defined as “an independent examination of‚ and expression of opinion on‚ the financial statements of an enterprise by a duly appointed auditor in pursuance of a relevant statutory or professional obligation”. Independent – an auditor is remote from the enterprise that he/she is reporting on. This independence is defined by law and professional practice. Opinion – an auditor gives an opinion. He does not certify or guarantee the financial statements as accurate or free from error or irregularity. Financial
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Generally Accepted Auditing Standards Paper University of Phoenix ACC 490 Auditing February 7‚ 2011 Generally Accepted Auditing Standards Paper Every auditor is expected to follow the standards of the industry while conducting audits for clients. The most widely used standards were originally established in the 1940s and were adopted by the Public Company Accounting Oversight Board PCAOB in 2003 and are referred to as the Generally Accepted Auditing Standards GAAS (Boynton & Johnson‚ 2006)
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The PCAOB and the Social Responsibility of the Independent Auditor By Douglas R. Carmichael‚ Chief Auditor It is a distinct pleasure to speak to this group that uniquely blends a passionate interest in auditing standards‚ practice‚ and education. I have the honor of being the first Chief Auditor of the Public Company Accounting Oversight Board – the primary advisor to the Board on policy and technical issues related to the auditing of public companies‚ including auditing standards‚ and
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Yogi Berra puts it‚ “If you don’t plan on where you are going‚ you could end up someplace different!” All too often the auditor does not give adequate attention to audit planning for a vast array of excuses. This leads the auditor down the path of using the “same as last year” approach to planning‚ often referred to as “SALY.” Using the SALY approach to planning causes the auditor to end up someplace different‚ as so eloquently stated by Mr. Berra. A meaningful audit plan considers 10 basic steps.
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that an auditor needs to assess prior to performing an audit: 1. The auditor must decide whether or not to accept the audit 2. The auditor must understand the client’s needs for the audit which will aid the auditor in planning out the audit 3. The auditor and client must come to an agreement about “the terms of the engagement” (Arens‚ etal‚ 2010) 4. The auditor must develop a strategy and gather all auditors and specialists When it comes to Smackey: 1. The auditor accepted
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How the Fraudsters Fool the Auditors History of financial statement frauds acquisition accounting related party transactions non existent bank accounts - relationship with auditors overstated bank balance off balance sheet accounting misleading disclosures Changes occurring from Sarbanes Oxley Higher standards for corporate governance and accountability Creating an independent regulatory framework for the accounting profession Enhancing the quality and transparency of financial reports Developing
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USING THE WORK OF AN AUDITOR’S EXPERT In some instances‚ the auditor may need to obtain‚ in conjunction with the entity or independently‚ audit evidence in the form of reports‚ opinions‚ valuations and statements of an expert (specialist). The auditor’s education and experience enable the auditor to be knowledgeable about accounting and auditing matters‚ however‚ an auditor is not expected to have the expertise of a person trained for or qualified to engage in the practice of another profession
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1a) External auditors obviously know what to look for in an audit‚ it’s what they do for a living. Having your company’s external auditor work for your company instead can give insight as to what they look for when doing an audit and therefore make it easier for a company to commit fraud. 1b) A client hiring former auditors may or may not affect the independence of current external auditors. It may affect their independence if they would rather work for the client; they could think that if they
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One of the major problems in this type of business is a conflict in interests among the family’s member. The auditor should be careful and observe the type of the relationship among the family’s member. There should be a written agreement to specify rights‚ duties‚ and obligations for each member‚ the auditor should read those documents for further information. One issue that faced the auditor is to understand the attitude of each member‚ the risk of manipulating facts can be existed due to the close
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accounts receivable audit is created because auditors are unable to obtain sufficient appropriate evidence using alternative procedures. Thus‚ if the amounts of wrong account receivables are material but not pervasive‚ the auditor can issue qualified opinion. If the scope limitation if pervasive‚ meaning the amounts of this prohibition are very large‚ the auditor should issue disclaimer of opinion. When the amounts involved are immaterial‚ the auditor can issue unqualified report. b. In this case
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