...statements, the auditor acts exclusively in the capacity of an auditor. c. The professional status of the independent auditor imposes commensurate professional obligations. d. Financial statements and financial data are verifiable. 1.25 In an attestation engagement, a CPA practitioner is engaged to a. Compile a company’s financial forecast based on management’s assumptions without expressing any form of assurance. b. Prepare a written report containing a conclusion about the reliability of a management assertion. c. Prepare a tax return using information the CPA has not audited or reviewed. d. Give expert testimony in court on particular facts in a corporate income tax controversy. 1.26 A determination of cost savings obtained by outsourcing cafeteria services is most likely to be an objective of a. Environmental auditing. b. Financial auditing. c. Compliance auditing. d. Operational auditing. 1.27 The primary difference between operational auditing and financial auditing is that...
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...date of auditors report Auditor’s Report This report addresses the auditor's responsibilities relating to subsequent events and subsequently discovered facts in an audit of financial statements. It also addresses a predecessor auditor's responsibilities for subsequent events and subsequently discovered facts when reissuing the auditor's report on previously issued financial statements that are to be presented on a comparative basis with audited financial statements of a subsequent period. In addition this report also incorporates management representation and consideration of an entity’s ability to continue as a going concern. There may be times when new information may come to an auditor's attention subsequent to the date of their report of an audited financial statements, this might affect the previously issued report. With information form the PCAOB this report describes how a subsequent audits should be followed by any auditor who becomes aware that facts may have existed at that time of the original audit of the financial statement. When performing an integrated audit of financial statements and internal control over financial reporting, refer to paragraph 98 of PCAOB Auditing Standard No. 5, which relays that an audit of internal control over financial reporting should be integrated with an audit of financial statements, this will provide directions, with respect to the subsequent discovery of information existing on the date of the auditor's final report. Most of the...
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...Overall, I think that the revamped auditing format makes the auditing report more readable and more understandable to the readers. Years before, I had an internship in an auditing firm and I had a chance to see numerous auditing reports. All the reports, as we know, have basically the same format. They are very brief. They give a pithy summary of the audit and a few other details. I found the brevity of the traditional style surprising because companies pay out large sum of money for audits, the audits are important, and the auditing report summarizes the final opinion of the audit. The proposed edition is helpful since it elaborates the auditor’s opinion and findings. Briefly, the proposed revamped version does the following, not done in the typically current style. As outlined by Wall Street Journal: • It places the most crucial part, the auditor’s opinion, in the introduction. • It clarifies the auditor’s terminology, such as the meaning of “ reasonable assurance” and “material misstatement”. • It details who is responsible—in the case of a multinational firm, which auditing department – for which aspects of the audit. • It summarize the scope of the audit in more details, providing a more comprehensive accounts of which aspects of the company in question was subject to the audit. • It includes an emphasis paragraph that details the auditor’s review of the most significant aspects of the company’s financial profile. • It highlights potentially risky...
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...earthwear annual report company growth strategy EarthWear’s growth strategy has three elements. First, the Company attempts to increase sales by expanding its customer base and by increasing sales to existing customers through improved product offerings. Second, the Company seeks to generate additional sales by targeted mailings of special issues of its catalogs and by offering its products through its web site. Third, the Company is pursuing additional opportunities to expand its merchandising skills internationally. Company History and operations EarthWear Clothiers was founded in Boise, Idaho, by James Williams and Calvin Rogers in 1973 to make high-quality clothing for outdoor sports, such as hiking, skiing, fly-fishing, and white-water kayaking. Over the years, the Company’s product lines have grown to include casual clothing, accessories, shoes, and soft luggage. EarthWear offers its products through three retailing options: catalogs, retail outlets, and its website. The Company strives to provide excellent, high-quality products at reasonable prices. EarthWear has a commitment to excellence in customer service and an unconditional guarantee. The Company is also conscious of its environmental responsibilities. All Company facilities are insulated, recycle, and conserve power. The Company continuously monitors the environmental impact of its products. The Company believes that many of its customers share this concern for the environment. The Company offers its products...
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...Discuss whether the current international regulatory environment for the auditing profession is robust enough to ensure that the external auditors of listed companies provide reports to owners and investors which are sufficiently independent to serve the public interest. Introduction As we will discover, the topic posed above is a complex one, which has many arguments both in favour and against the stability of the present regulatory environment in ensuring that the audits which auditors produce are indeed impartial enough to satisfy the public interest. We will first proceed in identifying the term “public interest” in light of the accounting and auditing profession. From this will be an explanation of what is the current regulatory environment, which will then lead us to arguments for and against auditors retaining their independence. Relevant sources will be used, including some concerning current thinking on the matter. From this a suitable conclusion can be made. What is meant by “the public interest” in relation to the (accounting and) audit profession? The International Federation of Accountants (IFAC 2010) soundly defines the public interest as any individual or entity which is affected by the work of the accountancy profession: in other words, society as a whole. What is expected of the accountancy profession in relation to the public is the safeguarding of particular interests. These interests may consist of providing accurate financial information, ensuring...
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...job or stay quiet? This can be a difficult situation and can put the employee in an awkward position. Your first instinct is to keep quiet, especially if you like your employer and your job. You need your job, everyone needs their jobs. On the other hand, if the violation is something serious and criminal, then yes, you are obligated to do something. What if you are wrong and falsely accuse your employer? If you make a false accusation you could be sued for defamation. Consider all of the options first before bringing the company to its knees and causing everyone to lose their jobs. Do not act hastily or rashly. You want to maintain a good relationship with your employer. Your first obligation is to report the violation. You are ethically responsible to report an environmental violation at your company. You should comply with your company’s established code of ethics. All employees must be a part of the ethical environment through a code of ethics and see it spelled out in policies, procedures, and training (Purpura, 2008). When you or your employer make unethical decisions, you become part of the problem. In addition to maybe committing a crime by not reporting the violation, you could also jeopardize your company’s chances of escaping indictment (Lingenberg, 1994). By not reporting the violation you are subjecting your company and yourself to possible criminal and civil liabilities (Purpura, 2008). Make sure your facts are accurate. You...
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...Assignment ACC/220 January 27, 2012 People who work in the accounting field provide a wide range of services to the companies that they work for. Their duties play a very important role in the successfulness in a company. They ensure that the accounting end of a business is run efficiently and correctly. Accountants analyze, verify, and are responsible for the overall auditing for the company. Accounts are in charge keeping track of expenses, revenues, and ensuring the company’s taxes will be paid on a timely basis. Most employers will require that a potential candidate have at a minium a bachelor’s degree in accounting or related field. An entry level account’s salary range begins on average $55,000 and will average 40-70 hours per week depending on the level of experience. Accounting Position 1: Degreed Staff Accountant, $52,500 * Analyzing and processing financial statements * Assisting budget prep * Preparing customer invoices and monthly reports * Maintaining the general ledger * Developing financial statements and reports * Assist in the internal/external audit process * Assist with month-end close * Extensive reporting in Excel Accounting Position 2: BS/BA Degree in Accounting/Finance. $54,500 • 2 years accounting/finance experience as well as broad business knowledge and analytical skills • 2 years’ experience working with U.S. GAAP required • 2 years’ experience working with Excel, large...
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...Nestlé Code Management System | Training Nestlé employees involved in marketing of breast-milk substitutes are regularly trained on the WHO Code. | Nestlé has developed a unique global programme to ensure compliance with the WHO Code across all Nestlé’s operations. GES Investment Services, Northern Europe’s leading analysis firm for socially responsible investments, published a report on “The Infant Food Industry and the WHO Code”. This report is the first of its kind assessing and comparing infant food companies’ compliance procedures with respect to the WHO Code. It concluded: “Nestlé has the most elaborated policies and mechanisms to address the Code, distinctly ahead of its peers”. Nestlé's implementation of the WHO Code includes the following: * Nestlé Policy and Instructions * Training, testing and compensation on WHO Code knowledge * Nestlé WHO Code Management System * Internal Ombudsman System * Internal and External Audits * Internal and External Reporting Nestlé Policy and Instructions First published in 1982, these were developed to ensure complete and correct implementation of the WHO Code by Nestlé. This became necessary because the WHO Code, as a recommendation to governments, does not supply implementation instructions. This is left to national regulation, which may be absent or weaker than the WHO requirements. Training, testing and compensation on WHO Code knowledge Nestlé trains personnel involved in marketing of breast-milk...
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...coin, it could be an advanced neural network application focused on detecting money laundering schemes. Whether it is simple or advanced, data analysis provides many benefits in the prevention and detection of fraud. On one hand, the fraud examiner gains insight on 100 percent of an organization’s transaction data vs. more limited manual methods of selection. Further, this approach can generally be completed in less time than manual procedures, given the automation of the work. Examiners also gain improved business intelligence as the generated reports often lead to conclusions beyond whether just fraud occurred. Such new insights can lead to suggested process improvements to the client. The Institute of Internal Auditors (IIA) Research Foundation recently announced the posting of a free online document to help fraud examiners worldwide use computers to fight fraud. Proactively Detecting Occupational Fraud Using Computer Audit Reports, written by the author of this article, is designed to assist fraud examiners and management in implementing data analysis...
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...Audit and Assurance Services Chapter 1 1 Learning Objectives 1. What is auditing? Distinguish between auditing and accounting. Importance of auditing in reducing information risk. 2. Distinguish audit services from other assurance and non-assurance services provided by CPAs. 3. Three main types of audits. 4. How to become a CPA? Identify the primary types of auditors. 2 What is auditing? Evaluating 3 Nature of Auditing Auditing is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria. Auditing should be done by a competent, independent person. 4 Audit Reporting -- (Expressing Opinions) The final stage in the auditing process is preparing the Audit Report, which is the communication of the auditor’s findings to users. 5 Information and Established Criteria To do an audit, there must be information in a verifiable form and some standards (criteria) by which the auditor can evaluate the information. 6 Accumulating Evidence and Evaluating Evidence Evidence is any information used by the auditor to determine whether the information being audited is stated in accordance with the established criteria. Transaction data Client inquiry Written and electronic Communications with outsiders Observations 7 Competent, Independent Person The auditor must be qualified...
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...the Sarbanes-Oxley Act on Auditing Prior to the 2002, there were numerous accounting and corporate scandals that rocked the business world. Foremost of which is the Enron debacle which was followed by WorldCom, Tyco International and Global Crossing (CIO Decisions). The collapse of these businesses was attributed to the lack of regulatory controls in the part of the government as well as transparency of operations of corporations which can be of help to its stakeholders in the analysis of profitability and assurance of good governance to the public. They importance of the Act lies on the accountability and security of financial reporting that the stakeholders would have in a corporation’s implementation of good business practices and adherence to laws and regulations in the administration and operations of the company. The Sarbanes-Oxley Act revised a significant portion of the federation securities laws which had been in place for 60 years already (Sarbanes-Oxley Information). Before SOX, there is a self-regulation in the accounting profession whereby the Securities and Exchange Commission was “given statutory authority to set accounting standards and oversight over the Activities of the auditors…the role of establishing standards was left to the accounting profession” (CPCAF). One of the key changes in internal audits is that the “Act requires all financial reports to include an internal control report” (Sarbanes Oxley Basics)...
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...Suretta Smith ACC/491 Generally Accepted Auditing Standards Paper September 25, 2012 Instructor: Santos Alarcon, Jr. Abstract The purpose of this paper will be to describe the nature and functions of auditing. The following will be addressed in this paper: description of the elements of the Generally Accepted Auditing Standards (GAAS), description how these standards apply to financial, operational, and compliance audits, explanation of the effect that the Sarbanes-Oxley Act of 2002, and the Public Company Accounting Oversight Board (PCAOB), will have on audits of publicly traded companies and the discussion on the additional requirements that are placed on auditors from this Act, and the actions of the PCAOB. The generally accepted auditing standards (GAAS) were implemented by the Public Company Accounting Oversight Board (PCAOB), in April of 2003. The standards were also adopted by the Auditing Standards Board of the American Institute of Certified Public Accountants, which consists of ten standards that establishes the framework for conducting audits. However, the auditing standards are not detailed but guidance on what should be included in the financial statements (Boynton & Johnson, 2006). The GAAS consist of three categories that incorporate the ten standards which are general standards, standards of field work, and standards of reporting. General standards. under the general standards category, it informs about the characteristics of adequate...
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...function of the PCAOB and AS 5 and AS 11 Ramecha Davis This paper is submitted in partial fulfillment of the requirements for Auditing BUS5423 Section 70 Texas Woman’s University Dr. John Nugent April 20, 2015 Abstract The purpose of this research paper is to provide an in depth review of the Public Company Accounting Oversight Board (PCAOB) and how it contributes to the interest of the Sarbanes Oxley Act of 2002. The research highlights the importance of the PCAOB’s role in the accounting profession as well as prospective changes that may evolve in the future related to PCAOB. Upon reading this research the reader will be familiar with PCAOB’s roles and functions, as well as auditing standards (AS) released such as AS5 and AS11. The PCAOB’s significance in the protection of investors is revealed as well. Keywords: SEC, PCAOB, SOX, AS 5, AS 11, Internal Control, Materiality Table of Contents Introduction……………………………………………………………………………………………….5 PCAOB…………….……………………………………..……………………………….……….……5-6 a) The PCAOB Mission, Vision, & Core Values………………………………….………........6-7 b) Current Standards…………………………………………………………….…..............…7-8 c) Future Standard Plans…………………………………………………………………….…8-9 Sarbanes Oxley Act of 2002 Section 404……………………………………………………………...….9 a) Auditing Standard 5…………………………………………………………………….….9-10 b) Auditing Standard 11……………………………………………………………………..10-12 c) Communication Requirements..............................................
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...REPORT OF COOPER AUDITING FIRM OF APOLLO SHOES, INCORPORATED To: The Board of Directors and Shareholders of Apollo Shoes, Incorporated The ____ Auditing Firm audited the balance sheets of Apollo Shoes, Inc. beginning December 31, 2008 and 2009 and the reports shared to the revenue, complete revenue, investors’ equity, and cash-flow for the period of two years that ended on December 31, 2008. ___ Auditing Firm has evaluated the manager’s statements of Apollo Shoes, Inc. that is placed with the attached Management’s Report in the part of the Internal Control-Over Financial Reporting. In this part, Apollo Shoes, Incorporated has retained effective internal control over financial reporting beginning December 31, 2008, the concern of a variety of standards, of the Internal Control Integrated Framework distributed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Apollo Shoes’ organization has a responsibility to uphold accurate financial statements, keeping effective internal control over financial reporting, and evaluation of internal control over the financial reporting system. __ Auditing Firm is accountable for issuing a professional judgment that will exemplify a complete evaluation of the financial statements, organization’s evaluation, and efficiency and success of the organizations internal control over financial reporting according to the auditing decisions of __ Auditing Firm. ___ Auditing Firm has performed the audit in agreement with the...
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...Nature of Auditing and the Public Accounting Profession 1. Auditing neither creates goods nor adds utility to existing goods and therefore does not add value to business. Auditing exists only because it has been legally mandated. Auditing exists because it is needed by the company. It is beneficial to users who need assurance if their financial statements reflect economic conditions that occurred in a period. Without reliable information, companies might make less effective decisions which are risky for the value of business. It may neither create goods nor add utility to goods but it adds value to business because it is a source of information for a business’ decisions. 2. The failure of the public accounting profession to warn us of the problems that existed in the economy is an example of a profession not adding utility to society. Accounting records, classifies, and summarizes economic events to provide financial information for decision making. It does not study the problems in the economy but it helps management to make effective decisions despite economic problems. That way, accounting profession is an added utility to society. 3. The only reason I would hire an auditor is with the expectation that the auditor search for and find any fraud that might exist within my company. Searching for fraud should be the primary focus of an audit. Fraud involves deception that can result to material misstatements of financial information and is not good for...
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