Chapter 1 Modern Auditing

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CHAPTER 1 AUDITING AND THE PUBLIC ACCOUNTING PROFESSION – INTEGRITY OF FINANCIAL REPORTING |LEARNING CHECK | 1. SEVERAL COMMON ATTRIBUTES OF ACTIVITIES DEFINED AS AUDITING ARE (A) SYSTEMATIC PROCESS, (B) OBJECTIVELY OBTAINING AND EVALUATING EVIDENCE, (C) ASSERTIONS ABOUT ECONOMIC ACTIONS AND EVENTS, (D) DEGREE OF CORRESPONDENCE, (E) ESTABLISHED CRITERIA, (F) COMMUNICATING THE RESULTS, AND (G) INTERESTED USERS. 2. A financial statement audit involves obtaining and evaluating evidence about an entity 's financial statements for the purpose of expressing an opinion on whether the statements are presented fairly in conformity with established criteria--usually GAAP. Thus, the nature of the auditor 's…show more content…
| |CPA Performance View |Provides relevant financial and nonfinancial information to management or the board of directors| | |about the entity’s performance. It ma also provide information about the reliability of | | |management’s system for monitoring the entity’s performance. | 7. a. The audit provides reasonable assurance that financial statement information is free of material misstatements. Decision makers can uses financial information to anticipate business opportunities and to make business decisions based with reasonable assurance that the information set used to make decisions is reliable. b. A review of financial statements provides less assurance about the reliability of financial information than that provided by an audit. The CPA provides negative assurance that he or she is not aware of any material modifications that need to be made to the financial statements in order for them to be in conformity with GAAP. This service is focused on both the relevance and reliability of information used by decision makers. A compilation does not provide assurance about the reliability of financial statement information used by decision makers. However, a compilation service
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