Answering audit questions

Description




You must read the below requirements now.


Please answer the questions in the attached file. The questions are about audit. The answers must be essays, correct, clear, and perfect.

The answers must be like the attached example. You can use some of them from the example file not most of them, but



you must paraphrase them



. Last part of the questions doesn’t have answers which is the questions under

11. NEW U.S. AUDITING REPORTING STANDARD :

you must answer them.

You can not use the examples from the example file or paraphrase them to the questions file, so the examples must be new and correct.

I will read all of them once you have done, so please make sure that you have followed the description and the requirements.

PART E: ESSAYS (Answers must be typed. Use as many pages as you find necessary).
1. AUDITS – (4 points).
a. What is an audit? Why is it important?
– An audit is an Systematic examination and verification of the financial statements of an firm to be
sure that the transaction records are a fair and accurate representation of the transactions they claim
to represent, other relevant documents, and physical inspection of inventory by qualified
accountants called auditors which can be internal by employees of the organization, or external by
an outside firm.
– Why is it important ? Auditing helps organizations achieve goals and objectives by measuring
overall performance and productivity, as detected in transactions and business records. An audit
protects an organization from financial misstatements, presenting a reliable health picture of the
organization to the markets. Fraud protection is a benefit of audits achieved through internal
controls that prevent and detect accounting irregularities. Strengthening the financial integrity of
an organization through an audit reduces risk and the cost of capital.
– b. What role does auditing play in society?
Although the role of auditors have their own limitation such as the time budget and experience of
the auditors, they have a clear role in society. auditors is reducing the agency problem. The
auditors are playing role as watchdogs to help the shareholder monitor the credibility of the
information presented by the management and verification of finance statement is showing true
and fair view to the shareholder. In enhance credibility is the perception of the external
stakeholders that the external auditors express an opinion in impartial and reduce conflicts of
interest. Also, the role of external auditors as independence profession parties to verification the
company financial statement. The auditors without independence, the auditors may affect its
audit judgment. For example. The auditor’s essence independence can underlie the success and
credibility of the accounting profession to serve the public” After the Enron and Andersen cases’
showing that auditors are failed to independence for provided the audit service to serve the
public. This is because of the auditor have close personal relationship with the Enron Chief
Accounting Officer” (Thibodeau. J, Freier.D). The Andersen audit partner are provide the nonaudit service to their audit client this will conflict interest especially when the revenue of nonaudit service is greater than the audit fee, this will lead auditor influence their opinion on audit
report”
c. What is an audit committee and why is it important?
– Audit committee is provide oversight of the financial reporting process, the audit process, the
system of internal controls and compliance with laws and regulations. The audit committee can
expect to review significant accounting and reporting issues and recent professional and
regulatory pronouncements to understand the potential impact on financial statements. An
understanding of how management develops internal interim financial information is necessary
to assess whether reports are complete and accurate. The committee reviews the results of the
audit with management and external auditors, including matters required to be communicated to
the committee under generally accepted auditing standards. Audit committees will consider
internal controls and review their effectiveness. Reports on, and management responses to,
observations and significant findings should be obtained and reviewed by the committee.
Controls over financial reporting, information technology security and operational matters fall
under the purview of the committee
– Audit committees is important to enhance audit quality. Effective audit committees and auditors
build confidence in the integrity of financial reporting.
– why is it important? The audit committee is important to create the right environment for
quality auditing. It is the audit committee’s responsibility to create an environment that
accommodates an open discussion in a culture of integrity, respect and transparency between
management and auditors. Audit committees are responsible for overseeing the work of the
auditors. Among other things, they need to understand the audit strategy, be satisfied that it
addresses the major audit risks, and make sure the auditors exercise appropriate professional
skepticism. They also need to ensure that the auditor has an appropriately independent mindset
from management and is truly objective. Ultimately, this will enable the audit committee to
draw conclusions about the effectiveness of the audit
d. What are Working Papers and why are they important?
– papers and documents, which consist of details about accounts, which are under audit. They are
the written, private materials, which an auditor prepares for each audit. They describe the
accounting information, which he obtained from his client, the method of examination used, his
conclusions and the financial statements. “Working papers provide basic evidence of audit
conducted in accordance with standard audit practices. They help the auditor in writing the
report. The quality of audit work performed by the auditor can be judged by the character and
contents of working papers prepared and maintained by the auditor.”
– Working papers are important to assist in the planning and performance of the audit, necessary
for audit quality control purposes, provide assurance that the work delegated by the audit partner
has been properly completed, provide evidence that an effective audit has been carried out,
increase the economy, efficiency, and effectiveness of the audit, contain sufficiently detailed and
up-to-date facts which justify the reasonableness of the auditor’s conclusions, retain a record of
matters of continuing significance to future, enable the auditor to point out to the client the
weakness of the internal control system in operation and inefficiency of the accountancy He
may, therefore, be in a position to advise his client as to how to avoid such pitfalls. The working
papers enable the auditor to prepare the report to be issued without much waste of time.
2. GAAS – (5 points).
Generally Accepted Auditing Standards (GAAS) are 10 general guidelines to aid auditors
in fulfilling their professional responsibilities. Briefly list and describe the 10 GAAS.
GAAS classification :
– General standards:
1. Adequate technical training and proficiency to perform the audit.
The audit is to be performed by a person or persons having adequate technical training and
proficiency as an auditor. if the auditor did not get enough training he may filed with his job or
has mistakes
2. Independence
In all matters relating to the assignment, independence does not have the mental attitude that is
maintained by the accounts auditors or auditor. An auditor must to understand responsibility
about his performance of his duty to the fullest regardless to any external effectiveness.
3. Due professional care
Professional due diligence is to be exercised in performing the audit and the preparation of the
report. In other words The auditor must exercise due professional care in the performance of The
audit and the preparation of the report.
– Standards of Field Work
4. Adequately plan.
The auditor must adequately plan the work and must properly supervise any assistants.
5. Internal control.
The auditor must obtain a sufficient understanding of the entity and its environment, including its
internal control, to assess the risk of material misstatement of the financial statements whether
due to error or fraud, and to design the nature, timing, and extent of further audit procedures.
6. Evidential matter.
The auditor must obtain sufficient appropriate audit evidence by performing audit procedures to
afford a reasonable basis for an opinion regarding the financial statements under audit.
– Standards of Reporting
7. Generally accepted accounting principles
The auditor must state in the auditor’s report whether the financial statements are presented in
accordance with generally accepted accounting principles
8. principles have not been consistently observe
The auditor must identify in the auditor’s report those circumstances in which such principles
have not been consistently observed in the current period in relation to the preceding period.
9. Disclosures
When the auditor determines that informative disclosures are not reasonably adequate, the
auditor must so state in the auditor’s report.
10. Xpression an opinion regarding the financial statements, taken as a whole:
The auditor must either express an opinion regarding the financial statements, taken as a whole,
or state that an opinion cannot be expressed, in the auditor’s report. When the auditor cannot
express an overall opinion, the auditor should state the reasons therefor in the auditor’s report. In
all cases where an auditor’s name is associated with financial statements, the auditor should
clearly indicate the character of the auditor’s work, if any, and the degree of responsibility the
auditor is taking, in the auditor’s report.






3. DEFINITIONS (3 points).
Define the following terms and give an example of each.
a. Fraud.
Accounting fraud is intentional manipulation of financial statements to create a facade of a
company’s financial health. It involves an employee, account or the organization itself and is
misleading to investors and shareholders. A company can falsify its financial statements by
overstating its revenue or assets, not recording expenses and under-recording liabilities.
For example, “a company commits accounting fraud if it overstates its revenue. Suppose
company ABC is actually operating at a loss and is not generating any revenues. On its financial
statements, the company’s profits would be inflated and its net worth would be overstated. If the
company overstated its revenues, it would drive its share price up and falsely depict the its true
financial health”
b. Materiality.
Materiality is the threshold above which missing or incorrect information in financial statements
is considered to have an impact on the decision making of users. Materiality is sometimes
construed in terms of net impact on reported profits, or the percentage or dollar change in a
specific line item in the financial statements. The materiality concept concerns omissions, errors,
and misleading statements in accounting reports.
A classic example of the materiality concept or the materiality principle is “the immediate
expensing of a $10 wastebasket that has a useful life of 10 years. The matching principle directs
you to record the wastebasket as an asset and then depreciate its cost over its useful life of 10
years. The materiality principle allows you to expense the entire $10 in the year it is acquired
instead of recording depreciation expense of $1 per year for 10 years. The reason is that no
investor, creditor, or other interested party would be misled by not depreciating the wastebasket
over a 10-year period”
c. Integrity.
integrity is an important fundamental element of the accounting profession. Integrity requires
accountants to be honest, candid and forthright with a client and the user of the financial
information. Accountants should restrict themselves from personal gain or advantage using
confidential information. While errors or differences in opinion regarding the applicability of
accounting laws do exist, professional accountants should avoid the intentional opportunity to
deceive and manipulate financial information.
For example individuals who handle general accounting functions and then audit this
information are essentially reviewing their own work. This situation may allow an accountant to
hide a company’s negative financial information.. Accountants must remain free from conflicts
of interest and other questionable business relationships when conducting accounting services
4. AUDIT OPINIONS – (6 points).
1.
2.
3.
4.
1.
2.
3.
4.
a. List and describe 4 similarities and 4 differences between the Standard Unqualified
Audit Report of a Nonpublic Company and a Standard Unqualified Audit Opinion for
Public Companies.
Similarities:
Both reports are judgment on the a company’s financial records and statements to give an opinion
if the statements are fairly and appropriately presented, and in accordance with the standards.
Both reports have 7 main parts must be on the report regardless to the content include; title,
address, introductory paragraph, scope paragraph, opinion paragraph, name of auditor and the
date of report.
Both report address the report to the shareholder of the entity.
Both reports has has almost same content in the introductory paragraph, which is shows the
statements that the have been audited by the auditor. Also, similar content in the scope
paragraph, which describe more details about auditing. In addition, both reports similar in the
opinion paragraph, which shows the auditor opinion about the health of the financial statements
and the accounting critical.
Differences:
Standard Unqualified Audit Report of a public Company did not include management’s
responsibility paragraph which shows the management’s responsibility for the preparation of the
financial statements accordance with the accounting standards while Standard Unqualified Audit
Report of a Nonpublic Company has it
Standard Unqualified Audit Report of a Nonpublic Company did not include auditor’s
responsibility paragraph which shows the auditor’s express an opinion on the financial
statements while Standard Unqualified Audit Report of a Nonpublic Company has it
standard Unqualified Audit Report of a nonpublic Company did not include explanatory
paragraph referring to the audit of internal control which describe more details while Standard
Unqualified Audit Report of a public Company has it
For some engagements in Standard Unqualified Audit Report of a Nonpublic Company ,
financial statements might be audited in accordance with multiple auditing standards. However ,
the Standard Unqualified Audit Report of a public Company, financial statements might be
audited in accordance with GAAP standards.
b. Special unqualified audit reports may be issued. List and describe 3 circumstances under
which a special report may be issued.
1. Lack of Consistency in Accounting Principles. If there has been a change in accounting
principles or in the method of their application, the auditor should add an explanatory paragraph
to the report (following the opinion paragraph) that describes the change and refers to the note to
the financial presentation (or specified elements, accounts, or items thereof) that discusses the
change and its effect thereon if the accounting change is considered relevant to the presentation.
2. Going Concern Uncertainties. If the auditor has substantial doubt about the entity’s ability to
continue as a going concern for a reasonable period of time not to exceed one year beyond the
date of the financial statement, the auditor should add an explanatory paragraph after the opinion
paragraph of the report only if the auditor’s substantial doubt is relevant to the presentation.
3. Comparative Financial Statements (or Specified Elements, Accounts, or Items Thereof). If the
auditor expresses an opinion on prior-period financial statements (or specified elements,
accounts, or items thereof) that is different from the opinion he or she previously expressed on
that same information, the auditor should disclose all of the substantive reasons for the different
opinion in a separate explanatory paragraph preceding the opinion paragraph of the report.
c. Besides an unqualified report, list the 3 other types of reports that may be issued by
an auditor. Describe the circumstances under which each report may be issued.
1. Qualified Opinion

Is a statement issued after an audit is done by a professional auditor that suggests the information
provided was limited in scope and/or the company being audited has not maintained GAAP
accounting principles. A qualified opinion, however, will include an additional paragraph that
highlights the reason why the audit report is not unqualified.
– This opinion issued in situations when a company’s financial records have not been maintained
in accordance with GAAP but no misrepresentations are identified, an auditor will issue a
qualified opinion.
. 2. Adverse Opinion

refers to the conclusion by an auditor that a company’s financial statements inaccurately
characterize the company’s financial standing.
This opinion issued in situations when a firm’s financial records do not conform to GAAP. In
addition, the financial records provided by the business have been grossly misrepresented.
Although this may occur by error, it is often an indication of fraud.
2. Disclaimer of Opinion
– is basically a statement provided by the auditor that doesn’t lay down any sort of opinion with
regard to the financial position and condition of the company. Disclaimer of opinion is provided
by certified public accountant wherein he clarifies that an audit related opinion/statement cannot
be provided owing to limitations of the examinations conducted.
– This opinion issued in situations when an auditor is unable to complete the audit report due to
absence of financial records or insufficient cooperation from management
5. SOX – (3 points).
The Sarbanes-Oxley Act of 2002 made significant reforms for public companies and their
auditors.
a. Describe the events that led up to the passage of the Act.
1. large number of misstatements of financial statements, many of which resulted from fraudulent
financial reporting.
The Sarbanes-Oxley Act was enacted in response to a series of high-profile financial scandals that
occurred in the early 2000s at companies including Enron, WorldCom and Tyco that rattled
investor confidence. The act, drafted by U.S. Congressmen Paul Sarbanes and Michael Oxley,
was aimed at improving corporate governance and accountability. Now, all public companies
must comply with SOX
2. The conviction of destroying evidence charges to the Big 5 accounting firm of Arthur Andersen
The Sarbanes-Oxley Act affects the IT departments charged with storing a corporation’s electronic
records. The act defines which records should be stored and for how long. SOX states that all
business records, including electronic records and electronic messages, must be saved for “not
less than five years.” The consequences for noncompliance are fines, imprisonment or both
b. Describe 5 of the major reforms made by the Act.
1. SOX led to greater internal control of financial reporting, and increased expertise and
independence among more-focused boards, committees and directors. “Sarbanes-Oxley Act is
Section 404, which requires public companies to perform extensive internal control tests and
include an internal control report with their annual audits”
2. Public companies are required to disclose any material off-balance sheet arrangements, such as
operating leases and special purposes entities. The company is also required to disclose any pro
forma statements and how they would look under the generally accepted accounting principles
(GAAP).
3. strengthening of audit committees at public companies. The audit committee receives wide
leverage in overseeing the company’s top management accounting decisions. The audit
committee members must be independent of the top management and gain new responsibilities
such as approving numerous audit and non-audit services.
4. changes management’s responsibility for financial reporting significantly. The act requires that
top managers personally certify the accuracy of financial reports. “If a top manager knowingly or
willfully makes a false certification, he can face 10 to 20 years in prison”. If the company is
forced to make a required accounting restatement due to management’s misconduct, top
managers can be forced to give up their bonuses or profits made from selling the company’s
stock.
5. imposes harsher punishment for obstructing justice and securities fraud, mail fraud and wire
fraud. “The maximum sentence term for securities fraud increased to 25 years, and the maximum
prison time for obstruction of justice increased to 20 years. The act increased the maximum
penalties for mail and wire fraud from five to 20 years of prison time”
6. MATERIALITY (3 points).
a. Materially is an important concept in auditing. Define the term materiality.
Materially in general explain the misstatements, including omissions, are considered to be
material if they, individually or in the aggregate, could reasonably be expected to influence the
economic decisions of users taken on the basis of the financial statements
b. Give an example of a situation that can be considered material. Explain why you
consider it to be material.
“Maldives Plc’s total sales for the financial year 2012 amounts to $100 million and its total
assets are $50 million. The company’s external auditors have found out that $3 million worth of
sales shouldn’t be recognized in financial year 2012 because the risks and rewards inherent in the
sales have not been transferred”
This example consider materiality due to size, this amount of $3 million is material in the context
of total assets of $50 million. The company should adjust its financial statements
c. How does materiality affect the audit of financial statements and reporting decisions?
The auditor’s consideration of materiality is a matter of professional judgment and is influenced
by the auditor’s perception of the needs of users of financial statements. The perceived needs of
users are recognized in the discussion of materiality in Financial Accounting Standards Board
(FASB) Statement of Financial Accounting Concepts. In an audit of financial statements, the
auditor’s judgment as to matters that are material to users of financial statements is based on
consideration of the needs of users as a group; the auditor does not consider the possible effect of
misstatements on specific individual users, whose needs may vary widely. “The determination of
materiality, therefore, takes into account how users with such characteristics could reasonably be
expected to be influenced in making economic decisions.”
7. ASSERTIONS REGARDING FINANCIAL STATEMENTS – (4 points).
a. What are assertions?
Audit Assertions are the implicit or explicit claims and representations made by the management
responsible for the preparation of financial statements regarding the appropriateness of the
various elements of financial statements and disclosures. “Financial statement assertions are
management’s explanation about the recognition, measurement, presentation and disclosure of
information in the financial statements.”
b. Who makes these assertions?
Management make the implicit or explicit assertions that the preparer of financial statements
(management) is making to its users.
c. What is the auditor’s responsibility regarding the financial statements?
The auditor has a responsibility to plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement, whether caused by error
or fraud. The auditor responsibility to the financial statements is the expression of an opinion on
the fairness with which they present, in all material respects, financial position, results of
operations, and its cash flows in conformity with generally accepted accounting principles.These
standards require the auditor to state whether, in his opinion, the financial statements are
presented in conformity with generally accepted accounting principles and to identify those
circumstances in which such principles have not been consistently observed in the preparation of
the financial statements of the current period in relation to those of the preceding period.
d. List and describe 7 assertions regarding the financial statements.
1.
Existence
The assertion of existence is the assertion that the assets, liabilities and shareholders’ equity
balances appearing on a company’s financial statements actually exist as stated at the end of the
accounting period that the financial statement covers
“For example, any statement of inventory included in the financial statement carries the implicit
assertion that such inventory exists, as stated, at the end of the accounting period. The assertion
of existence applies to all assets or liabilities included in a financial statement”
2. Completeness
Checking completeness of a financial statement is to analyze whether all the transactions that are
already given in the financial statement are correctly included. In order to abide by the
completeness assertion, the auditors prove with the help of sufficient evidence that all the
recorded transactions deserve to be included. This is further supported with an external document
so as to provide evidence regarding the occurrence of the transaction.
3. Rights and Obligations:
This financial statement assertion is used to check whether the assets that are included in the
financial statement are the rights and the liabilities are the obligations of the company. In order
to ensure this, sometimes special purpose entities are created.
4. Management Assertions:
In Management Assertions auditors decompose the broad assertions into a detailed set of
statements referred to as management assertions. Its has a major role in financial statement
assertions and audit assertions.
5. Accuracy and Valuation
The assertion of accuracy and valuation is the statement that all figures presented in a financial
statement are accurate and based on proper valuation of assets, liabilities and equity balances.
6. Presentation and Disclosure
The final financial statement assertion is that of presentation and disclosure. This is the assertion
that all appropriate information and disclosures regarding the company’s financial statement are
included in the statement, and that all the information presented in the statement is presented in a
fair and clear manner that facilitates ease of understanding the information contained in the
statement.
7. Occurrence
Being sure the the transactions and events recorded actually occur and pertain to the entity.
8. ETHICS & PROFESSIONAL RESPONSIBILITIES – (5 points).
a. What is Ethics? List and describe 3 Theories of Ethical Behavior.
Ethics are concerned with fundamental principles of right and wrong and what people
ought to do.
“Refers to a system or code of conduct based on moral duties and obligations that indicate how
an individual should interact with others in society”
Theories of Ethical Behavior.
1. Utilitarian Ethical Theory
“Utilitarian theory was first formulated in the eighteenth century by Jeremy Bentham and later
refined by John Stuart Mill. Utilitarian look beyond self-interest to consider impartially the
interests of all persons affected by an action. The theory emphasizes consequences of an action
on the stakeholders. The stakeholders are those parties affected by the outcome of an action.
Utilitarian recognize that trade-offs exist in decision-making. Utilitarian theory is concerned
with making decisions that maximize net benefits and minimize overall harms for all
stakeholders. It is similar to cost-benefit analysis decision-making. The ultimate rule to follow
is the “Greatest Good for the Greatest Number.”
2. Virtue-Based Ethical Theory
Judgment is exercised not through a set of rules, but as a result of possessing those dispositions
or virtues that enable choices to be made about what is good and holding in check desires for
something other than what will help to achieve this goal. Thus, virtue-based ethics emphasizes
certain qualities that define appropriate behavior and the right action to take. Unlike the other
standard ethical theories discussed, virtue theory does not establish a set of criteria to evaluate
potential decisions. “Rather, it emphasizes the internal characteristics of an individual with
whom we would want to enter into a relationship of trust. The ultimate goal is for “the decision
maker to do the right thing in the right place as the right time in the right way.”
3. Rights-Based Ethical Theory
Modern rights theory is associated with the eighteenth-century philosopher Immanuel Kant.
Rights theory assumes that individuals have certain entitlements that should be respected such as
freedom of speech, the right of privacy, and due process. Kant’s theory establishes an
individual’s duty as a moral agent toward others who possess certain rights. It is based on a
moral principle that he calls the categorical imperative. “One version of the categorical
imperative emphasizes the universality of moral actions. The principle is stated as follows: “I
ought never to act except in such a way that I can also will that my maxim (reason for acting)
should become a universal law.” The ultimate guiding principle is, “I should only act in a way in
which I would be happy if everyone in that situation would act the same.”
b. Why is it important for an Auditor to behave ethically?
It is important because the value of the ethical audit is that it enables the company to see itself
through a variety of lenses: it captures the company’s ethical profile. Companies recognise the
importance of their financial profile for their investors, of their service profile for their
customers, and of their profile as an employer for their current and potential employees. An
ethical profile brings together all of the factors which affect a company’s reputation, by
examining the way in which it does business. By taking a picture of the value system at a
given point in time, it can clarify the actual values to which the company operates, provide a
baseline by which to measure future improvement learn how to meet any societal expectations
which are not currently being met, give stakeholders the opportunity to clarify their
expectations of the company’s behaviour. identify specific problem areas within the company.
learn about the issues which motivate employees, identify general areas of vulnerability,
particularly related to lack of openness. “In relation to the specific factors of the ethical
environment, studies on codes of ethics have dominated the ethical accounting and auditing
literature. Codes of ethics are important since they implicitly set limits for unethical behaviour
and are intended to offer guidance in ambiguous situations”
c. Summarize the auditor’s professional responsibilities.
Auditing Standards
In private company, GAAS defines some general auditing standards for private company.
GAAS mandates that auditors have adequate training and proficiency to do the audit. This means
auditors should maintain professional certifications, like the certified public accountant
designation and any specialty designations for their field. It’s crucial that auditors maintain
consistency in how they conduct the audit. GAAS mandates that auditors obtain sufficient and
appropriate audit evidence. Auditors must conduct a risk assessment to judge what is a sufficient
amount of evidence. The appropriateness of evidence can be up for debate, but it generally
means the evidence should come from a reliable source and be relevant to the audit. The AICPA
makes it clear that all audit reports should contain specific statements and disclosures. Auditors
must identify the accounting framework they are using for the audit and offer an opinion on
whether or not the financial statements were prepared according to the framework. Most U.S.
companies follow the U.S. generally accepted accounting principles, but an audit could be
conducted on a business based on the tax code or cash accounting.
In public company, the standards are similar to the private company with some exception
“PCAOB auditing standards currently consist of two types of equally authoritative auditing
standards: (i) standards originally issued by the Auditing Standards Board (“ASB”) of the
American Institute of Certified Public Accountants (“AICPA”) and adopted by the Board on an
interim, transitional basis in April 2003 and (ii) standards issued by the Board”
Standards of professional conduct
In private company, it established by the code professional conduct (AICPA) which is is a
necessary component to any profession to maintain standards for the individuals within that
profession to adhere. It brings about accountability, responsibility and trust to the individuals that
the profession serves. Also, three standards include : independence decision with audit
committee , certain independence implication of audits of mutual funds and related entities, and
employments with audit clients issued by ISB . ISB also issued three interpretations include :
impact on auditor independence of assisting clients in the implementation of FAS, the
applicability of ISB standards, and an amendment of ISB interpretations.
In public company, “CPA must follow the auditing standards PCAOB. the code of professional
conduct and also the more stringent Independence requirements established by the SEC, ISB and
PCAOB”
d. What is independence? An auditor may be independent of mind but not of
appearance. Explain the difference between the two. Why are both important?
An independent auditor is a certified public accountant (CPA) or chartered accountant
(CA) who examines the financial records and business transactions of a company with
which he is not affiliated. An independent auditor is typically used to avoid conflicts of
interest and to ensure the integrity of performing an audit.
difference between the two :
1.
independent of mind
More specifically, real independence concerns the state of mind an auditor is in, and how the
auditor acts in/deals with a specific situation. An auditor who is independent ‘in fact’ has the
ability to make independent decisions even if there is a perceived lack of independence
present,or if the auditor is placed in a compromising position by company directors..
2.
independent of appearance
The avoidance of facts and circumstances that are so significant that a reasonable and informed
third party, having knowledge of all relevant information, including safeguards applied, would
reasonably conclude a firm’s, or a member of the assurance team’s, integrity, objectivity or
professional scepticism had been compromised.
The Important for both types of independence is to keep the The auditor independent
from the client company, so that the audit opinion will not be influenced by any
relationship between them. The auditors are expected to give an unbiased and honest
professional opinion on the financial statements to the shareholders.
e. The auditor’s independence rules also apply to covered members. Who are covered
members? List and describe 4 covered members.
1.
An individual who was formerly employed by a client or associated with a client as an
officer, director, promoter, underwriter, voting trustee, or trustee for a pension or profitsharing trust of the client would impair his or her firm’s independence if the individual
participated on the attest engagement team.
2.
An individual in a position to influence the attest engagement is one who evaluates the
performance or recommends the compensation of the attest engagement partner; directly
supervises or manages the attest engagement partner, including all successively senior
levels above that individual through the firm’s chief executive; consults with the attest
engagement team regarding technical or industry-related issues specific to the attest
engagement; or participates in or overseas, at all successively senior levels, quality
control activities, including internal monitoring, with respect to the specific attest
engagement.
3.
4.
A partner or manager who provides nonattest services to the attest client beginning once
he or she provides ten hours of nonattest services to the client within any fiscal year and
ending on the later of the date. First, the firm signs the report on the financial statements
for the fiscal year during which those services were provided. Second, he or she no
longer expects to provide ten or more hours of nonattest services to the attest client on a
recurring basis.
“An entity whose operating, financial, or accounting policies can be controlled (as
defined by generally accepted accounting principles [GAAP] for consolidation purposes)
by any of the individuals or entities described in (a) through (e) or by two or more such
individuals or entities if they act together.”
9. AUDITORS LIABILITY – (5 points).
a. Explain the difference between common law and statutory law.
Common law, also known as case law, allows judges to render decisions based on the
rulings of earlier cases. Common law is guided by the regulations set forth in federal or
state statutes, but it does not rely exclusively on those written laws.
Statutory law refers to the written law established by the legislative branch of the
government. Statutes may be enacted by both federal and state governments and must
adhere to the rules set in the Constitution. Proposed statutes are reviewed by the
legislature prior to being enacted into law.
b. Under common law, describe the auditor’s liability;
1.
Liability to client
The auditor can be held liable to the client for :
breach of contract
If the the auditors are not performing within the agreement set forth in the contract this will be
considered a breach of contract. Also, if the client fail to complete his obligations . “ generally occurs
when one of the parties avoids or neglects their legal obligations under the agreement. When
hearing cases involving common law contracts, courts also consider where the breach was a result
of a legal excuse or defense. Under the common law breach of contract remedies, a party filing a
lawsuit could ask a court to award specific performance remedies, compensatory damages, or
remedies for unjust enrichment. In other situations, a party may seek liquidated damages.
“
Negligence
Is a failure to exercise the appropriate and or ethical ruled care expected to be exercised amongst
specified circumstances.The area of tort law known as negligence involves harm caused by
failing to act as a form of carelessness possibly with extenuating circumstances. The Elements of
negligence claims are: duty of care; which is The legal liability of a defendant to a plaintiff is
based on the defendant’s failure to fulfil a responsibility, breach of duty; which is provement if
that the defendant owed a duty to the plaintiff/claimant, the matter of whether or not that duty
was breached must be settled, factual causation; it must be shown that the particular acts or
omissions were the cause of the loss or damage sustained, and harm; plaintiff may not recover
unless he can prove that the defendant’s breach caused a pecuniary injury. This should not be
mistaken with the requirements that a plaintiff prove harm to recover.
Fraud
“an auditor can be held liable to clients for fraud when he or she acted with knowledge and
intent to deceive. However, action alleging fraud on the part of the auditors result from lawsuits
by Third parties”
2.
Liability to third parties
The auditor can be held liable to the third parties for:
Ordinary Negligence
s the failure to act as a reasonably prudent person. It is the failure to exercise such care as the
great mass of mankind ordinarily exercises under the same or similar circumstances. Ordinary
negligence is the want of exercise of ordinary care
Four Legal Standards for Third Parties
1.
Private
“. The traditional view held that auditors had no liability under common law to third parties who
did not have a privity relationship with the auditor. Privity here means that the obligations that
exist under a contract are between the original parties to the contract, and failure to perform with
due care results in a breach of that duty only to those parties. Many courts have reexamined the
privity notion and substituted the concept of public responsibility”
2.
Near privity
“ third parties whose relationship with the CPA approaches privity”
3.
Foreseen third parties
“third parties whose reliance should before seen, even if the specific person is unknown to the
auditor”
4.
Reasonable foreseeable third parties
“ third parties whose reliance should be reasonably foreseeable,even if the specific person is
unknown to the auditor”
Fraud and Gross Negligence
This is a fraud committed by people outside an employee employer relationship. They can be
committed against individuals, businesses, companies, the government or any other entity. Third
party frauds are not as common as occupational frauds, but on average each fraud is for a larger
amount. Some third party frauds are not meant to remain hidden forever. Some only remain
hidden long enough for the fraudster to make their get-away. The fraudster may not care if the
fraud is eventually discovered as they do not have a continuing relationship with the victim and
they cannot be found. Third Party Must Prove “A false representation by the CPA,knowledge or
belief by the CPA that the representation was false,the CPA intended to induce the 3rd party to
rely on the false representation, the third party relied on the false representation and the third
party suffered damages”
c. List and describe the categories of parties that may be involved? What must be proven
by the parties; what are the auditor’s possible defenses?
1.Privity: The traditional view held that auditors had no liability under common law to third
parties who did not have a privity relationship with the auditor
2. Near privity: “ third parties whose relationship with the CPA approaches privity”
3. Foreseen third parties:“third parties whose reliance should before seen, even if the specific
person is unknown to the auditor”
4. Reasonably foreseeable third parties: “ third parties whose reliance should be reasonably
foreseeable,even if the specific person is unknown to the auditor”
Must be proven for these categorize: the auditor had a duty to the plaintiff to exercise due
care,the auditor breached that duty and was negligent in following professional standards.
the auditor’s breach of due care was the direct cause of the third party’s loss and the third
party suffered and actual loss.
Auditor’s defense these categorize: no duty was owed , the client was negligent (contributory
negligence, comparative negligence, or management fraud), the audit was performed in
accordance with GAAS, the client suffered no loss, tny loss was caused by other events, the
claim is invalid because the statute of limitations has expired.
Other categorize
1.
Negligence
Is a failure to exercise the appropriate and or ethical ruled care expected to be exercised amongst
specified circumstances.The area of tort law known as negligence involves harm caused by
failing to act as a form of carelessness possibly with extenuating circumstances. The Elements of
negligence claims are: duty of care; which is The legal liability of a defendant to a plaintiff is
based on the defendant’s failure to fulfil a responsibility, breach of duty.
Must be proven: “a duty was owed to the client, failure to act in accordance with that duty, a
causal connection between the auditor’s negligence and the client’s damage and actual loss or
damage to the client”.
Auditor’s defense against clint negligence claims include; “no duty was owed to the client the
client was negligent, the auditor’s work was performed in accordance with professional
standards, the client suffered no loss.5, lack of causal connection between auditor negligence and
the client loss and the claim is invalid because the statute of limitations has expired”
2.
Ordinary Negligence
The failure to act as a reasonably prudent person. It is the failure to exercise such care as the
great mass of mankind ordinarily exercises under the same or similar circumstances. Ordinary
negligence is the want of exercise of ordinary care

Must be proven : the auditor had a duty to the plaintiff to exercise due care, the auditor
breached that duty by failing to act with due professional care. there was a direct causal
connection between the auditor’s negligence and the third party’s injury, the third party
suffered an actual loss as a result.
Auditor’s defense: “no duty was owed to the third party (level of duty required depends
on the case law followed by the courts), the third party was negligent, the auditor’s work
was performed in accordance with professional standards, the third party suffered no loss,
lack of causal connection between auditor negligence and the client loss, and the claim is
invalid because the statute of limitations has expired”
3. Fraud and Gross Negligence
This is a fraud committed by people outside an employee employer relationship. They can be
committed against individuals, businesses, companies, the government or any other entity. Third
party frauds are not as common as occupational frauds, but on average each fraud is for a larger
amount. Some third party frauds are not meant to remain hidden forever. Some only remain
hidden long enough for the fraudster to make their get-away. The fraudster may not care if the
fraud is eventually discovered as they do not have a continuing relationship with the victim and
they cannot be found.


Must be proven “A false representation by the CPA,knowledge or belief by the CPA that
the representation was false,the CPA intended to induce the 3rd party to rely on the false
representation, the third party relied on the false representation and the third party
suffered damages”
Auditor’s defense: “”If the auditor has been only negligent he or she can claim that his or
her negligence did not rise to the level of gross negligence or fraud. The auditor can also
raise the statute of limitations as defenses. Finally the auditor can claim that the plaintiff’s
lack of due diligence led unjustifiably to reliance on a false representation”
d. List and describe the SEC Act of 1933 and 1934. Who are the parties that the auditor
may be liable to under these Acts? What must be proven by them against auditors?
What are the auditor’s possible defenses?
SEC Act of 1933
The first significant case brought under the Securities Act of 1933. The auditors were unable to
establish their due diligence, especially with respect to the S-1 review for subsequent events up
to the effective date of the registration statement. Under the Securities Act of 1933, third Party
must Prove “ The third party suffered losses by investing in the registered security and the
audited financial statements contained a material omission or misstatement”

SEC Act of 1934
Ernst and Ernst v. Hochfelder Established that the auditors could not be held liable under Rule
10b-5 of the Act for ordinary negligence. The U.S. Supreme Court concluded that the auditor’s’
knowledge of the fraud must be proved before damages can be recovered under this provision of
the Securities Exchange Act of 1934. Third party should improve “ a material, factual
misrepresentation or omission, reliance on the financial statements, damages suffered as a result
of reliance on the financial statements, scienter (gross negligence or recklessness may be
enough)”
Who are the parties that the auditor may be liable to under these Acts? What must
be proven by them against auditors? What are the auditor’s possible defenses?
1.
Section 11 under securities Act of 1933 which “ imposes a liability on issuers and
others,including auditors, for losses suffered by third parties when false or misleading
information is included in a registration statement”
Must be proven : “ the third party suffered losses by investing in the registered security
and the audited financial statements contained a material omission or misstatement”
Auditor’s defense: due diligence which is the auditor should made investigation for
purpose of the facts supporting or contradicting the information included in the
registration statement”
2.
Section 18 under securities Act of 1934 which “ imposes liability on any person who
makes a material false or misleading statement in documents filed with the SEC. Section
10(b) and Rule 10b-5 are the greatest source of liability for auditors under this act”
Must be proven : a material, factual misrepresentation or omission, reliance on the
financial statements, damages suffered as a result of reliance on the financial statements
and scienter.
Auditor’s defense: The auditor performs the audit with enough due diligence. In addition,
prove that the plaintiff loses did not caused by reliance on financial statement and The
statute of limitations has expired.
e. List and describe 5 steps that an auditor should take in order to prevent litigation.
1.
Service-Specific Documentation. Complete separate engagement letters for each service
offered any given client, from audit, review, and compilation to tax, consulting, and other
services. For example, while bookkeeping is less complex than other assignments and may be
one of two or three services you provide to a client, it is important to be clear about the scope of
bookkeeping services, especially when bank reconciliation is involved.
2.
Set the Scope. Define limitations of services from day one and enforce them; clients often
try to expand the scope after a problem is discovered.
3.
Set the Tone. An engagement letter is a must. Failure to create this document can lead to
broad interpretation of scope of services actually performed and lead to misunderstandings and
unrealistic expectations.
4.
Coordinate. Make sure invoices match the scope of the engagement; embellishment could
result in fraud risks.
5.
Set Realistic Standards. Don’t overpromise. It’s important that proposals align with the
promise to deliver specific services, experience in accomplishing the services as well as the
accountants’ availability and resources.
10. AUDIT ACCEPTANCE & PLANNING (4 points).
You are an experienced CPA and have been assigned to be the in-charge auditor to audit
the financial statements of Montclair Company, a publicly held company for the first time.
If you accept the engagement, you will supervise 3 assistants on the engagement and will be
required to communicate with the predecessor auditor.
a.
List the steps that you would take before accepting a new client.
1. Evaluate prospective client integrity personally
Ask for and follow up with references, including attorneys, bankers, other business consultants, and
major vendors or customers. Verify that relationships were not terminated due to disagreements
regarding business operations or outstanding invoices.
2. Perform engagements with professional competence.
Before agreeing to propose on or accept an engagement, consider whether the requested service can
be competently provided in accordance with applicable professional standards
3. Consider risks related to the particular engagement
4. Formalize the process
contact with the firms to develop a new client acceptance checklist to document the decision-making
process. The checklist should identify what the firm deems important and provide a written
record of representations made by prospective clients and why the firm accepted them
b.
List and describe the steps that you should take immediately after accepting a new
audit client.
1. request a permission of the new client before contacting with predecessor auditor
It is important to request a permission of the new client before contacting with predecessor
auditor due to the fact as auditor it hard to disclose confidential any information about a client
without firm’s consent.
2. Make some inquiries of predecessor auditor
These inquiries include; information that might bear on the Integrity of management,
disagreements with management about accounting policies auditing procedures or other similarly
significant matters. Communications to those charged with the government regarding fraud and
noncompliance with laws or regulations by the entity. Communications to those charged with
the government regarding regarding deficiencies and material weakness in internal control and
the predecessor auditor’s understanding about the reasons for the change of the auditors”
3. Make engagement letter
It is necessary to save both parties rights and avoid any mistakes and misstatements in future.
c.
List and describe the items that should be included in the engagement letter. Describe
the benefits derived from the engagement letter.
– Items that should be included in the engagement letter:
1. Name of the entity
Engagement will start with the entity’s name
2. The objectives of the engagement
Shows the purpose of the engagement and use this letter as improve between parties
3. Management’s responsibilities
The management of company is responsible for the financial statements from all sides.
4. The auditor’s responsibilities:
Ensure the validity and relevance of financial information in the financial statements and make
sure they are free of any errors and manipulation. Give an opinion about the financial statements
5. The limitations of the engagement.
This shows what should be and what should not be during the engagement. In other words, give
the terms of engagement
– The benefit of the engagement letter is to formalize the arrangements reached between
the auditor and the entity. This also help to reduce the risk that any party may
misinterpret what is expected or required of other party
d.
List and describe the steps involved in a financial statement audit.
1. Engagement Acceptance
“The American Institute of CPAs recommends that an auditor evaluate the risks associated with
each engagement.”Therefore, a CPA inquires about any special circumstances, the integrity of
management and pending lawsuits before performing an audit.
2. Planning
Auditing standards require that an auditor prepare adequate planning for an engagement. The
amount of audit planning needed is in direct relation to the size and complexity of the
organization. Audit planning involves obtaining an understanding of the organization’s business
and industry, performing trend and ratio analysis.The auditor utilizes the results of the planning
process to determine the timing and extent of audit testing.
3. Audit Tests
During the fieldwork process, or the time the auditor spends at the organization offices, the
auditor performs tests of financial data. “For instance, a CPA selects a random sample of forty
disbursements to ensure checks are payable to the correct vendor and are written for the correct
amount”. In addition, an auditor reviews the invoice associated with the disbursement to ensure
the expense is classified correctly and that the vendor actually exists.
4. Account Analysis
During the account analysis process, the auditor ensures that financial statement account
balances are supported by underlying documentation and analysis. A CPA evaluates the results
of tests, reviewers responses to inquires and records audit-adjusting journal entries.
5. Reporting
CPAs issue an opinion on audited financial statements as to whether the financial statements are
presented in accordance with accounting principles generally accepted in the U.S. The opinion is
issued on the Independent Auditor’s report.
6. Summation
An auditor is required to retain proper documentation regarding the audit and obtain signatures
from management regarding management’s responsibility for the information reported in the
financial statements. The information is retained by the CPA should lawsuits occur regarding
reported amounts and for future account analysis.
11. PROPOSED NEW U.S. AUDITING STANDARD (5 points)
In response from the outcry from the public, several countries have enacted a new Auditing
Standard. The U.S. has also proposed a new standard.
a. What type of companies does the new U.S. Audit Reporting Standard apply to?
b. When does the Standard become effective?
c. What are the major components of the new U.S. Standard?
d. If the new Auditing Standard was implemented, what impact will it have on the following
parties:
i.
The Financial Statement Users.
The financial statement users will get more information and a full details about
the statements and they will avoid any misunderstanding which make them take an investing
decision fairly in their relation with the company.
ii.
The Auditors.
The auditors will give more information which make them prove a clear and fair opinion of the
financial statements’ users and give a full information to their clients. So, the auditor may attract
investors, obtain loans, and improve public appearance by their auditor’s report.
iii.
The Company’s Management.
Theses changes my enhancements to existing language in the auditor’s report including the auditor
responsibility and management responsibility. Management responsibility would be more clear
for the users and decision maker about the company’s financial statements
iv.
The Standard setters and regulators.
These changes may make the standard setters to follow up the new standard in order to make any
enhancements required to keep this standard help full for all company’s parties.
Works cited
Auditing important? (n.d.). Retrieved March 03, 2017, from
https://www.reference.com/business-finance/auditing-important-2daa49efeb4cda63#
J. (2017, March 02). AuJ. (2017, March 02). Audit Working Papers | Importance | Objectives |
Contents. Retrieved March 11, 2017, from http://accountlearning.com/audit-working-papersimportance-objectives-contents/
Nickolas, S. (2015, March 27). What is accounting fraud? Retrieved March 11, 2017, from
http://www.investopedia.com/ask/answers/032715/what-accounting-fraud.asp
Publications. (n.d.). Retrieved March 11, 2017, from
http://www.grfcpa.com/resources/publications/audit-committee-responsibilities/
Role of the Audit Committee. (n.d.). Retrieved March 11, 2017, from http://www.cpabccrc.ca/en/topics/RoleAuditCommittee/Pages/default.aspx
What is materiality? | AccountingCoach. (n.d.). Retrieved March 11, 2017, from
http://www.accountingcoach.com/blog/what-is-materiality
What is Sarbanes-Oxley Act (SOX)? – Definition from WhatIs.com. (n.d.). Retrieved March 11,
2017, from http://searchcio.techtarget.com/definition/Sarbanes-Oxley-Act
Writer, L. G. (2010, July 29). What Are Financial Statement Assertions? Retrieved March 11, 2017,
from http://smallbusiness.chron.com/financial-statement-assertions-3788.html
dit Working Papers | Importance | Objectives | Contents. Retrieved March 11, 2017, from
http://accountlearning.com/audit-working-papers-importance-objectives-contents/
Maleske, M. (2012, January 01). 8 ways SOX changed corporate governance. Retrieved March
11, 2017, from http://www.insidecounsel.com/2012/01/01/8-ways-sox-changed-corporategovernance
Blokhin, A. (2015, May 28). What impact did the Sarbanes-Oxley Act have on corporate
governance in the United States? Retrieved March 11, 2017, from
http://www.investopedia.com/ask/answers/052815/what-impact-did-sarbanesoxley-act-havecorporate-governance-united-states.asp
Written by Obaidullah Jan, ACA, CFAhire me at. (n.d.). Materiality Concept. Retrieved March
11, 2017, from http://accountingexplained.com/financial/principles/materiality
Writer, L. G. (2013, September 20). Auditing Standards for Private Companies. Retrieved March
11, 2017, from http://yourbusiness.azcentral.com/auditing-standards-private-companies27396.html
CPA’s Multistate Guide to Ethics and Professional Conduct 2008. (n.d.). Retrieved March 11,
2017, from https://books.google.com/books?id=v-K7D11x9uUC&pg=SA4-PA5&lpg=SA4-
PA5&dq=three%2Band%2Bthree%2Binterpretation%2Bstandards%2Bissued%2Bby%2BISB&s
ource=bl&ots=vXg5ekC7jG&sig=uJH58HCgU6WwlqmYWChnlqjBCkg&hl=en&sa=X&ved=0
ahUKEwiv6vPf28PSAhUHyyYKHZjdCOQQ6AEISTAI#v=onepage&q&f=false
Legal, I. U. (n.d.). USLegal. Retrieved March 11, 2017, from
https://accountants.uslegal.com/duties-and-liabilities-of-accountants/liability-to-third-party/
The 8 Key Steps to Avoid Liability Claims and Client Litigation. (2014, November 13).
Retrieved March 11, 2017, from http://www.accountingweb.com/aa/auditing/the-8-key-steps-toavoid-liability-claims-and-client-litigation
P. (n.d.). In brief: PCAOB reproposes significant changes to the auditor’s report. Retrieved
March 11, 2017, from http://www.pwc.com/us/en/cfodirect/publications/in-brief/pcaobreproposes-significant-changes-auditors-report.html
Messier, W. F., M., G. S., & Prawitt, D. F. (2012). Auditing & assurance services / a systematic
approach. New York, NY: McGraw-Hill/Irwin.
ESSAYS (Use as many pages as you find necessary).
1. AUDITS :
a. What is an audit? Why is it important?
b. What role does auditing play in society?
c. What is an audit committee and why is it important?
d. What are Working Papers and why are they important?
2. GAAS :
Generally Accepted Auditing Standards (GAAS) are 10 general guidelines to aid auditors in fulfilling their
professional responsibilities. Briefly list and describe the 10 GAAS.
3. DEFINITIONS :
Define the following terms and give an example of each.
a. Fraud.
b. Materiality.
c. Integrity.
4. AUDIT OPINIONS :
a. List and describe 4 similarities and 4 differences between the Standard Unqualified Audit Report
of a Nonpublic Company and a Standard Unqualified Audit Opinion for Public Companies.
b. Special unqualified audit reports may be issued. List and describe 3 circumstances under which a
special report may be issued.
c. Besides an unqualified report, list the 3 other types of reports that may be issued by an auditor.
Describe the circumstances under which each report may be issued.
5. SOX :
The Sarbanes-Oxley Act of 2002 made significant reforms for public companies and their auditors.
a. Describe the events that led up to the passage of the Act.
b. Describe 5 of the major reforms made by the Act.
6. MATERIALITY :
a. Materially is an important concept in auditing. Define the term materiality.
b. Give an example of a situation that can be considered material. Explain why you consider it to
be material.
c. How does materiality affect the audit of financial statements and reporting decisions?
7. ASSERTIONS REGARDING FINANCIAL STATEMENTS:
a. What are assertions?
b. Who makes these assertions?
c. What is the auditor’s responsibility regarding the financial statements?
d. List and describe 7 assertions regarding the financial statements.
8. ETHICS & PROFESSIONAL RESPONSIBILITIES :
a. What is Ethics? List and describe 3 Theories of Ethical Behavior.
b. Why is it important for an Auditor to behave ethically?
c. Summarize the auditor’s professional responsibilities.
d. What is independence? An auditor may be independent of mind but not of appearance. Explain
the difference between the two. Why are both important?
e. The auditor’s independence rules also apply to covered members. Who are covered members?
List and describe 4 covered members.
9. AUDITORS LIABILITY :
a. Explain the difference between common law and statutory law.
b. Under common law, describe the auditor’s liability;
c. List and describe the categories of parties that may be involved? What must be proven by the
parties; what are the auditor’s possible defenses?
d. List and describe the SEC Act of 1933 and 1934. Who are the parties that the auditor may be
liable to under these Acts? What must be proven by them against auditors? What are the auditor’s
possible defenses?
e. List and describe 5 steps that an auditor should take in order to prevent litigation.
10. AUDIT ACCEPTANCE & PLANNING :
You are an experienced CPA and have been assigned to be the in-charge auditor to audit the financial
statements of Montclair Company, a publicly held company for the first time. If you accept the engagement,
you will supervise 3 assistants on the engagement and will be required to communicate with the
predecessor auditor.
a. List the steps that you would take before accepting a new client.
b. List and describe the steps that you should take immediately after accepting a new audit client.
c. List and describe the items that should be included in the engagement letter. Describe the benefits
derived from the engagement letter.
d. List and describe the steps involved in a financial statement audit.
11. NEW U.S. AUDITING REPORTING STANDARD :
In response from the outcry from the public, several countries have enacted a new Auditing Standard. The
U.S. has also enacted a new audit reporting standard.
a. What type of companies does the new U.S. Audit Reporting Standard apply to?
b. When does the Standard become effective?
c. What are the major components of the new U.S. Standard?
d. What impact will the new Standard have on the following parties:
i. The Financial Statement Users.
ii. The Auditors.
iii. The Companies’ Management.
iv. The Standard setters and regulators.

Purchase answer to see full
attachment

We offer the bestcustom writing paper services. We have done this question before, we can also do it for you.

Why Choose Us

  • 100% non-plagiarized Papers
  • 24/7 /365 Service Available
  • Affordable Prices
  • Any Paper, Urgency, and Subject
  • Will complete your papers in 6 hours
  • On-time Delivery
  • Money-back and Privacy guarantees
  • Unlimited Amendments upon request
  • Satisfaction guarantee

How it Works

  • Click on the “Place Order” tab at the top menu or “Order Now” icon at the bottom and a new page will appear with an order form to be filled.
  • Fill in your paper’s requirements in the "PAPER DETAILS" section.
  • Fill in your paper’s academic level, deadline, and the required number of pages from the drop-down menus.
  • Click “CREATE ACCOUNT & SIGN IN” to enter your registration details and get an account with us for record-keeping and then, click on “PROCEED TO CHECKOUT” at the bottom of the page.
  • From there, the payment sections will show, follow the guided payment process and your order will be available for our writing team to work on it.