At the assertion level: AR = IR * CR * DR Audit risk = the risk that the relevant assertions related to balances, classes of transactions, or disclosures contain misstatements that could be material to the financial statements when aggregated with misstatements in other balances, classes, or disclosures Inherent risk = the susceptibility of a relevant assertion to misstatements that could be material, either individually or when aggregated with other misstatements, assuming there are no
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AYN411 Audit & Assurance – Semester 1, 2013 Final Exam Revision Questions Additional Resources AYN411 Audit & Assurance – Semester 1, 2013 Final Exam Revision Questions Additional Resources Final Exam Revision QUESTION 1 – Audit Planning a. The Auditing Standard ASA 300 ‘Planning an Audit of a Financial Report’ states that the auditor needs to plan the audit so it will be performed in an effective way, by establishing the overall audit strategy for the audit and developing
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- The tax law provides varying opportunities for tax planning, and firms have competing incentives to consider in planning a tax reporting strategy, including financial reporting effects. I present preliminary results that Internal Revenue Service audit adjustments increase in the excess of book income over taxable income. This is evidence that firms incur additional costs for reporting higher book income than taxable income. I also investigate the relationship between compliance costs and taxes paid
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evidence about information to determine and report on the degree of correspondence b/w the information and established criteria. * Auditing should be done by a competent, independent person. Information and Established Criteria: * To do an audit, there must be information in a verifiable form and some standards (criteria) by which the auditor can evaluate the information. Accumulating Evidence and Evaluating Evidence: * Evidence is any information used by the auditor to determine whether
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Public? a. True b. False 4) The difference between what the public thinks it is getting in audited financial statements and what the public is actually getting is known as: a. Credibility gap b. Expectations gap c. Audit gap d. Stewardship gap e. None of the above 5) Which of the following is not a trend described in Chapter 1 as having an impact on the ethics of business? a. Directors’ legal liability b. Management’s stated intention to protect
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service in which the CPA firm issues a report about a subject matter or assertion that is the responsibility of another party Audit of historical financial statements — a form of attestation service in which the auditor issues a written report stating whether the financial statements are in material conformity with accounting standards Audit report — the communication of audit findings to users Auditing — the accumulation and evaluation of evidence about information to determine and report on the
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deferred taxes, the various procedures used for reporting accounting changes and error corrections, and the rationale for establishing the subsidiary as a corporation. In addition it will address our professional responsibilities are as a Certified Public Accountants (CPA’s) and finally distinguish between a financial audit and a financial review. The Methodology used to Determine Deferred Taxes The accounting for tax liability is governed by the internal revenue service (IRS) code whereas income statement
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- Assurance services F/S audit, Reviews, review of controls at service org,, assessing I/C’s, compliance audit; special reporting engagements - Types of core questions (level A and B): o Acceptance decision & audit planning o Which financial reporting framework to apply o Review a prepared audit file (strengths/weaknesses) o Procedures to check if partnership promises upheld o Discuss conflict/independence issues involved o Due diligence procedures for takeover target o Draft a preliminary
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ACCT 545 Deborah Asbury CPA Report Memo To: Outside CPAs From: Date: April 13, 2014 Re: CPA Report In response to the examination of the subsidiary that has been set up as a corporation, the explanations to the deferred tax methods, procedures for accounting changes and corrections, and the reasoning for setting up the corporation as a subsidiary will be addressed in the following memo. Deferred Tax Method Financial reporting and tax reporting create temporary differences between the
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THE RESULTS, AND (G) INTERESTED USERS. 2. A financial statement audit involves obtaining and evaluating evidence about an entity's financial statements for the purpose of expressing an opinion on whether the statements are presented fairly in conformity with established criteria--usually GAAP. Thus, the nature of the auditor's report is an opinion on the fairness of the financial statement presentation. A compliance audit involves obtaining and evaluating evidence to determine whether certain
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