Podcast
Questions and Answers
Who does internal auditing primarily provide assistance to?
Who does internal auditing primarily provide assistance to?
- Government
- External auditors
- Stockholders
- Management and the board of directors (correct)
To whom should internal auditors report to enhance their independence?
To whom should internal auditors report to enhance their independence?
- The head of the finance department
- The president of the Company
- The external auditors
- The audit committee of the board of directors (correct)
Which group is least likely to be involved in an operational audit?
Which group is least likely to be involved in an operational audit?
- External auditors
- Internal auditors
- Government auditors
- None of the above (correct)
Which statement is not a distinction between external and internal auditors?
Which statement is not a distinction between external and internal auditors?
What is the primary objective of an independent auditor's examination?
What is the primary objective of an independent auditor's examination?
Why do auditors accumulate evidence?
Why do auditors accumulate evidence?
Who is primarily responsible for the preparation of financial statements?
Who is primarily responsible for the preparation of financial statements?
How can independent auditing best be described?
How can independent auditing best be described?
What is the auditor's main responsibility regarding audited financial statements?
What is the auditor's main responsibility regarding audited financial statements?
What are the three generally accepted auditing standards classified as general standards focused on?
What are the three generally accepted auditing standards classified as general standards focused on?
Which statement about management's responsibility for financial statements is incorrect?
Which statement about management's responsibility for financial statements is incorrect?
Which standard does not relate to the standards of fieldwork in auditing?
Which standard does not relate to the standards of fieldwork in auditing?
What aspect of independent financial statement audit is incorrect?
What aspect of independent financial statement audit is incorrect?
What level of care is expected from professional accountants while performing audit services?
What level of care is expected from professional accountants while performing audit services?
Which option does not accurately describe a limitation of an audit?
Which option does not accurately describe a limitation of an audit?
What does the standard of due audit care require of the auditor?
What does the standard of due audit care require of the auditor?
What is one recognized limitation of an audit?
What is one recognized limitation of an audit?
Which aspect is most likely unique to CPAs in comparison to other professions?
Which aspect is most likely unique to CPAs in comparison to other professions?
Which of the following correctly identifies the assumption underlying an audit of financial statements?
Which of the following correctly identifies the assumption underlying an audit of financial statements?
How is the standard of due care in auditing traditionally interpreted?
How is the standard of due care in auditing traditionally interpreted?
Which statement about auditing procedures is true?
Which statement about auditing procedures is true?
What is the focus of the three generally accepted auditing standards classified as standards of field work?
What is the focus of the three generally accepted auditing standards classified as standards of field work?
Which of the following is NOT considered a requirement for the planning of the audit?
Which of the following is NOT considered a requirement for the planning of the audit?
What is a key element of an auditor's responsibility regarding financial statements?
What is a key element of an auditor's responsibility regarding financial statements?
What must the CPA express regarding the financial statements for an engagement to apply agreed-upon procedures to be accepted?
What must the CPA express regarding the financial statements for an engagement to apply agreed-upon procedures to be accepted?
Which responsibility does the CPA assume in an agreed-upon procedure engagement?
Which responsibility does the CPA assume in an agreed-upon procedure engagement?
Who is responsible for the adequacy of the procedures performed in an agreed-upon procedure engagement?
Who is responsible for the adequacy of the procedures performed in an agreed-upon procedure engagement?
What is a key characteristic of the report based on agreed-upon procedures?
What is a key characteristic of the report based on agreed-upon procedures?
Which ethical principle is least applicable to an agreed-upon procedure engagement?
Which ethical principle is least applicable to an agreed-upon procedure engagement?
What will be issued in an agreed-upon procedures engagement instead of assurance?
What will be issued in an agreed-upon procedures engagement instead of assurance?
How should users of the report assess the procedures and findings reported by the auditor?
How should users of the report assess the procedures and findings reported by the auditor?
When conducting an agreed-upon procedures engagement, what guidelines must be followed?
When conducting an agreed-upon procedures engagement, what guidelines must be followed?
What is the primary objective of the fourth standard?
What is the primary objective of the fourth standard?
Which statement reflects the auditor's liability to their client?
Which statement reflects the auditor's liability to their client?
What do the Philippine Standards on Auditing (PSAs) represent?
What do the Philippine Standards on Auditing (PSAs) represent?
According to the Philippine Standards on Auditing, how does an auditor view their role regarding financial statement accuracy?
According to the Philippine Standards on Auditing, how does an auditor view their role regarding financial statement accuracy?
When can an auditor disregard a specific requirement of the PSA?
When can an auditor disregard a specific requirement of the PSA?
How can the Philippine Standards on Auditing best be characterized?
How can the Philippine Standards on Auditing best be characterized?
What is the primary function of the Auditing and Assurance Standards Council (AASC)?
What is the primary function of the Auditing and Assurance Standards Council (AASC)?
What statement is FALSE regarding auditor's responsibilities according to the PSA?
What statement is FALSE regarding auditor's responsibilities according to the PSA?
Study Notes
Auditor Responsibilities
- Auditor's responsibility is to express an opinion on the financial statements audited.
- Management holds the primary responsibility for the preparation and fair presentation of financial statements.
- Auditors do not guarantee financial statements are free from errors or misstatements but provide reasonable assurance.
Limitations of Auditing
- Audits use sampling, which means many conclusions are based on examining a subset of evidence.
- Auditor's work requires judgement and may involve misinterpretation of evidence.
- Auditors face inherent limitations such as nature of evidence, inadequacy of records, confidentiality issues, and scope limitations imposed by the entity.
Independence and Internal Auditing
- Internal auditors must report to the audit committee for greater independence.
- Internal auditors evaluate organizational activities, but external auditors operate independently of the entity's management.
Auditing Process and Standards
- Objective of the audit is to express an opinion on the fairness of financial statements.
- Auditors gather evidence to support their conclusions regarding the financial statements' fairness.
- There are generally accepted auditing standards that include criteria for competence, independence, and professional care of auditors.
Professional Standards of Field Work
- Standards of fieldwork require adequate planning, supervision, and evaluation of internal controls.
- Auditors must exercise due care and ensure all relevant factors are considered before reaching conclusions.
Philippine Standards on Auditing (PSA)
- PSAs provide guidelines that are mandatory for auditors to ensure minimum performance standards.
- Auditors cannot fully detect all material misstatements but must provide reasonable assurance of accuracy.
- Auditors can forgo specific PSA requirements if deemed insignificant or impractical, but must document their rationale.
Agreed-Upon Procedures Engagement
- Reports based on agreed-upon procedures provide limited assurance and are restricted to the parties involved.
- Users assess the findings and draw their own conclusions rather than relying solely on the auditor’s opinion.
Ethical Considerations
- Independence, confidentiality, professional behavior, and due care are critical ethical principles for auditors.
- Agreed-upon procedures require the auditor to maintain independence and ensure they are competent throughout the engagement.
Auditor Liabilities
- Auditors are not liable for errors in judgment or negligence if they have adhered to professional standards.
- Standard of due audit care requires auditors to demonstrate reasonable judgment rather than perfection in their work.
Key Stakeholders in Auditing
- Audits support management, boards of directors, and external stakeholders like stockholders and government entities by providing credible financial information.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Related Documents
Description
Test your knowledge on the responsibilities of auditors in relation to financial statements. This quiz covers key concepts around the accuracy and presentation of financial information. Are you ready to see how well you understand auditing practices?
