D215 – Auditing Questions and Answers
PCAOB (Public Company Accounting Oversight Board) framework for audits of public companies
AS 2201 an audit of internal control over financial reporting that is integrated with an audit
of financial statements
AS 3101 The Auditor's Report on an Audit of Financial Statements When the Auditor
Expresses an Unqualified Opinion
Auditing Standards Board Framework for Audits of Private Companies
AU-C 200 overall objectives of the independent auditor and conduct of an audit in
accordance with generally accepted auditing standards
AU-C 700 Forming an Opinion and Reporting on Financial Statements
The objectives of the auditor are to
a. Form an opinion on the financial statements based on an evaluation of the audit
evidence obtained, and
b. Express clearly that opinion on the financial statements through a written report
that also describes the basis for that opinion.
Audit Services Services by an independent CPA that provide financial statement users with (1) an
opinion on whether the financial statements are presented fairly, in all material
respects, in accordance with an applicable financial reporting framework and, in
some cases, (2) an opinion on the effectiveness of ICFR, which enhances the
degree of confidence that intended users can place in the financial statements.
, Two primary types of audit services 1. audits of financial statements
2. audits of internal controls over financial reporting (ICFR)
ICFR Internal Control over Financial Reporting
Auditor An independent certified public accountant (CPA) who is qualified to perform the
auditing services.
Attesation Services Services performed when an independent practitioner, or CPA, is engaged to
issue a report on subject matter that is the responsibility of another party.
Practitioner is used rather than auditor because attestation services encompass
more than just the audit of historical financial statements and internal controls.
Assurance Services independent professional services that improve the quality of information, or its
context, for decision makers
Who are intended users of assurance services? The intended users of assurance services are decision makers, such as investors,
creditors, and regulators.
What does "independent" mean in the context of Within the context of assurance services, "independent" means that the person
assurance services? performing the service is not involved with the creation of the information and is
objective in the evaluation of the information.
What is an example of an "applicable financial reporting Examples of "applicable financial reporting frameworks" are GAAP, IFRS, and a
framework"? federal income tax basis of accounting.
Integrated Audit An audit that combines the financial statement audit with an audit of the
effectiveness of ICFR
Limitations of an audit are caused by (1) the nature of financial reporting, (2) the nature of audit procedures, and (3) the
need for the audit to be conducted within a reasonable period of time at a
reasonable cost
Materiality Information is material if omitting it or misstating it could influence decisions that
users make on the basis of the reported financial information of a specific
reporting entity.
Compliance Audits An audit to determine whether the entity has conformed with regulations, rules, or
processes.
Operational (performance) audit an assessment of the economy, efficiency, and effectiveness of an organization's
operations
internal audit A function within an entity which generally evaluates and improves risk
management, internal control procedures and elements of the governance
process
Those charged with governance the person(s) with responsibility for overseeing the strategic direction of the entity
and its obligations related to the accountability of the entity
PCAOB (Public Company Accounting Oversight Board) framework for audits of public companies
AS 2201 an audit of internal control over financial reporting that is integrated with an audit
of financial statements
AS 3101 The Auditor's Report on an Audit of Financial Statements When the Auditor
Expresses an Unqualified Opinion
Auditing Standards Board Framework for Audits of Private Companies
AU-C 200 overall objectives of the independent auditor and conduct of an audit in
accordance with generally accepted auditing standards
AU-C 700 Forming an Opinion and Reporting on Financial Statements
The objectives of the auditor are to
a. Form an opinion on the financial statements based on an evaluation of the audit
evidence obtained, and
b. Express clearly that opinion on the financial statements through a written report
that also describes the basis for that opinion.
Audit Services Services by an independent CPA that provide financial statement users with (1) an
opinion on whether the financial statements are presented fairly, in all material
respects, in accordance with an applicable financial reporting framework and, in
some cases, (2) an opinion on the effectiveness of ICFR, which enhances the
degree of confidence that intended users can place in the financial statements.
, Two primary types of audit services 1. audits of financial statements
2. audits of internal controls over financial reporting (ICFR)
ICFR Internal Control over Financial Reporting
Auditor An independent certified public accountant (CPA) who is qualified to perform the
auditing services.
Attesation Services Services performed when an independent practitioner, or CPA, is engaged to
issue a report on subject matter that is the responsibility of another party.
Practitioner is used rather than auditor because attestation services encompass
more than just the audit of historical financial statements and internal controls.
Assurance Services independent professional services that improve the quality of information, or its
context, for decision makers
Who are intended users of assurance services? The intended users of assurance services are decision makers, such as investors,
creditors, and regulators.
What does "independent" mean in the context of Within the context of assurance services, "independent" means that the person
assurance services? performing the service is not involved with the creation of the information and is
objective in the evaluation of the information.
What is an example of an "applicable financial reporting Examples of "applicable financial reporting frameworks" are GAAP, IFRS, and a
framework"? federal income tax basis of accounting.
Integrated Audit An audit that combines the financial statement audit with an audit of the
effectiveness of ICFR
Limitations of an audit are caused by (1) the nature of financial reporting, (2) the nature of audit procedures, and (3) the
need for the audit to be conducted within a reasonable period of time at a
reasonable cost
Materiality Information is material if omitting it or misstating it could influence decisions that
users make on the basis of the reported financial information of a specific
reporting entity.
Compliance Audits An audit to determine whether the entity has conformed with regulations, rules, or
processes.
Operational (performance) audit an assessment of the economy, efficiency, and effectiveness of an organization's
operations
internal audit A function within an entity which generally evaluates and improves risk
management, internal control procedures and elements of the governance
process
Those charged with governance the person(s) with responsibility for overseeing the strategic direction of the entity
and its obligations related to the accountability of the entity
