Audit CPA Exam
Issuers public companies
Non-issuers private companies
AICPA standard-setting body for non-issuers and attest engagements
PCAOB standard-setting body for issuers
Governmental Accountability Office standard-setting body for government organizations
AICPA Accounting and Review Services Committeee standard-setting body for review engagements
Statements on Auditing Standards (SAS) standard/guideline for non-issuers; interpretations of ASB standards
PCAOB Auditing Standards standard/guideline for issuers
Generally Accepted Government Auditing Standards standard/guideline for government organizations
(GAGAS)
Statements on Standards for Attestation Engagements standard/guideline for attestation engagements
(SSAE)
Statements on Standards for Accounting and Review standard/guideline for review engagements
Services (SSARS)
levels of audit guidance most authoritative to least
1. AICPA SAS (nonissuers) and PCAOB AS (issuers)
2. Interpretive publications
3. other auditing publications
must (level 1) represent a requirements that is considered to be unconditional
should (level 2) represent a presumptively mandatory requirement, that must be followed in all
relevant cases; reasonable explanation should exist
could, might, may (level 3) represent explanatory material that will not enforce a professional performance
requirement
, Audit CPA Exam
GAAS interpretations of SAS or PCAOB AS
Level of Oversight 1. Board of Directors
2. Audit Committee
3. Auditor
4. Management
COSO Framework management's system of internal controls
Quality Control Framework measures quality of an audit firm
Code of Professional Conduct Framework measures standards of an audit professional
3 types of members in Code of Professional Conduct 1. members in public practice
2. members in business
3. other members
threats to independence 1. financial relationships
2. employment relationships
3. business relationships
immediate family members covered member, covered member's spouse, and dependent children
close family members covered member's spouse, dependents, nondependent children, parents and
siblings
direct financial interest will impair independence regardless of its materiality to the financial statements; ex.
owning stock
indirect financial interest will impair independence only if it is material to the financial statements; ex.
ownership in diversified mutual funds that contain the client's stock
financial relationships that can impair independence 1. direct financial interest
2. indirect financial interest
3. lending agreements
4. received more than $100 as gift
steps to understanding threats to compliance 1. identify threats
2. evaluate significance of threat
3. identify and apply safeguards
threats to compliance 1. adverse interest
2. advocacy
3. familiarity
4. management participation
5. self-interest
6. self-review
7. undue influence
, Audit CPA Exam
elements of quality control Performance of the Engagement
Acceptance of the client and engagement continuance
Leadership responsibilities
Monitoring
Ethical responsibilities
Human Resources
performance of the engagement performance and procedures are used to ensure that engagement personnel are
properly supervised and that the work is adequately reviewed
engagement and client acceptance and continuance policies and procedures designed to enable practitioners to have a better
understanding as to whether they should accept or continue a client relationship
primary factors involved in Client Acceptance and 1. minimize likelihood of associating with a client that lacks integrity
Engagement continuance 2. determine whether or not the firm can perform the engagement
leadership responsibilities audit firm should have a solid control environment; "tone at the top"
peer review conducted every 3 years (unless 100+ issuers, then 1 year) as a review by one
accounting firm to another
ethical responsibilities all personnel on engagements should maintain independence in mind and in
appearance, perform all professional responsibilities with integrity, and maintain
objectivity in performing their professional responsibilities
human resources includes standards for recruitment, hiring, staffing personnel, professional
development, performance evaluation, and compensation
engagement quality control review process designed to provide an objective evaluation, prior to the release of the
report, of the conclusions reached
engagement quality control reviewer parties all having significant appropriate experience and authority to objectively
evaluate significant judgments that the engagement team made, and the
conclusions reached when formulating their report
criteria for eligibility of engagement quality control 1. technical qualifications required to perform role, including necessary experience
reviewers and authority
2. degree to which a reviewer can be consulted on the engagement without
compromising the reviewer's objectivity
quality control an accounting firms evaluating its personnel advancement to ascertain whether
individuals meeting stated criteria are assigned increased degrees of responsibility
engagement scope what is and is not included in an engagement
Issuers public companies
Non-issuers private companies
AICPA standard-setting body for non-issuers and attest engagements
PCAOB standard-setting body for issuers
Governmental Accountability Office standard-setting body for government organizations
AICPA Accounting and Review Services Committeee standard-setting body for review engagements
Statements on Auditing Standards (SAS) standard/guideline for non-issuers; interpretations of ASB standards
PCAOB Auditing Standards standard/guideline for issuers
Generally Accepted Government Auditing Standards standard/guideline for government organizations
(GAGAS)
Statements on Standards for Attestation Engagements standard/guideline for attestation engagements
(SSAE)
Statements on Standards for Accounting and Review standard/guideline for review engagements
Services (SSARS)
levels of audit guidance most authoritative to least
1. AICPA SAS (nonissuers) and PCAOB AS (issuers)
2. Interpretive publications
3. other auditing publications
must (level 1) represent a requirements that is considered to be unconditional
should (level 2) represent a presumptively mandatory requirement, that must be followed in all
relevant cases; reasonable explanation should exist
could, might, may (level 3) represent explanatory material that will not enforce a professional performance
requirement
, Audit CPA Exam
GAAS interpretations of SAS or PCAOB AS
Level of Oversight 1. Board of Directors
2. Audit Committee
3. Auditor
4. Management
COSO Framework management's system of internal controls
Quality Control Framework measures quality of an audit firm
Code of Professional Conduct Framework measures standards of an audit professional
3 types of members in Code of Professional Conduct 1. members in public practice
2. members in business
3. other members
threats to independence 1. financial relationships
2. employment relationships
3. business relationships
immediate family members covered member, covered member's spouse, and dependent children
close family members covered member's spouse, dependents, nondependent children, parents and
siblings
direct financial interest will impair independence regardless of its materiality to the financial statements; ex.
owning stock
indirect financial interest will impair independence only if it is material to the financial statements; ex.
ownership in diversified mutual funds that contain the client's stock
financial relationships that can impair independence 1. direct financial interest
2. indirect financial interest
3. lending agreements
4. received more than $100 as gift
steps to understanding threats to compliance 1. identify threats
2. evaluate significance of threat
3. identify and apply safeguards
threats to compliance 1. adverse interest
2. advocacy
3. familiarity
4. management participation
5. self-interest
6. self-review
7. undue influence
, Audit CPA Exam
elements of quality control Performance of the Engagement
Acceptance of the client and engagement continuance
Leadership responsibilities
Monitoring
Ethical responsibilities
Human Resources
performance of the engagement performance and procedures are used to ensure that engagement personnel are
properly supervised and that the work is adequately reviewed
engagement and client acceptance and continuance policies and procedures designed to enable practitioners to have a better
understanding as to whether they should accept or continue a client relationship
primary factors involved in Client Acceptance and 1. minimize likelihood of associating with a client that lacks integrity
Engagement continuance 2. determine whether or not the firm can perform the engagement
leadership responsibilities audit firm should have a solid control environment; "tone at the top"
peer review conducted every 3 years (unless 100+ issuers, then 1 year) as a review by one
accounting firm to another
ethical responsibilities all personnel on engagements should maintain independence in mind and in
appearance, perform all professional responsibilities with integrity, and maintain
objectivity in performing their professional responsibilities
human resources includes standards for recruitment, hiring, staffing personnel, professional
development, performance evaluation, and compensation
engagement quality control review process designed to provide an objective evaluation, prior to the release of the
report, of the conclusions reached
engagement quality control reviewer parties all having significant appropriate experience and authority to objectively
evaluate significant judgments that the engagement team made, and the
conclusions reached when formulating their report
criteria for eligibility of engagement quality control 1. technical qualifications required to perform role, including necessary experience
reviewers and authority
2. degree to which a reviewer can be consulted on the engagement without
compromising the reviewer's objectivity
quality control an accounting firms evaluating its personnel advancement to ascertain whether
individuals meeting stated criteria are assigned increased degrees of responsibility
engagement scope what is and is not included in an engagement
