WGU D215 Auditing – Questions With Fully
Explained Solutions
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Terms in this set (209)
Audit Expectation Gap Difference between expectations of auditors and F.S
users beliefs that do not align with auditor's
professional responsibilities
Audit Services Audit of financial statements and audit of ICFR
Attestation Services independent practitioner engaged to issue a report
on subject matter that is the responsibility of another
party
Audit of financial statements provides financial statement users with an opinion
from auditors on whether financial statements are
presented fairly and in accordance with GAAP
Audit of ICFR provides F.S. users with opinion of auditor on design
and operating effectiveness of ICFR
Examples of attestation services Financial forecasts
Detailed schedules of specific accounts
Review of historical financial statements
Agreed-upon procedures
Assurance Services independent professional services that improve the
quality of information, or its context, for decision
makers
,Types of Assurance Services Financial Statement Audits
Compliance Audits
Operational (Performance) Audits
Internal Audits
Limitations of an audit caused by 1. Nature of financial reporting- judgment of F.S
2. Nature of audit procedures- reliance on evidence,
materiality
3. Need for audit to be conducted in a certain
amount of time
Materiality whether an item is large enough to likely influence
the decision of an investor or creditor
Compliance Audit examination of organizational compliance with
applicable laws, regulations, policies, and
procedures
ex: income tax audit
Operational (Performance) Audit an assessment of the economy, efficiency, and
effectiveness of an organization's operations
Internal Audits Conducted by employees of organization (or
outsourced); evaluating/improving risk management,
internal control procedures, elements of
governmental processes
Sources of demand for audit and remoteness, complexity, competing incentives,
assurance services reliability
Auditor responsibility obtain reasonable assurance FS are free of material
misstatements
Professional Skepticism a state of mind that is characterized by appropriate
questioning and a critical assessment of audit
evidence
, SEC Mission is to protect investors, maintain fair and
efficient markets, facilitate capital formation, enforce
and interpret securities laws
PCAOB non-profit corporation that oversees audits to
protect investor interests; regulation and standard-
setting for audits of public companies
*Sets AS
Auditing Standards Minimum requirements and guidance for auditing
services
AICPA private professional membership organization of
CPA's representing accounting professionals; ASB
part of AICPA
Auditing Standards Board The arm of the AICPA that is responsible for issuing
auditing standards for private and nonprofit
organizations (Statements for Auditing Standards)
Financial Accounting Standards Board the private board that establishes the generally
(FASB) accepted accounting principles used in the practice
of financial accounting
Committee of Sponsoring private sector group that provides guidance to
Organizations of the Treadway management and expertise in areas of internal
Commission (COSO) control, enterprise risk management, fraud
deterrence
State Boards of Accountancy Issue CPA certificates
All boards require successful completion of CPA
examination
Education and experience requirements vary
National Association of State Boards of Accounting
(NASBA)
Explained Solutions
Save
Terms in this set (209)
Audit Expectation Gap Difference between expectations of auditors and F.S
users beliefs that do not align with auditor's
professional responsibilities
Audit Services Audit of financial statements and audit of ICFR
Attestation Services independent practitioner engaged to issue a report
on subject matter that is the responsibility of another
party
Audit of financial statements provides financial statement users with an opinion
from auditors on whether financial statements are
presented fairly and in accordance with GAAP
Audit of ICFR provides F.S. users with opinion of auditor on design
and operating effectiveness of ICFR
Examples of attestation services Financial forecasts
Detailed schedules of specific accounts
Review of historical financial statements
Agreed-upon procedures
Assurance Services independent professional services that improve the
quality of information, or its context, for decision
makers
,Types of Assurance Services Financial Statement Audits
Compliance Audits
Operational (Performance) Audits
Internal Audits
Limitations of an audit caused by 1. Nature of financial reporting- judgment of F.S
2. Nature of audit procedures- reliance on evidence,
materiality
3. Need for audit to be conducted in a certain
amount of time
Materiality whether an item is large enough to likely influence
the decision of an investor or creditor
Compliance Audit examination of organizational compliance with
applicable laws, regulations, policies, and
procedures
ex: income tax audit
Operational (Performance) Audit an assessment of the economy, efficiency, and
effectiveness of an organization's operations
Internal Audits Conducted by employees of organization (or
outsourced); evaluating/improving risk management,
internal control procedures, elements of
governmental processes
Sources of demand for audit and remoteness, complexity, competing incentives,
assurance services reliability
Auditor responsibility obtain reasonable assurance FS are free of material
misstatements
Professional Skepticism a state of mind that is characterized by appropriate
questioning and a critical assessment of audit
evidence
, SEC Mission is to protect investors, maintain fair and
efficient markets, facilitate capital formation, enforce
and interpret securities laws
PCAOB non-profit corporation that oversees audits to
protect investor interests; regulation and standard-
setting for audits of public companies
*Sets AS
Auditing Standards Minimum requirements and guidance for auditing
services
AICPA private professional membership organization of
CPA's representing accounting professionals; ASB
part of AICPA
Auditing Standards Board The arm of the AICPA that is responsible for issuing
auditing standards for private and nonprofit
organizations (Statements for Auditing Standards)
Financial Accounting Standards Board the private board that establishes the generally
(FASB) accepted accounting principles used in the practice
of financial accounting
Committee of Sponsoring private sector group that provides guidance to
Organizations of the Treadway management and expertise in areas of internal
Commission (COSO) control, enterprise risk management, fraud
deterrence
State Boards of Accountancy Issue CPA certificates
All boards require successful completion of CPA
examination
Education and experience requirements vary
National Association of State Boards of Accounting
(NASBA)
