Nonattest Engagement In Financial Accounting

The auditor must assess the transactions for how much of a risk factor is involved. When reviewing these transactions, auditor must be able to review the internal controls of the company’s accounting personnel. The segregation of duties is associated with the safeguarding of an organization 's assets and the topic known as internal control. An example of the segregation of duties would be a company 's requirement that the bank statement for its checking

Legitimacy in accounting practices is ensured by the check and balance of having independent auditors from registered public accountant firms reviewing financial practices. The report features eleven sections and these sections pertain to accounting overview, independence of auditors to reduce interest conflicts, corporate responsibility, financial disclosures, tax returns, criminal fraud and various elements of white collar criminal activity (107th Congress

3. What was the balance of Walmart’s allowance for doubtful accounts (ADA) as of January 31, 2012?

Describe at least two (2) career options someone with an accounting education can pursue. Be sure to reference sources such as the Bureau of Labor Statistics and the American Institute of Certified Public Accountants.

The act is an exhaustive piece of legislation that contains eleven major section and some of the most important titles outline requirements on auditor independence, analyst conflict of interests, corporate responsibility, enhanced financial disclosures, internal controls assessment, and corporate fraud accountability (Bainbridge, 2007). One of the main benefits of the legislation is to establish auditor independence requirements and rules for the prevention of conflicts of interest in particular by prohibiting auditing firms from offering other services. Prior to Sarbanes–Oxley, the auditing professionals were self-regulated and the decisions that controlled the industry, such as violation of ethical standards, were made largely by auditors themselves (Verschoor, 2012). In order to prevent conflict of interests, the Sarbanes–Oxley Act grants the PCAOB authority to oversee and regulate auditing firms, conduct investigations, and impose disciplinary sanctions against accounting firms (McDonough, 2004). Another provision of the Act is requiring senior executives to be personally accountable and responsible for the financial information reports by certifying that the information is correct.(Welch, 2006). A byproduct of the law implementation is a significant quality improvement on accounting practices;

Section 201 prohibits any registered public accounting firm from providing the following non-audit services to audit clients: “bookkeeping or other services related to the accounting records, financial info systems design or implementation, appraisal or valuation services, fairness opinions, actuarial services, internal audit outsourcing services, management functions or human resources, broker or dealer investment advisor or investment banking services, legal services and expert services unrelated to the audit, any other service the board determines impermissible” (Sarbanes-Oxley Act, 2002). Section 202 requires the issuer’s audit committee to preapprove all auditing and non-auditing services that will be provided to the issuer (Philipp, CPA, & CGMA, 2014). Section 203 establishes mandatory and substantive rotation of audit partner and partner responsible for review of the audit every 5 years (Philipp, CPA, & CGMA, 2014). Section 204 needs the public accounting firm to report to the audit committee such as “critical accounting policies and practices, alternative accounting treatments within GAAP discussed with management and material written communications between auditor’s firm and management of the issuer” (Philipp, CPA, & CGMA, 2014). Section 206 prohibits the public accounting firm from providing audit services for the issuer if the CEO, CFO, CAO or any person serving in the equivalent capacity of

AICPA Code of Professional Conduct is the code of conduct that required each member of the organization to follow rigorously and act with integrity, objectivity, due care, competence, fully disclose any conflicts of interest (and obtain client consent if a conflict exists), maintain client confidentiality, disclose to the client any commission or referral fees, and serve the public interest when providing financial services. Accountants are relied upon to be trustworthy and maintain high ethical standards. It is because of the nature of the profession that puts them in a position of trust with people who rely on their professional judgment and guidance in making decisions. These decisions are extremely important in accounting

According to the Public Company Accounting Oversight Board (PCAOB), The primary objective and responsibilities of auditor is to express an opinion on the fairness with which all financial statement including all of its (material aspects, financial position, the result of the company operation and its overall level of cash flows) AU Suction 110. Thus, what this means is that auditor must be fully independent and must be fully able and willing to apply professional judgment as it relates to the audit engagement under consideration.

• (Framework for Assurance Engagements para 21) Absolute Assurance • Absolute assurance can never be provided because of: – The nature of accounting: • Valuation issues, • Accounting policy choice and judgments, • Contingent items, – Time and cost of evidence collection and evaluation. Reasonable Assurance • Reasonable assurance is a high but not absolute level of assurance • The conclusion is expressed in a positive form – The financial statements are true and fair. • An audit engagement provides a reasonable level of assurance. • The opinion is expressed in an audit report.

The last aspect, programming independence, covers the need of the auditor to have absolutely no interference from their audit client in how the audit is run. An audit client cannot attempt to control any aspects of the audit such as changing or restricting any procedures an auditor may want to perform. The audit client may not try to control any of the audit work and may not put any type of restrictions on how many auditors may come to the location to perform fieldwork.

The requirements according to the respective accounting standard related to disclosures of sources of estimation uncertainty and judgments in applying accounting policies

Field Work Standard #2 : The auditor must obtain a sufficient understanding of the entity and its environment, including its internal control, to assess the risk of material misstatement of the financial statements whether due to error or fraud, and to design the nature, timing, and extent of further audit procedures (AICPA). Enron had no procedure for internal controls. Therefore, Anderson could not have sufficient understanding of the internal controls.

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

For nonpublic companies auditing guidance are issued by the American Institute of Certified Public Accountants, AICPA. Prior to PCAOB, AICPA served as the primary governing body of public accounting profession. Since the roles have changed with PCAOB regarding the auditing standards for public companies, the AICPA is still developing standards for the nonpublic companies. The organization has developed four fundamental principles that govern an audit conducted in accordance with GAAP. The principles are:

Accounting employees have a duty to be forthright and truthful when interacting with the independent auditors, and