Audit Week one Course Administration Professor

Transcript:Audit Week one Course Administration Professor:
Audit Week one Course Administration Professor Thomas Davis Email: tomas.davis@hotmail.com Student course leader Textbook: Auditing and Assurance Services, Arens/Elder/Beaseley, 12th edition Course Assessment 30% midterm exam (5 Oct-22 Oct) 20% project (week 11 case study) 50% final exam (30 Nov-17 Dec) Course Outline Introduction (week 1) Audit overview (week 2) Financial statement cycles/audit objectives (week 3) Audit evidence (week 4) Audit planning (week 5) Materiality (week 6) Audit plan/audit program/review for midterm exam (week 7) Course Outline Sales cycle: controls and transactions testing (week 8) Case study (week 9) Sales cycle: analytical procedures/balances testing (week 10) Case study (week 11) Payroll and acquisition cycles (week 12) Inventory and capital cycles/audit completion (week 13) Review for final exam (week 14) Audit Week two Readings GAAS standards: http://www.aicpa.org/Research/Standards/AuditAttest/DownloadableDocuments/AU-00150.pdf Audit reports http://en.wikipedia.org/wiki/Auditor's_report Legal liability http://en.wikipedia.org/wiki/Legal_liability_of_certified_public_accountants Audit vs. Accounting Accounting: preparing financial statements Auditing: verifying financial statements The CPA Profession The “Big Four” Deloitte, EY, PwC, KPMG Staff levels: Staff, Senior, Manager, Partner CPA certification Education Exam Experience Generally Accepted Auditing Standards (GAAS) General standards Training and proficiency Independence Professional care Standards of field work Planning and supervision Understanding of entity Sufficient evidence Standards of reporting Evaluation of GAAP Explanation of departures from GAAP Adequate disclosure Financial statement opinion Audit Reports – Standard Unqualified Opinion All four financial statements included All three GAAS general standards followed All three field work standards met Presentation in accordance with GAAP No explanation/modification required Other Audit Reports Unqualified opinion with explanation/modification Qualified opinion – “except for” Scope limitation – client or circumstances Not in accordance with GAAP but fairly stated Adverse opinion – financials not fairly stated per GAAP Disclaimer – lack of information or lack of independence Materiality and Misstatements Immaterial – unlikely to affect decision of user: unqualified opinion Material but financial statements are fair (one item/isolated situation): qualified opinion Material – fairness of financial statements is in question: disclaimer or adverse opinion Ethics Independence Integrity and objectivity Confidential client information Contingent fees Audit and consulting… conflict of interest Legal Liability Business failure vs. audit failure Audit failure vs. audit risk Negligence vs. fraud Third parties vs. clients Civil (securities law) vs. criminal (federal law) liability “Joint and several” vs. “separate and proportionate” liability Audit week three Readings Accounting cycles http://tgg-accounting.com/blog/2012/01/financial-statement-cycles/ Audit objectives (not all objectives are covered here; we will discuss others during the class) http://smallbusiness.chron.com/audit-procedures-objectives-58836.html Auditor Responsibilities Material vs. immaterial misstatements Reasonable assurance Errors