Chapter 1 Auditing Essay

Submitted By Dan-Wu
Words: 604
Pages: 3

Modern
Modern Auditing:
Auditing:

Assurance
Assurance Services
Services and and the the th
Integrity
of
Financial
Reporting,
8
Integrity of Financial Reporting, 8th
Edition
Edition
William C. Boynton

California Polytechnic State
University at San Luis Obispo

Raymond N.
Johnson

Portland State University
Chapter 1 – Auditing and the Public Accounting
Profession – Integrity of Financial Reporting

Chapter
Chapter 1
1 Overview
Overview

Auditing
Auditing Defined
Defined
• Systematic process
• Objectively obtaining and evaluating evidence • Assertions about economic actions and events • Degree of correspondence

Auditing
Auditing Defined
Defined (cont.)
(cont.)
• Established criteria

• Communicating the results

• Interested users

Comparative
Comparative Summary
Summary of of Types
Types of of Audits
Audits

Types
Types of of Auditors
Auditors
• Independent Auditors

• Internal Auditors

• Government Auditors

Assurance
Assurance Services
Services Defined
Defined
• Independence
• Professional services
• Quality of information
• Decision maker

Example
Example Assurance
Assurance
Services
Services
• Audit Engagements
• Attest Services
– Examination
– Review Engagement
– Agreed-upon Procedures Engagement

• Accounting Services
• Compilation Services

Levels
Levels of of Assurance
Assurance
• Reasonable Assurance
• Negative Assurance
• Agreed-upon Procedures
• Compilation Without Assurance

Universe
Universe of of Assurance
Assurance
Services
Services

The
The Accountant’s
Accountant’s Value
Value
Chain
Chain

Study
Study Break
Break
1. This type of audit involves obtaining and evaluating evidence about the efficiency and effectiveness of an entity’s operating activities.
A. Financial Statement Audit
B. Compliance Audit
C. Operational Audit
D. Internal Control Audit
C. Operational Audit

Study
Study Break
Break
2. These auditors are typically
CPA’s who render professional auditing services to clients.
A. Independent Auditors
B. Internal Auditors
C. Government Auditors
D. IRS Auditors
A. Independent Auditors

The
The Roots
Roots of of Auditing
Auditing
• British influence and migration
• Stock market crash
• Legislation of the 1930’s
• Important changes in the 1940’s

The
The Roots
Roots of of Auditing
Auditing
• Scrutiny of 1980’s lead to changes
• Increasing amount of consulting in
1990’s
• Growing numbers of earnings restatements • Sarbanes-Oxley Act of 2002

Need
Need for for Financial
Financial Statement
Statement
Audits
Audits
• Conflict of Interest
• Consequence
• Complexity
• Remoteness

Economic
Economic Benefits
Benefits of of an an Audit
Audit
• Access to Capital Markets
• Lower Cost of Capital
• Deterrent to Inefficiency and Fraud
• Control and Operational
Improvements

Limitations
Limitations of of a a Financial
Financial
Statement
Statement Audit
Audit
• Economic Limitations
– Reasonable…