Term
| What are the parts of user demand for reliable information? |
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Definition
Complexity
Remoteness
Timeliness
Consequences |
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Term
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Definition
| majority of audit work is correcting errors, not detecting fraud; clients make mistakes sometimes |
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Term
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Definition
| 100,000 shareholders cannot come in and audit books |
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Term
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Definition
| Annually, possibly quarterly audits |
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Term
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Definition
| when clean opinion- stock price doesn't change; when there is damage it is a different story |
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Term
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Definition
| A systematic process of objectively obtaining and evaluating evidence regarding assertions (F/S's & footnotes) about economic actions and events to ascertain the degree of correspondence b/t the assertions and established criteria (GAAP) and communicating the results (audit opinion) to interested users (stakeholders- creditors & investors) |
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Term
| what are auditors selling? |
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Definition
trust & confidence
independent opinion
CREDIBILITY
EXPERTISE |
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Term
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Definition
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Term
| expertise + credibility = ? |
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Definition
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Term
| define attestation engagement |
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Definition
| a practitioner assesses and reports on "subject matter or an assertion about the subject matter that is the responsibility of another party" |
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Term
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Definition
| CPA firms extend credibility; independent professional services that improve the quality of information, or its context, for decision makers (no standards for these services unlike audits) |
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Term
| What makes up majority of attestation and assurance services? |
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Definition
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Term
| What are the major provisions of SOX? |
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Definition
-CEO/CFO must certify F/S's
-Auditor must evaluate internal controls
-Created PCAOB (add. auditor "watchdog")
-Prohibition of certain client services by firms conducting a client's audit |
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Term
| What services are not allowed to be provided to a firm's audit client? |
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Definition
1) bookkeeping
2) design/implementation of financial info. systems
3) appraisal or valuation services
4) actuarial services (risk services)
5) internal audit outsourcing
6) mgmt/HR services
7) investment or broker/dealer services
8) legal & expert services (unrelated to audit) |
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Term
| What professional services are allowed? |
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Definition
-some tax services (w/restrictions)
-other services approved by audit comm. |
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Term
| In summary, what services does SOX prohibit? |
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Definition
| services that have auditors making mgmt. decisions or auditing their own firm's work |
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Term
| Who reports to partners in an audit engagement? |
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Definition
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Term
| Who reports to managers working on an audit? |
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Definition
Senior (in-charge) accountants
Staff accountants (or Associates) |
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Term
| What are the 3 main categories of services in the public actg. profession? |
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Definition
Assurance services
Tax consulting services
Consulting services |
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Term
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Definition
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Term
| Name different assurance services |
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Definition
-audit engagements
-attestation engagements
-assurance engagements
-compilations
-reviews |
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