AUE303R/101/3/2013 Tutorial letter 101/3/2013 ADVANCED THEORY OF AUDITING AND THE PERFORMING OF THE AUDIT PROCESS AUE303R Semesters 1 & 2 Department of Auditing IMPORTANT INFORMATION: This tutorial letter contains important information about your module. CONTENTS Page 1 2 2.1 2.2 3 3.1 3.2 3.3 4 4.1 4.2 4.3 5 6 7 8 8.1 8.2 8.2.1 8.2.2 8.3 8.4.1 8.4.2 8.4.3 8.4.4 9 10 11 12 13 14 INTRODUCTION .........................................................................................
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Ethical (General) Standards Competence – adequate technical training and proficiency. Competence is knowing what to do. 1. Recognize the assertion being made by management in each element (account) of a financial statement. 2. Decide which evidence is relevant for supporting or refusing the assertion 3. Select and perform procedures of obtaining the evidence 4. Evaluate the evidence and decide whether management assertions correspond to reality and GAAP - Objectivity
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provide a estimation on the efficiency & effectiveness of internal controls. Auditors must evaluate the risk of material misstatement for each assertion. Per Section 404 of the Sarbanes-Oxley Act‚ management and auditors both hold certain obligations on reporting the internal control of the company. Tesla may have internal controls in place to reduce the risk of material misstatement in their financial documents. But‚ the power & efficiency of these controls must be
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Control environment 9. Risk assessment 10. Monitoring 10-41 Independent Situation Appropriate Audit Report Reason for Report 1. Adverse opinion on internal control over financial reporting PCAOB Standard 2 notes that the presence of a material misstatement not detected by the company’s internal controls is to be considered at least a significant deficiency‚ if not a material weakness for purposes of reporting on internal controls. 2. Qualified or disclaimer of opinion on internal control over financial
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UVA-F-1357 EBAY INC. (A) Gary Bengier‚ Chief Financial Officer and Vice President of Operations at eBay‚ clicked on the send button as he emailed the week’s financial update to Pierre Omidyar‚ the company’s 31-year old chairman. It was September 15‚ 1998 and Wall Street was still reeling from a summer of severe market volatility. Much of the market’s instability could be traced to bearish worries over a deepening and continuing economic crisis in Asia and other developing markets. Many investors
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Chapter 4 Legal Liability for auditors 4-1. Understand litigious environment‚ which CPAs practice According to Google dictionary‚ litigious environment means a controversial environment. Where a simple mishaps can end up in a heavy lawsuit. Under common law‚ audit professionals have the responsibility to their client to fulfill their agreed on contracts. However‚ if one audit fails to fulfill their contract‚ not only they have to take responsibility to their clients but in some circumstances
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acceptable audit risk and materiality have on the audit compared to the levels you selected? The levels of acceptable audit risk decide how much evidence to gather during the audit. Lower levels of acceptable audit risk means less tolerant of the misstatement‚ and therefore more substantive tests will need to be done. A low acceptable audit risk requires a high level of audit assurance‚ but more time‚ labor and cost are required.For the accounts are high risky‚ such as those with relatively large size
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1. The final responsibility for the integrity of an SEC registrant’s internal controls lies on the management team. U.S. companies need to refer to a comprehensive framework of internal control when assessing the quality of financial reporting to determine that financial statements are being presented under General Accepted Accounting Principles‚ GAAP. The widely used framework is referred as COSO‚ Committee of Sponsoring Organizations of the Treadway Commission‚ sponsored by the following organizations
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Deficiency in internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees‚ in the normal course of performing their assigned functions‚ to prevent‚ or detect and correct‚ misstatements on a timely basis. A deficiency in design exists when (a) a control necessary to meet the control objective is missing‚ or (b) an existing control is not properly designed so that‚ even if the control operates as designed‚ the control objective
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Act‚ 1956 "the Act"). This responsibility includes the design‚ implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement‚ whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute
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