Auditing: Analytical and Logical Skills

1245 Words Sep 5th, 2015 5 Pages
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

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LO# 1

The Study of Auditing
The study of auditing is different from other accounting courses that you have taken in college because …
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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
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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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