Homework Assignment Week 1

The information in this report regarding the accounting standards for private companies is as stated in the proposal stage. The three options discussed are options being considered and the Accounting Standards Board (AcSB) has issued an

documentation, materiality and risk, internal control, statistical tools, and the overall audit plan and program.

Compare the primary auditor objectives in auditing historical financial statements to auditing internal controls over financial reporting. Identify at least two (2) objectives that are the most significant in reducing the risk of reporting errors or misstatements in financial statements. Provide a rationale for your response.

f) To evaluate the material misstatement in the accounts, I think both of the consolidated income statement and the three financial statements are useful. We need to use the information properly from all the financial statements. However the consolidated income statement is the most useful one. If there is a significant change in an account balance comparing with preceding two years, the auditor will examine whether there a material misstatement exists. For instance, the bad debt expense as a percent of net sales in 2011, 2010 and 2009 are 0.56%, 0.70% and 0.69%, respectively. There should

Discuss the audit risk model, and ascertain which sampling or non-sampling techniques you would use in order to establish your preliminary judgment about materiality. Justify your response.

(b) Mark Paxson maintains that the statement of cash flows is an optional financial statement. Do you agree? Explain.

1a) What should the auditor consider when determining whether an account should be considered significant?

3. Research auditing standards and describe the typical procedures that an auditor would perform in auditing a fair value estimate such as the

Auditing standards that give guidance for internal control reporting are AS 2 & AS 5.

The objectives an audit team hopes to accomplish by preparing a proper set of audit workpapers is to facilitate the planning, performance, supervision of the engagement, and provide evidence supporting significant conclusions by the auditor in accordance with the PCAOB. A record of the evidence, samples tested and the conclusions are presented to supervisors and partners for review

d. “The auditor's reliance on substantive tests to achieve an audit objective related to a particular assertion may be derived from tests of details, from analytical procedures, or from a combination of both. The decision about which procedure or procedures to use to achieve a particular audit objective is based on the auditor's judgment on the expected effectiveness and efficiency of the available procedures. For significant risks of material misstatement, it is unlikely that audit evidence obtained from substantive analytical procedures alone will be sufficient (PCAOB, AS 2305.09).”

American Institute of Certified Public Accountants (AICPA). 2015. Statements on Auditing Standards. Accessed at AICPA web site (March 6, 2015): http://www.aicpa.org/research/standards/auditattest/pages/sas.aspx

General Standard #3: The auditor must exercise due professional care in the performance of the audit and the preparation of the report (AICPA). They failed to act in a professional manner and to practice due care when they violated any of the standards.

3. What potential implications arise for the accounting firm if they issue an unqualified report without the going-concern explanatory paragraph?

Strategic objectives- pertain to value creation management makes on behalf of shareholders. Longterm strategies look