会计专业英语Chapter 12.ppt
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1、Part Auditing,Chapter 12 Auditing Principles,Chapter Skeleton,Understand the basis of auditing Describe assurance services and distinguish audit services from other assurance and non-assurance services provided by CPAs. Distinguish from auditing from accounting. Identify auditing objectives. Underst
2、and auditing responsibility and describe audit risks. Describe the characteristics of auditing evidence and auditing sampling.,12.1 auditing Basis and Auditing Objectives,Assurance Services,Assurance services are independent professional services that improve the quality of information for decision
3、makers. Attestation service is a type of assurance service in which the CPA firm issues a written communication that expresses a conclusion about the reliability of a written assertion of another party.,Audit of Historical Financial Statements,An audit of historical financial statements is a form of
4、 attestation service in which the auditor issues a written report expressing an opinion about whether the financial statements are in material conformity with generally accepted accounting principles.,Review of Historical Financial Statements,A review of historical financial statements is another ty
5、pe of attestation service performed by CPAs. A review is often adequate to meet users needs and can be provided by the CPA firm at a much-lower fee than an audit.,Distinction Between Auditing and Accounting,Accounting is the recording, classifying, and summarizing of economic events in a logical man
6、ner of the purpose of providing financial information for decision making. In auditing accounting data, the concern is with determining whether recorded information properly reflects the economic events that occurred during the accounting period. In addition to understanding accounting, the auditors
7、 must posses expertise in the accumulation and interpretation of audit evidence.,Three types of Auditing,Financial statement audit, operational audits, and compliance audits. The latter two services are often called audit activities. A financial statement audit is conducted to determine whether the
8、overall financial statements are stated in accordance with specified criteria. An operational audit is a review of any part of an organizations operating procedures and methods. The purpose of a compliance audit is to determine whether the auditee is following specific procedures, rules, or regulati
9、ons set by some higher authority.,Objectives of Conducting an Audit of Financial Statements,In the context of an audit, assertions represent the set of information that the preparer of information is providing to another party. Five broad categories of assertions: 1. existence or occurrence 2. compl
10、eteness 3. rights and obligations 4. valuation or allocation 5. disclosure and presentations.,In a sense, the auditors overall objective becomes that of examine the assertions that comprise the information being audited. For managements assertion about valuation, the auditor confronts three separate
11、 objectives. Two audit objectives pertain to managements assertions about presentation and disclosure: 1. Classification objective 2. disclosure objective,Objectives of Conducting an Audit of Financial Statements,The objective, overall reasonableness, is intended to provide a broader view of the ful
12、l set of assertions being examined.,Objectives of Conducting an Audit of Financial Statements,12.2 Materiality and Auditing Risk,Materiality,The FASB defines materiality as the magnitude of an omission or misstatement of accounting information that , in light of surrounding circumstances, makes it p
13、robable that the judgment of a reasonable person relying on the information would have been changed or influenced by the omission or misstatement. An audit is designed to detect material misstatements.,Audit Risk,A fundamental precept in the risk-based approach to auditing is that auditor should ass
14、ess the risk that an account balance is misstated and then adjust the audit procedures to minimize the possibility that misstatements will go undetected. Consider the risks and potential causes of misstatement that might be associated with managements assertions regarding accounts receivable. Engage
15、ment risk refers to the risk the auditing firm encounters because it is associated with a particular client.,Audit risk is defined as the risk the auditor may give an unqualified opinion on materially-misstated financial statements.,Audit Risk,The Professions Audit Risk Model: Practice Implication,A
16、udit is risk is defined as the risk of an auditors issuing an unqualified opinion on materially-misstated financial statements. That is possible only when two independent events occur: 1. a material misstatement occurs in the financial recording process 2. the auditor fails to discover the misstatem
17、ent. General observations flow from the nature of accounting transactions,Audit Risk Model AR = f (IR, CR, DR) Inherent risk is the initial susceptibility of a transaction or accounting adjustment to be recorded in error, or for the transaction not to be recorded in the absence of internal control.
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