the auditing decisions of __ Auditing Firm. ___ Auditing Firm has performed the audit in agreement with the...
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