Kế toán, kiểm toán - Chapter 02: Professional standards

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.Chapter 02 Professional Standards “In today’s regulatory environment, it’s virtually impossible to violate rules.” – Bernard Madoff, money manager, on October 12, 2007, approximately one year prior to being arrested for embezzling $50 billion from investors in a Ponzi scheme. 2-2Auditing Standards for Public and Nonpublic EntitiesAudits of Public EntitiesAudits of Nonpublic EntitiesAICPA Statements on Auditing StandardsStandards issued by the Auditing Standards Board prior to April 2003 not amended or superseded by PCAOB standards (Interim Standards)All current standards issued by Auditing Standards BoardPCAOB Auditing StandardsAll current standards issued by PCAOBNot applicable2-3Generally Accepted Auditing StandardsIdentify necessary qualifications and characteristics of auditors and guide the conduct of the auditPurpose of GAAS is to achieve the following objectives of an audit examinationObtain reasonable assurance about whether financial statements are free of material misstatementReport on the financial statements and communicate in accordance with auditor’s findings2-4Comparison of AICPA GAAS to Principles: ResponsibilitiesGeneral StandardsResponsibilities PrincipleTraining and proficiency2. Independence in mental attitude3. Due professional careAuditors are responsible for:competence and capabilitiesethical requirements (independence and due care)professional skepticism and professional judgment2-5Responsibilities PrincipleCompetence and capabilitiesExperience and expertiseIndependenceIndependence in fact vs. independence in appearanceFinancial and managerial relationshipsDue careLevel of performance by reasonable auditor in similar circumstancesProfessional skepticism and judgmentSkepticism: Appropriate questioning and critical assessment of evidenceJudgment: Application of training, knowledge, and experience in making informed decisions during audit2-6Comparison of AICPA GAAS to Principles: Performance Standards of Field WorkPerformance PrinciplePlanning and supervision2. Understanding of entity and environment to assess risk of material misstatement3. Obtain sufficient appropriate evidenceTo obtain reasonable assurance:Plan work and supervise assistantsDetermine and apply appropriate materiality levelsIdentify and assess risks of material misstatementObtain sufficient appropriate evidence2-7Performance PrincipleGoal is to provide reasonable assurance that financial statements do not contain material misstatements Planning and supervisionPreparation of audit plan MaterialityInfluences decisions of financial statement usersConsidered throughout the audit Risk assessment Understand entity and environment (including internal control)Determine necessary effectiveness of substantive tests Audit evidenceSufficient = quantity (How many transactions or components?)Appropriate = quality (What level of reliability needed? Source?)2-8Overview of EvidenceDetection RiskSufficiency (Quantity of Evidence)Relevance (What Does Evidence Tell the Auditor?)Reliability (Can the Auditor Trust the Evidence?)Appropriateness (Quality of Evidence)2-9Sufficient evidenceRelated to quantity (number of transactions or components examined)Influenced by effectiveness of entity’s internal controlEffective internal controlLower level of control riskEvaluate less evidenceIneffective internal controlHigher level of control riskEvaluate more evidence2-10Appropriate EvidenceRelates to the quality of evidenceRelevance: Does evidence address assertion(s) of interest?Reliability: Source of evidenceAuditors’ direct personal knowledgeExternal documentary evidenceExternal-internal evidenceInternal documentary evidenceVerbal evidenceHighLow2-11Comparison of AICPA GAAS to Principles: Reporting Standards of ReportingReporting PrincipleFinancial statements in accordance with GAAPGAAP applied consistently (only report if not consistent)Adequacy of disclosures (only report if not adequate)Express or disclaim an opinionExpress an opinion or state that an opinion cannot be expressedOpinion is based on conformity of financial statements with applicable financial reporting framework2-12Reporting PrincipleExpress an opinion (or indicate that an opinion cannot be expressed) on entity’s financial statementsAssess financial statements against financial reporting frameworkSet of criteria used to determine the measurement, recognition, presentation, and disclosure of material items in the financial statementsExamples include GAAP, IFRS, or special purpose framework2-13Types of Audit OpinionsUnqualifiedF/S are in conformity with GAAPQualifiedExcept for limited items, F/S are in conformity with GAAPCan issue for GAAP departure and scope limitationAdverseF/S are not in conformity with GAAPCan issue for GAAP departure (more serious)DisclaimerAuditors do not express an opinionCan issue for scope limitation (more serious) or situation in which auditor is not independent2-14System of Quality ControlProvides firm with reasonable assurance that the firm and its personnelComply with professional standards and regulatory/legal requirementsIssue reports that are appropriate in the circumstancesReviewed through either peer reviews (for firms auditing nonpublic entities) or PCAOB inspections (for firms auditing public entities)2-15