Paper
Chapter 1: Auditing, The Integral to the Economy
Public Accounting
1) audtiors provide opinions on financial statements and, as part of an integrated audit, ausitors provide opinions on internal control effectiveness
a. Confidence in financial system decreases when fails
2) Unqualified audit report
a. When auditor has no reservations about financial statements or internal control
3) Financial Statement Audit
a. Objectively obtaining and evaluation evidence regarding economic actions and events
b. Management responsible for
i. Preparing financial statements ii. Maintaining internal control over financial reporting iii. Providing auditors with information relevant to financial statements
4) Auditing
a. Most important party is the public
i. Represented by investors, lendors, and workers
b. Problems
i. Lost track of responsibilities ii. Rules became interpretations iii. Using financial statemets to accomplish a management objective iv. Auditors hired and fired by management i.e. worked to please management not board of directors
Chapter 2
1) Corporate Governance
a. Process by which owner and creditors of an organization exert control and require accountability for the resources entrusted to the organization
i. Stockholders, board of directors, audit commitees, management etc.
b. Responsibilities
i. Stakeholders/owners delegate responsibilities through board and management. Passed to internal auditors as well ii. Stakeholders- anyone influenced directly or indirectly by actions of company
1. Has interest in governance because has relationship to economic performance and quality of financial reporting iii. Regulators are response to societies wishes to ensure that organizations act responsibly and operate in compliance with relevant laws
c. Managements responsibility to
i. Choose best accounting principles to best portray company transactions ii. Implement internal control system that assures completeness and accuracy iii. Ensure
Public Accounting
1) audtiors provide opinions on financial statements and, as part of an integrated audit, ausitors provide opinions on internal control effectiveness
a. Confidence in financial system decreases when fails
2) Unqualified audit report
a. When auditor has no reservations about financial statements or internal control
3) Financial Statement Audit
a. Objectively obtaining and evaluation evidence regarding economic actions and events
b. Management responsible for
i. Preparing financial statements ii. Maintaining internal control over financial reporting iii. Providing auditors with information relevant to financial statements
4) Auditing
a. Most important party is the public
i. Represented by investors, lendors, and workers
b. Problems
i. Lost track of responsibilities ii. Rules became interpretations iii. Using financial statemets to accomplish a management objective iv. Auditors hired and fired by management i.e. worked to please management not board of directors
Chapter 2
1) Corporate Governance
a. Process by which owner and creditors of an organization exert control and require accountability for the resources entrusted to the organization
i. Stockholders, board of directors, audit commitees, management etc.
b. Responsibilities
i. Stakeholders/owners delegate responsibilities through board and management. Passed to internal auditors as well ii. Stakeholders- anyone influenced directly or indirectly by actions of company
1. Has interest in governance because has relationship to economic performance and quality of financial reporting iii. Regulators are response to societies wishes to ensure that organizations act responsibly and operate in compliance with relevant laws
c. Managements responsibility to
i. Choose best accounting principles to best portray company transactions ii. Implement internal control system that assures completeness and accuracy iii. Ensure