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Cpa Memo

In:

Submitted By dorag
Words 379
Pages 2
TO: CEO
FROM: Student XXX
DATE: October 22, 2012
SUBJECT: Professional responsibilities of a CPA and the difference between a review and an audit.
Difference between a review and an audit.
An audit expresses an opinion on the financial statements. Its primary goal is to see if the financial statements contain material misstatements. In an audit, the auditor would sample and test transactions, confirm receivables and more to check internal controls and accounting procedures.
A review only expresses a limited assurance that the financials have been put together properly. The primary goal of a review attestation engagement is to express limited assurance that no material changes should be made to the financial statement in order for them to be in conformity with general accepted accounting principles. During the course of a review, the auditor would perform limited procedures and inquiries, less than a formal audit. An example is performing analytical procedures on the financial statements. The reviewer would compute the traditional ratios for liquidity, solvency, turnover, and profitability to see if they have changed from the prior year or expected relationships. If they have, the reviewing auditor would ask about why and see if the explanation made sense given the rest of the data available and their understanding of the activity during the period.
Professional responsibilities as a CPA
I am responsible to exercise professional judgment to determine allocations, valuations, performance measures and assumptions for projections and budgets. I must make sure all laws are followed, ensure that data is clear, concise, correct, and on time for management. In addition, I must follow ethical codes even if they differ from my individual moral convictions or from the demands of my employer (See Article 1 of CPA's Principles of Professional Conduct. During an

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