expectation gap is critical to the auditing profession because the greater the unfulfilled expectation from the public‚ the lower the credibility earning potential and prestige associated with the work of auditors. The study examined the level and nature of expectation gap (performance gap) between auditors and users of financial statements. It sought to establish whether audit expectation gap exists in Nigeria and the perception of the users’ group on its existence. Respondents view was also sought on
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ch02 Student: 1. Auditors may be independent in fact but not independent in appearance. True False 2. Auditing Standards issued by the PCAOB are the sole source of guidance for audits of public entities. True False 3. Attestation standards provide guidance for a wide variety of engagements different in scope than an audit. True False 4. Generally accepted auditing standards must be followed on all audit engagements. True False 5. The reporting principle relates to a firm’s
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to explain how an auditor goes about the process of auditing financial statements and presents the five basic stages that the auditor performed during the financial statement audit at Maryward Primary School in Kwekwe for the year ending 31 December 2012. In order to be in a position to fulfil auditing responsibility to report on the client’s annual financial statements‚ the auditor followed a series of procedures and activities as required by the auditing profession. The auditor applied the following
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leads to an imprecision in the ability to verify financial statement presentations. Accounting and auditing require the application of significant professional judgment. Hence‚ the auditor seeks only a reasonable basis for expressing an opinion on the fairness of the financial statements. In making an examination‚ the auditor obtains evidence for sound and well-grounded conclusions about the fairness and representational faithfulness of the accounting treatment of transactions‚ balances‚ and disclosures
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Chapter 20‚ Review Question 20-5 Distinguish among the four standards that have evolved for defining auditors’ liability for ordinary negligence to third parties under common law. Why is this area of auditors’ liability so complex? Legal precedent differs by jurisdiction (state by state). Third party must prove: 1. auditor had a duty to the plaintiff to exercise due care 2. auditor breached that duty by failing to act with due professional care 3. direct causal connection between auditor’s
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Billy’s Beat Inc When considering whether or not to accept a new audit client‚ the successor audit should make specific and reasonable inquiries of the predecessor auditor regarding matters that will assist the successor auditor in determining the acceptance of the engagement. Matters subject to inquiry include: information that might bear on the integrity of management‚ disagreements with management as to accounting procedures‚ or other similar significant matters‚ and communications to audit committees
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The liability of auditors to third parties has been the subject of much litigation. Litigation claims against accountancy firms have increased dramatically in the last thirty years. Previously‚ such cases were rare and were viewed with great interest. Nowadays‚ whereas still treated with great interest they are becoming all kind of common. The specific area of auditors ’ liability to third parties is an extremely complex area. As there is no
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client hires‚ pays‚ and fires the auditor and therefore‚ the culture of the auditors serving at the pleasure of the client still remains. As DeAngelo (1981) explained in his article‚ an important aspect of the loss of auditor independence is that auditors refrain from reporting detected material misstatements in audited financial statements‚ thereby failing to perform their duty to warn. Another aspect of the issue relates to the provision of non-audit services by auditors to their clients. As Lai (2003)
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• Why is materiality allocated only to those accounts that are sampled? An auditor needs to consider planning the audit and evaluating financial statements with the generally accepted accounting principles regulations. If an entity is considered less material to financial users then it is considered to be a materiality entity. Under the materiality principle‚ certain accounting standards may be ignored if it does not conflict a readers understanding on a financial statement. The total asset of
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............................ 1 General outline and financial impact....................................................... 3 Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Auditor rotation requirements .......................................17 Annual transparency reports ........................................27 Auditor independence functions ...................................35 Audit deficiency notifications and reports .....................41 Communications with corporations‚ registered schemes
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