Auditing: Analytical and Logical Skills

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ACG 4632 Introduction to Financial Statement Auditing Spring 2015 Section 422 Instructor: Devin Williams, CPA 1-1 Chapter 1 An Introduction to Assurance and Financial Statement Auditing Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. LO# 1 The Study of Auditing The study of auditing is different from other accounting courses that you have taken in college because … OTHER COURSES Rules, techniques and computations to prepare and analyze financial information AUDITING Analytical and logical skills Much more conceptual in nature 1-3 LO# 2 Principals and Agents A public company is a company that sells its stocks or bonds to the…show more content…
1-18 LO# 5 Materiality Information is material if omitting it or misstating it could influence decisions that users make on the basis of the financial information of a specific reporting entity. 1-19 Materiality LO# 5 Information is material if omitting it or misstating it could influence decisions that users make on the basis of the financial information of a specific reporting entity. $5 – Material? One bite of a cookie – Material? $1 million – Material? 1-20 Audit Evidence Regarding Management Assertions LO# 5 Evidence that assists the auditor in evaluating management’s financial statement assertions consists of the underlying accounting data and any additional information available to the auditor, whether originating from the client or externally. Relevance – Is the information related to the specific assertion being tested? Reliability – Can the information be relied upon to signal the true state of the specific assertion being tested? 1-21 Audit Evidence  To arrive at opinion on financials, the auditor must gather evidence – Sufficiency – quantity of evidence – Appropriateness  Relevance – does evidence relate to management assertion being tested?  Reliability – does evidence signal true state of management assertion? LO# 6 Sampling: Inferences Based on Limited Observations Auditors use a sampling approach to examine a subset of
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