Audit

The Demand for Audit and Other Assurance Services O ssu a S s
Chapter 1

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SarbanesSarbanes-Oxley Act
Enron WorldCom

The Act established the Public Company Accounting Oversight Board. It also requires auditors to report on the effectiveness of internal control over financial reporting.

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Learning Objective 1
Describe auditing.

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Nature of Auditing
Auditing is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria. Auditing should be done by a competent, independent person.

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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.

FASB

Criteria

IASB
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Accumulating Evidence and Evaluating Evidence
Evidence is any information used by the auditor to determine whether the information being audited is stated in accordance with the established criteria. t bli h d it i
Transaction data

Client inquiry

Written and electronic Communications with outsiders

Observations

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Competent, Independent Person
Competence