...Sample Letter – Auditor’s Independence February 20, 201x The Board of Directors (or the Audit Committee) Sample View Regional Waste Management Services Commission 123 Main Street Sampleburg, Alberta T1X 1Z8 Dear Board/Audit Committee Members I have been engaged to audit the consolidated financial statements of the Sample View Regional Waste Management Services Commission for the year ending December 31, 201x. Canadian generally accepted auditing standards (GAAS) require that I communicate at least annually with you regarding all relationships between the Commission and me that, in my professional judgment, may reasonably be thought to bear on my independence. In determining which relationships to report, these standards require me to consider relevant rules and related interpretations prescribed by the appropriate provincial institute and applicable legislation, covering such matters as: a) holding a financial interest, either directly or indirectly, in a client; b) holding a position, either directly or indirectly, that gives the right or responsibility to exert significant influence over the financial or accounting policies of a client; c) personal or business relationships of immediate family, close relatives, partners or retired partners, either directly or indirectly, with a client; d) economic dependence on a client; and e) provision of services in addition to the audit engagement. I have prepared the following comments to facilitate my discussion with you regarding independence...
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...Standards (FRS, 2010) is issued by Auditing Practices Board. Its responsibilities are set up standards and guidance for auditing work. According to this standard, APB tries to enhance confidence on auditing process for public. ESs includes five requirements that auditors must adhere to and its primary objective is to give ‘true and fair’ opinions on financial statement. The credibility of audit opinions depends on the integrity, objectivity and independence of the auditor. Accordingly, it requires the quality of audit more stringent, especially the independence of auditors’ assurance. ES2 illustrates the guidance on some particular circumstances, which may generate threats to the independence and objectivity of auditors. ES3 states that senior positions have collaborated with audit engagement for a continuous period should be rotating. ES4 explains that there is no relationship between audit opinion and audit fees or other remuneration. ES5 shows that audit firm should consider whether non-audit service have significant effect on the threats to the auditor’s objectivity or independence. International Standards on Auditing ISA (FRS, 2009) copes with independent auditor’s overall responsibilities when implementing auditing process. These professional standards establish objectives of independent auditors together with explain the scope and nature of auditing process, which is designed to enable auditors to achieve the objectives. These standards aim at setting out essential...
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...members of the professional bodies are to act with integrity, objectivity, professional competence and due care, confidentiality and professional behaviour (APES 110, 100.4). The requirement to act in the public interest means that auditors should consider how their actions impact the client and their employer. They must also consider the impact of their actions on others such as the client’s employees, investors, credit providers, and those without direct financial interests in the client such as the broader business and financial community and members of the public. All these people could be reliant on the quality of the auditor’s work, even though they are not party to the contract between the client and the audit firm. The reliability of the financial reports and the audit report is potentially damaged if the auditor does not act with integrity (honesty), objectivity (being independent), with professional competence and due care (executing the work with the required level of skill and attention), confidentiality (discussing the client’s affairs with others inappropriately), and professional behaviour (protecting their reputation and the profession’s reputation). A dishonest auditor could knowingly help publish a materially false, misleading, or reckless financial report. Auditors...
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...The key areas of concern for students writing the PA exams are as follows: 1) Time management 2) Missing level 3 of the competency and jumping directly to level 4 3) Missing the competencies to be found in the exhibits in the case questions. Another concern is when students are writing both PA1 and PA2 at the same time. It is critical that those students “switch hats” from being a public practitioner in PA1 to a comptroller in PA2. And for those writing only one exam, make sure you write from the correct perspective. Consider the following for each case: 1) Type of communication (memo, letter or report) 2) Who is writing 3) To whom the case is being written to 4) The time frame. a. ie when in the audit: beginning, middle, end; there is no point writing about issues at beginning of audit if the audit is over and there is a draft audit report b. ie regarding purchase or sale of property: has the decision already been made to buy the property (shares or assets) or not; and if so, has the financing been decided. Or maybe there is an issue such as in Feed & Grow with the auditor owning shares of company to be consolidated with client; the extra shares to result in >50% ownership have not yet been bought so it is next year’s issue. The issue must still be addressed but the recommendation might be to consider the issue further. Not all issues have to be answered today; just that they must be addressed. The recommendation can be to explore...
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...August 31, 2014 I chose Petsmart as my topic for my paper. Mainly because I have pets and that is where I purchase all my necessities for the animals that I truly treat like my kids. I thought it would be interesting to see what the internal procedures for this company are. Petsmart has an audit committee which is selected by the Board of Directors, and is comprised of at least three board members who remain independent of the company and the management team. This is mainly because of the NASDAQ National Market rules that are in place and must be followed. By following these rules outlined, all committee members will meet the financial literacy requirements of the NASDAQ, and at least one member will meet the financial expertise required by the NASDAQ. The purpose of the Committee is to assist the Board in fulfilling its oversight responsibilities relating to the integrity of the Company’s financial statements and accounting and financial reporting processes; the audit of the Company’s financial statements; the compliance by the Company with its systems of internal accounting and financial controls and legal and regulatory requirements; the independence of the Company’s external auditors and the performance of the Company’s external and internal auditors. The committee is allowed access to all financial books, records, facilities, and personnel of the company in order to properly discharge the responsibilities of the committee to the company. The committee...
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... | | |Details of Subject | |Qualification |FNS60210 Advanced Diploma of Accounting | |Subject Name |Auditing and Reporting | |Details of Unit(s) of competency | |Unit Code |FNSACC602A |Unit Title |Audit and Report on Financial systems and records | |Details of Student | |Student Name | |Student ID | | |College | | |Student Declaration: I declare that the work submitted is my own, |Signature:...
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...I chose Petsmart as my topic for my paper. Mainly because I have pets and that is where I purchase all my necessities for the animals that I truly treat like my kids. I thought it would be interesting to see what the internal procedures for this company are. Petsmart has an audit committee which is selected by the Board of Directors, and is comprised of at least three board members who remain independent of the company and the management team. This is mainly because of the NASDAQ National Market rules that are in place and must be followed. By following these rules outlined, all committee members will meet the financial literacy requirements of the NASDAQ, and at least one member will meet the financial expertise required by the NASDAQ. The purpose of the Committee is to assist the Board in fulfilling its oversight responsibilities relating to the integrity of the Company’s financial statements and accounting and financial reporting processes; the audit of the Company’s financial statements; the compliance by the Company with its systems of internal accounting and financial controls and legal and regulatory requirements; the independence of the Company’s external auditors and the performance of the Company’s external and internal auditors. The committee is allowed access to all financial books, records, facilities, and personnel of the company in order to properly discharge the responsibilities of the committee to the company. The committee has the power to investigate anything...
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...judgment - follow the co’s rules, shown in its AOA - make decisions for the benefit of the co. - tell other shareholders if you might personally benefit from a transaction the co. makes - make sure the co’s accounts are a true and fair view of the business’ finances. c) – auditing is the analysis of the financial accounts/records, by a qualified accountant, and procedures of a firm organization. - this is essential in order to gain a fair perspective on the co’s financial statement - potential investors and creditors can look at financial statement to decide whether to invest in a business o not - important as it also protects the public from scams and corrupt business procedures d) Financial Audits,Compliance Audits, Information Technology Audits, Departmental Audits e) – duty to carry out...
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...Core Marker’s Comment Sheet Course Name: Advanced External Auditing (AU2) Assignment: 1 Modules: 1 and 2 General Comments If you have any comments or suggestions for improvements of these marker’s comment sheets, please forward them to your marker or CGA-BC. Your feedback is important to us. PLEASE NOTE FOR SUBSEQUENT ASSIGNMENTS AND EXAM PURPOSES When answering assignment (and examination) questions, students should carefully read the requirements of the question. Marks are awarded for each valid point included in your answer. The specific terminology of the question is important. If the question asks for items to be “listed”, it is sufficient to list the items without explanation or elaboration. If, on the other hand, the question requires that items be described, a mere listing will not result in full marks being awarded. In general, marks are awarded for each valid point made and you should be guided by both the wording of the question and the number of marks available in deciding how many points are required and how much detail is needed. To receive full marks, it is necessary to provide enough detail (as required by the question) about sufficient points (as determined from the number of marks available). In answering an assignment question, review the lesson notes and required readings carefully and attempt to include as many valid points as possible in your solution. Advanced External Auditing (AU2) is the second course in external auditing...
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...mutually incongruent goals. I appreciate your interest in Anderson, Olds, and Watershed (AOW) and want to explain some of the many audit and assurance services that my firm has to offer. As a publicly traded company, the Securities and Exchange Commission (SEC) requires Apollo Shoes to submit audited financial statements as part of its annual 10-K filing. The Sarbanes-Oxley Act of 2002 also requires auditors to attest to the effectiveness of internal controls in the financial reporting process. My firm has years of experience in supporting organizations with these requirements. Not only is an independent audit of financial statements required by law, but it can also serve to provide external stakeholders with assurance that your financial statements are fairly presented in accordance with generally accepted accounting principles (GAAP). These stakeholders, including banks, investors, and other creditors, rely on this assurance to assess the amount of risk involved in investing in your business. Often, a set of audited financial statements can help increase investment in an organization and decrease its cost of capital. Furthermore, an audit of a firm’s financial statements can help to identify fraudulent activity within the organization. In addition to an audit of financial statements, AOW has experience in conducting audits and reviews of historical financial statements. A review of historical financial statements...
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...equity. Kenneth Lay was responsible for not addressing the situation when Sherron Watkins sent him a letter with her concerns. It was his responsibility to speak tackle the situation. The letter clearly expresses Watkins’ concerns with the SPEs including Braveheart, Rawhide, Raptor, Condor, and Talon. Andrew Fastow was the Chief Financial Officer; therefore, he should have been more aware. Apparently Fastow knew about the various SPEs because he named them after his children. Arthur Andersen & Co. was responsible for auditing the financial statements of Enron and should have been more aware. Their knowledge and expertise of accounting practices should have alerted them to the various SPEs and their treatment. They should have been more thorough in their investigation. Even when they did discover Enron’s treatment and communicated those thoughts, Enron did not address the issue. AA then had the responsibility to disconnect their firm from the audit. 2. Three types of consulting services that audit firms have provided to their audit clients include: Internal Auditing-Threat of biased audits and threat of objectivity Design of Accounting Systems-Threat of creating illegal programs, accessing files, and threats to database management Development of E-Commerce Initiatives-Threat of violating restrictions All of the above services can threaten the independence of an accounting firm. If a company offers more than market...
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...Steps In Auditing Advanced Auditing 606M Jeremy Borden The purpose of this paper is to explain the purpose, goal, and/or outcome of each step in the audit process. The steps included in these pages are essential when conducting any audit of any company. Although specific audit procedures are different from one engagement to the next, the following steps are involved in every engagement. The first step in the audit process for any engagement is to make contact with the potential client. The goal of this step is to obtain new audit business. This is often times is done through the submittal of a general proposal that includes details on the nature of services provided, the qualifications of the firm’s auditors, anticipated fees, and other pertinent information to persuade the client to choose the firm. If the potential client is a publicly held company, arrangements for the audit are made through the audit committee. The proposal and oral presentations are made to provide a basis for selection. If the potential client is a private company, a partnership, or a smaller company, arrangements are made through the owners, a partner, or an executive of the company. This initial contact will often lead to oral discussions, negotiations, and other fact-finding topics before a final formal proposal is written and the audit is accepted. The proposal will also include a mention of contacting the previous auditor of the potential client. This is important because the potential...
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...responsibilities for detecting errors and fraud in the financial statements. Answer5: Managements are responsible for presenting fair financial statements in conformity with general accepted accounting principles and auditors are confined to express his or her opinion on the information provided. Auditors are responsible to check if managers are conforming to GAAP with no errors and materiality. Management and auditors both have to conform to GAAP. Question 9: What kind of organization is PCAOB, why was it formed, and what does it do? Answer 9: PCAOB is a quasi-governmental organization (government owned corporation) over seen by the SEC. Formed to provide governmental regulations of the standards used in conducting public company audits because of a perceived failure of the profession to adequately regulate itself. Question 10: What role does the SEC play in the establishment of accounting and...
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...Advanced External Auditing [AU2] Examination Blueprint 2013/2014 Purpose The Advanced External Auditing [AU2] examination has been constructed using an examination blueprint. The blueprint, also referred to as the test specifications, outlines the content areas covered on the examination and the weighting allotted to each content area. This document also lists the topics, the level of competence for each topic, and the related learning objectives and competencies. The learning objectives have been designed to ensure that the competencies are met. In addition, information is provided on the proportion of each question type presented in the examination (that is, multiple choice, quantitative problems, and so on). Use Candidates should use the examination blueprint to prepare for the course examination. The blueprint may not include all the topics listed in the course materials; however, candidates are still responsible for acquiring a broad-based knowledge of all topics not listed in the blueprint since these topics will be tested in assignment and review questions. The topics not listed in the blueprint will also provide candidates with a greater depth of understanding of auditing concepts. Examination Objectives The objective of the 4-hour comprehensive examination is to test CGA candidates on the prerequisite knowledge required for advancement into PA1 and PA2, so as to ensure that the candidates have the broad-based knowledge in assurance needed to function properly in the association’s...
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...Case 1-3: Independence Read the Deloitte Data Trappers Case posted on Blackboard. Complete the following questions we are using for our case assignment: 1. Make an argument for why the audit firm is independent. B&T is independent because they were indirectly working with a subsidiary that represents less than 2% of Data Trappers business. Once B&T was offered the contract to provide auditing services to Data Trappers, all of their previous bookkeeping up to that point in the current year was destroyed and redone by an internal audit team at Data Trappers. In this case the prospective firm, B&T, severed all ties to the client, Data Trappers, prior to beginning the audit. 2. Make an argument for why the audit firm is not independent. Section 0.400.21.b of the AICPA Code of Professional Conduct defines independence in appearance as, “Independence in appearance is the avoidance of circumstances that would cause a reasonable and informed third party who has knowledge of all relevant information, including the safeguards applied, to reasonably conclude that the integrity, objectivity, or professional skepticism of a firm or member of the attest engagement team is compromised.” Under this definition, B&T could be seen as lacking independence from the attest client, Data Trappers. B&T previously assisted Data Chops, a subsidiary of Data Trappers, with bookkeeping services. B&T has only been removed from the relationship for less than two years...
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