Index

Accurate auditing, importance of, 2

Adoption/SEC approval, 86

Adverse opinion, 244245

Advocacy threat, 6970

AICPA. See American Institute of Certified Public Accountants

AICPA ASB auditing standard, 287293

AICPA Code, 66

AICPA Statements on Auditing Standards (SASs), 9

American Institute of Certified Public Accountants (AICPA), 24, 6, 8, 54, 60, 83, 229230

Analytical procedures

differences between PCAOB and ISA, 171172

examples of, 162163

nature and purpose of, 163165

stages in, 168171

when to use, 165167

types of, 167168

data mining, 168

ratio analysis, 167

reasonableness testing, 168

trend analysis, 167

Anomalous error, 203

Article 10, 48

Article 11, 50

Article 12, 50

Article 13, 48

Article 19, 44

Article 41, 54

Article 42, 50

Article 45, 50

Article 64, 39

Article 78, 48

Article 81, 48

Article 82, 48

Article 114, 48

Article 164, 46

Article 211, 50

Article 234, 41

Article 323, 42, 43

Article 483, 48

Article 1101, 50

Article 1142, 46

Article 1382, 41, 46

Article 1383, 46

Article 1902, 50

Article 2407, 45, 46

AS 1, 9, 83, 92, 93

AS 2, 89

AS 5, 89, 128, 135, 145, 146, 150, 152157

AS 9, 106

AS 11, 111

AS 12, 110, 166, 167, 172

AS 14, 167

AS 18, 9, 111, 112118

ASB. See Auditing Standards Board

AU. See Existing interim

AU 5, 155

AU 220, 64, 68

AU 230, 17

AU 315, 9698

AU 316, 12, 110

AU 325, 152

AU 329, 161164, 166, 168172

AU 330, 108

AU 334, 112, 114118

AU 336, 105, 121, 124

AU 543, 121

AU 600, 122

AU 625, 63

Audit approach, planning and design of, 2021

Audit documentation, 8889, 190191, 213214

custodial issues related to, 222

nature of, 215

preparation of, time periods for, 219

purpose of, 215

types of, 216218

Audit evidence, evaluating sufficiency and appropriateness of, 188190

Audit of financial statements, principles governing, 1718

Audit opinion formulation, 202

Audit planning, 105111

Audit report

audit and issuance of, 22

background, 228230

“modified” report, 245246

Audit sampling

anomalous error, 203

dual purpose sampling, 199201

error, 203

nonsampling risk, 205206

nonstatistical sampling, 201202

opinion formulation, 202

PCAOB standards evolution, 193194

projecting errors, 206207

“representative” sampling, 198199

results, performance and evaluation of, 207209

risk, 204205

sample selection, 197206

selecting specific items, 195

statistical sampling, 201202

techniques for, 194197

whole population selection, 194195

Audit tenure, 276279

Audit/client acceptance, planning

client acceptance/engagement process, 94103

engagement letter, 103105

planning an audit, 105111

related party transactions, 111125

Auditing accounting estimates, 281282

Auditing, final considerations, 257267

Auditing Standards Board (ASB), 8, 11, 17, 18, 83, 91, 193, 235

Auditor

audit procedures, 177188

v. client, 224225

overall responses, 176, 177

risks faced by, 1819

Auditor shopping, 101

Auditor’s duty, 11

Auditor’s report

going concern related, 270

KAM/CAM in, 273274

key elements, 230241

PCAOB required amendments, 270271

recent developments, 269275

requirement of new, 250251

types of, 241246

Auditor’s responsibility, 237239

Balance sheet, 13, 103, 157, 187, 189, 233, 248, 254

Benjamin, Matthew, 134

Bily v. Arthur Young and Co., 30

The British Companies Acts, 6

CAATs. See Computer Assisted Audit Techniques

CAM. See Critical audit matters

Certified Public Accountants (CPAs), 27, 91

CFO. See Chief Financial Officer

Chief Financial Officer (CFO), 16

Citizens State Bank v. Timm, Schmidt and Co., 31

Civil Code, 41, 45, 46, 49, 50

Civil Practices Act, 36

Clarified International Standards on Auditing, 9

Client acceptance, 20

engagement process, 94103

Client-auditor relationship, 98

Client v. auditor, 224225

Codified law, 43

Cohen Commission (1978), 11

Committee of Sponsoring Organizations of the Treadway Commission (COSO), 136

Common law, 2526, 27, 2829, 41

Competence, 137

Compliance audits, 15

Compliance frameworks v. fair presentation frameworks, 255256

Computer Assisted Audit Techniques (CAATs), 183, 197

Conceptualization, 85

Control accounts, 146

Corporate governance, defined, 257258

Corporate Law Economic Reform Program Act 1999, 55

COSO. See Committee of Sponsoring Organizations of the Treadway Commission

CPAs. See Certified Public Accountants

Credit Alliance Corp v. Arthur Andersen and Co, 31

Critical audit matters (CAM), 271275

Current file, 218

Danish Companies Act, 40

Danish law, 40

Data mining, 168

Davison and Benson Committees, 11

Deloitte Touche report, 113115, 118

Dingell Committee (1987), 11

Disclaimer of opinion, 242244

Documentation procedures, 88

Dodd-Frank Wall Street Reform and Consumer Protection Act, 85

Dual purpose sampling, 199201

Due professional care, 21

Dutch Civil Code, 47

EC. See European Community

EEC. See European Economic Commission

Eighth Company Directive, 55, 56

El Paso Energy Company, 146

Engagement Completion Memorandum, 88, 224

Engagement letter, 103105

Engagement partner, 276

Engagement quality control (EQC), 281

EQC. See Engagement quality control

Equity Funding Corporation of America, 33

Error, defined, 203

ESM Government Securities v. Alexander Grant and Co (1985), 34

Ethical values, 137

European Community (EC), 28

European Economic Commission (EEC), 36, 37

Evidence, tests for, 2122

Existing interim (AU), 9

External auditors, 1617

Fair presentation frameworks v. compliance frameworks, 255256

Familiarity threat, 7071

Financial interest threats, 6769

Financial Reporting Council (FRC), 55

Financial statement audit, 1415

Firm, going concern status of, 252255

Fogarty notes, 91

Foreign subsidiaries, use of another auditor in, 280281

Foreseen user test, 30, 31

Forseeability, 29

Fraud, 2728

FRC. See Financial Reporting Council

Fundamental premise, 8

GAAP. See Generally accepted accounting principles

GAAS. See Generally accepted auditing standards

Generally accepted accounting principles (GAAP), 14, 33

Generally accepted auditing standards (GAAS), 84

Goelzer notes, 85, 87

Going concern, 89

Green Paper, 56

Handelsgesetzbuch (HGB), 38

Herzfeld v. Laventhol, Krekstein, Howarth and Howarth (1974), 32

HGB. See Handelsgesetzbuch

Horizons for the Auditing Standards Board, 8

Human resources policies/practices, 138139

IAASB. See International Auditing Assurance Standards Board

IAG. See Investor Advisory Group

ICAEW. See Institute of Chartered Accountants of England and Wales

Identified users, 30

IESBA. See International Ethics Standards Board of Accounting

IESBA Code, 6265

IFAC. See International Federation of Accountants

IFRS. See International Financial Reporting Standards

Institute of Chartered Accountants of England and Wales (ICAEW), 5

Integrity values, 137

Interim period, 184188

Interim standards, 9, 63

Internal auditors, 16

Internal control over financial reporting, 8990, 279

Internal controls, risk assessment and tests of

assessing technological, techniques and guidelines for, 129130

control environment, 137139

control procedures/activities, 144149

economic, techniques and guidelines for, 129130

entity, nature of, 131134

entity’s financial performance, measurement and review of, 135136

entity’s risk assessment process, auditor’s assessment of, 139143

industry/environment, 130131

internal control assessment, 153154

internal control standards, 150151

discussions relating to material weaknesses in, 151153

legal, techniques and guidelines for, 129130

monitoring of controls, 149150

overall objectives strategies/related business risks, 134135

review of, 136

tests, tests of internal controls and communication of the results of, 154158

International auditing

auditors, types of, 1518

audit of financial statements, principles governing, 1718

external, 1617

internal, 16

audits, types of, 1415

compliance audits, 15

financial statement audit, 1415

operational audits, 15

definition to, 10

key components of, 1214

limitation of, 18

objectives of, 1112

risks faced by auditors, 1819

standard audit process model, 1922

International Auditing Assurance Standards Board (IAASB), 2, 4, 8, 9, 12, 222

International auditors, ethics for

commonalities between IESBA and AICPA codes, 6466

definition to, 6064

IFAC, ethical standards required by, 6667

IFAC ethics code, nonaudit services to audit clients under, 7379

bookkeeping services, 7374

corporate finance and similar activities, 7879

provision of information technology systems services, 7677

provision of internal audit services, 7576

provision of legal services to financial statement audit clients, 7778

provision of litigation support services, 76

recruiting senior management, 78

taxation services, 75

temporary staff assignments to financial statement audit clients, 77

valuation services, 7475

independence, threats to, 6772

advocacy threat, 6970

familiarity threat, 7071

financial interest threats, 6769

recency threat, 7172

self-review threats, 7273

United States, developments in, 7981

Rule 3502, 81

Rule 3521, 80

Rule 3522(b), 80

Rule 3522(a), 80

Rule 3523, 80

Rule 3524, 81

International Ethics Standards Board of Accounting (IESBA), 59, 60, 62

International Federation of Accountants (IFAC), 2, 68, 17, 5962, 67, 97

International Financial Reporting Standards (IFRS), 3

International Standard on Quality Control, 102

International Standards for Auditing (ISA), 2, 3, 68, 10, 17, 18, 67, 86, 96, 97, 119, 135, 136, 150, 153, 163, 213

International Standards on Quality Control (ISQC), 215

International/U.S. audit environments

auditor regulation, recent developments in, 5355

legal liability, 2752

in Europe, 3652

in United States, 2736

SOX, non-United States equivalents to, 55

Investor Advisory Group (IAG), 85

ISA. See International Standards for Auditing

ISA 200, 10, 12, 17, 19, 139, 140

ISA 210, 20, 96, 99, 101, 103105

ISA 230, 213

paragraph 3 of, 214

paragraph 5 of, 215

paragraph 7 of, 215, 219

paragraph 9 of, 214

significant matters and issues, 222225

v. PCAOB’s AS 3, 219, 221, 225

ISA 240, 12

ISA 265, 151, 152, 155, 156, 157

ISA 300, 20, 21, 105, 106

ISA 315, 21, 106110, 129, 130, 132137, 140144, 147149, 151, 154

ISA 320, 111

ISA 330, 111

paragraph 31 of, 183

paragraph 49 of, 178

paragraph 51 of, 180

paragraph 53 of, 180181

ISA 500, 21, 100, 135

ISA 501, 21

ISA 510, 98

ISA 520, 161172

ISA 530

paragraph 4 of, 203

paragraph 25 of, 195

paragraph 28 of, 201

paragraph 54 of, 207208

v. PCAOB’s AU 350, 201202

ISA 550, 22, 109, 111, 112, 114118

ISA 560, 22

paragraph 3 of, 251

paragraph 12 of, 250251

paragraph 16 of, 249

ISA 570, 22

ISA 580, 22

ISA 600, 22, 119, 121, 122

ISA 610, 125

ISA 620, 22, 120, 121, 123, 124

ISA 700, 103105

paragraph 7 of, 232

paragraph 18 of, 231

paragraph 20 of, 231

paragraph 22 of, 231

paragraph 24 of, 236237, 240

paragraph 26 of, 236

paragraph 32 of, 237

paragraph 43 of, 240

paragraph 46 of, 238

paragraph 52 of, 240241

ISA 701, 246

ISA 720, 246

paragraph 3 of, 246247

paragraph 6 of, 247

paragraph 15 of, 247248

ISA auditing standards, 287293

ISA v. PCAOB, 196197

ISQC. See International Standards on Quality Control

Japanese Institute of Certified Public Accountants (JICPA), 263

JICPA. See Japanese Institute of Certified Public Accountants

Judgment, 18

KAM. See Key audit matters

Key audit matters (KAM), 271275

KPMG Peat Marwick, 98

LCSC. See Loi coordomnee sure les societes commerciales

Legal liability, 2752

Loi coordomnee sure les societes commerciales (LCSC), 39

Management’s operating style, 137

Management’s philosophy, 137

Material misstatements of fact, 247248

National Marketing Corporation, 33

Nature of the Entity, 108

Negligence, 27

New Jersey Supreme Court, 31

Nikkei exchange indexed derivatives, 147

Nonsampling risk, 205206

Nonstatistical sampling, 201202

Operational audits, 15

Opinion shopping, 97

Organizational structure, 138

Osborne Computer Company, 30

Oxley, Michael G., 53

PCAOB. See Public Company Accounting Oversight Board

Permanent file, 217

Principles-based accounting, 8

Privity, 27

Proposal, 86

Public Company Accounting Oversight Board (PCAOB)

AS 3 v. ISA 230, 219, 221, 225

AU 341, 253254

v. ISA 700, 232

AU 350

paragraph 10 of, 204

projecting misstatement results, 210211

v. ISA 530, 201202

auditing standards, 283285, 287293

v. ISA, 196197

Qualified opinion, 242

Random number tables. See Computer Assisted Audit Techniques (CAATs)

Ratio analysis, 167

Reasonableness testing, 168

Recency threat, 7172

Related party transactions (RPTs), 111125

“Representative” sampling, 198199

Risk assessment, 184, 280281

Risk, audit sampling, 204205

Rosenblum Inc. v. Adler, 31

Roussey notes, 7

RPTs. See Related party transactions

Rule 10b-5, 32

Rule 3502, 81

Rule 3521, 80

Rule 3522(b), 80

Rule 3522(a), 80

Rule 3523, 80

Rule 3524, 81

SAG. See Standing Advisory Group

Sarbanes Oxley Act (SOX), 2, 9, 27, 5355, 66, 79, 84, 86, 89, 119, 150, 154, 220, 228230, 279

Sarbanes, Paul, 53

SAS 510, 122

Scope, defined, 233

SEC. See Securities and Exchange Commission

Section 1.240.010, 68

Section 2, 51

Section 44, 40

Section 100.4, 64

Section 103, 84

Section 103(a), 79

Section 103(b), 79

Section 141, 40

Section 163, 45

Section 193, 45

Section 210, 95, 96, 97

Section 228.3, 38

Section 230, 88, 89

Section 240, 90

Section 275, 38

Section 290, 64, 67

Section 290.6, 67

Section 290.8, 67

Section 290.11, 69

Section 290.104, 67

Section 290.106, 68

Section 290.107, 68

Section 290.110, 69

Section 290.127, 69

Section 290.135, 70

Section 290.149, 72

Section 290.150, 69

Section 290.153, 71

Section 290.154, 71

Section 290.156, 71

Section 290.159, 72

Section 290.163, 78

Section 290.167, 72, 73

Section 290.169, 73

Section 290.170, 74

Section 290.176, 74

Section 290.177, 75

Section 290.180, 75

Section 290.182, 75

Section 290.185, 75

Section 290.188, 77

Section 290.192, 77

Section 290.193, 76

Section 290.194, 76

Section 290.201, 78

Section 290.203, 78

Section 290.204, 78

Section 290.205, 79

Section 291, 64

Section 315, 129

Section 323, 42

Section 404, 55

Section 500, 21

Section 501, 21

Section 600, 21

Section 620, 21, 121

Securities Act of 1933, 31, 33, 35

Securities and Exchange Commission (SEC), 4, 31, 32, 54, 66, 79, 85, 220, 229

Securities Exchange Act of 1934, 32, 35

Self-review threats, 7273

Sound illustration, 131

SOX. See Sarbanes Oxley Act

Standard audit process model, 1922

Standard unmodified opinion, 241242

Standing Advisory Group (SAG), 85

Statistical sampling, 201202

Statutory Auditors’ Independence in the EU: A Set of Fundamental Principles, 66

Statutory law, 2526, 3136

Statutory liability, 28

Statutory representatives, 26

Subsequent events, 248252

types of, 251252

Substantive analytical procedures, 161

Substantive testing

audit evidence, evaluating sufficiency and appropriateness of, 188190

designing, 180181

documentation, 190191

for reducing risks of material misstatements, 181183

type and extent of, 179180

Swedish Companies Act, 51

Tax shelters, 79

Third party, 2831

Tilimtarkastuslaki (TTL), 40

Tort Liability Act, 51

Treadway Commission (1987), 11

Trend analysis, 167

TTL. See Tilimtarkastuslaki

Ultramares Corporation v. Touche, 29

United States v. Natelli (1975), 33

United States v. Weiner (1975), 33

U.S. auditing standards/role of the PCAOB

Definition of, 8586

Differences between GAAS and PCAOB Standards, 90

Differences between ISA and PCAOB Standards, 8690

U.S. News and World Report, 134

U.S. stock exchange, 8

Walkthroughs, 100

Watchdogs, 6

Whole population selection, 194195

Wisconsin Supreme Court, 31

Working papers. See also Audit documentation

alterations of, 221222

content of, 216

document retention, 219220

uses of, 214

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