WGU D215 Auditing Questions and Answers
a report issued when the auditor believes the financial statements are so
materially misstated or misleading as a whole that they do not present fairly the entity's financial
position or the results of its operations and cash flows in conformity with GAAP
2 types of audit services audit of financial statements, audit of internal
controls over financial reporting (ICFR)
what is audit of financial statements? purpose is to provide statement users with auditor
opinion ensuring statements are being presented
in accordance with reporting framework
what is audit of internal controls provides statement users with opinion by auditor
(ICFR)? on design and operating effectiveness of controls
Assurance Services independent professional services that improve the
quality of information, or its context, for decision
makers
Attestation Services when independent CPA is engaged to issue report
on subject that is another party's responsibility
umbrella of audit services assurance -> attestation -> audit services
compliance audit gathering evidence to determine whether entity
under review has followed policies/regulations/etc
, operational/performance audit concerned with the economy, efficiency, and
effectiveness of an organization's activities
internal audit evaluates/improves risk management, internal
control procedures, elements of governance
process
management's audit responsibilities ensures statement info presented fairly, complies
with financial reporting framework
non-audit services not assurance services, CPA doesn't need to be
independent
PCAOB (Public Company overseas audits of public companies (AS: auditing
Accounting Oversight Board) standards)
COSO Framework provides guidance to management and expertise
with internal controls, risk management, fraud
deference
1. Control Environment
2. Risk Assessment
3. Control Activities
4. Information and Communication
5. Monitoring
FASB (Financial Accounting Establishes accounting rules and guidelines
Standards Board)
audit risk The risk that the auditor expresses an inappropriate
audit opinion when the financial statements are
materially misstated.
a report issued when the auditor believes the financial statements are so
materially misstated or misleading as a whole that they do not present fairly the entity's financial
position or the results of its operations and cash flows in conformity with GAAP
2 types of audit services audit of financial statements, audit of internal
controls over financial reporting (ICFR)
what is audit of financial statements? purpose is to provide statement users with auditor
opinion ensuring statements are being presented
in accordance with reporting framework
what is audit of internal controls provides statement users with opinion by auditor
(ICFR)? on design and operating effectiveness of controls
Assurance Services independent professional services that improve the
quality of information, or its context, for decision
makers
Attestation Services when independent CPA is engaged to issue report
on subject that is another party's responsibility
umbrella of audit services assurance -> attestation -> audit services
compliance audit gathering evidence to determine whether entity
under review has followed policies/regulations/etc
, operational/performance audit concerned with the economy, efficiency, and
effectiveness of an organization's activities
internal audit evaluates/improves risk management, internal
control procedures, elements of governance
process
management's audit responsibilities ensures statement info presented fairly, complies
with financial reporting framework
non-audit services not assurance services, CPA doesn't need to be
independent
PCAOB (Public Company overseas audits of public companies (AS: auditing
Accounting Oversight Board) standards)
COSO Framework provides guidance to management and expertise
with internal controls, risk management, fraud
deference
1. Control Environment
2. Risk Assessment
3. Control Activities
4. Information and Communication
5. Monitoring
FASB (Financial Accounting Establishes accounting rules and guidelines
Standards Board)
audit risk The risk that the auditor expresses an inappropriate
audit opinion when the financial statements are
materially misstated.
