Term
| What are the engagement-type services provided by CPAs? |
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Definition
| compilations, reviews, examinations/audits, agreed-upon procedures |
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Term
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Definition
| disclaimer of any assurance |
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Term
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Definition
| accountant makes inquiries, applies analytical procedures, and obtains management representations. Limited assurance can be expressed. Independence is a must. |
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Term
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Definition
| positive assurance (usu. reasonable) or opinion expressed |
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Term
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Definition
| attest engagements include results of agreed-upon procedures performed on subject matter but no assurance. Independence required. |
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Term
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Definition
| Statement on Auditing Standards issued by the ASB; are standards codified within the framework of the 10 standards and are deemed to have the status of GAAS. |
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Term
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Definition
Auditing Standards Board; issues SAS, SSAE, and SQCS
The AICPA’s senior committee for auditing, attestation, and quality control applicable to the performance and issuance of audit and attestation reports for non issuers. |
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Term
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Definition
| Statement on Standards for Accounting and Review Services |
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Term
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Definition
| Statement on Standards for Consulting Services |
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Term
| SOX (in relation to auditing standards) |
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Definition
| created PCAOB that has issued 14+ currently effective auditing standards applicable to audits of issuers by public accounting firms |
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Term
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Definition
| practitioner is engaged to issue or does issue an examination, review, or agreed-upon procedures report on subject matter, or an assertion about the subject matter, that is the responsibility of another party |
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Term
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Definition
| CPA in practice of public accounting |
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Term
| When do attest standards apply? |
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Definition
| Only to attest engagements involving a practitioner. |
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Term
| What can attest services do? |
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Definition
| limited to expressing an opinion on historical F/S on the basis of an audit in accordance w/GAAS. |
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Term
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Definition
| Statements on Standards for Attestation Engagements; cover only attest engagements, not services to which specific standards apply. |
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Term
| attestation standards (3 types) |
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Definition
| general standards, standards of field work, standards of reporting |
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Term
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Definition
Training and proficiency
Subject matter knowledge
Suitable and available criteria
Independence in mental attitude
Due professional care |
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Term
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Definition
Planning and supervision
Sufficient evidence |
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Term
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Definition
Character
Conclusion
Reservations |
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Term
| suitable and available criteria |
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Definition
Criteria must be objective, measurable, complete, and relevant.
It should be publicly available, clearly included in assertion and in practitioner's report, well understood by most users, and available only to specified parties. |
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Term
| restrictions on standards on reporting occur when... |
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Definition
Only certain parties can understand the suitable criteria.
When criteria is only available to certain parties.
When reporting on subject matter and a written assertion has not been provided by the responsible party.
When report is on attest engagement to apply agreed-upon procedures to the subject matter. |
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Term
| positive (high-level) assurance |
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Definition
| given in reports that express conclusions on the basis of an examination. |
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Term
| limited (moderate level/negative) assurance |
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Definition
| given in reports that express conclusions on the basis of a review. |
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Term
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Definition
Practitioner should obtain a written assertion provided by the responsible party; failure to obtain this is a limitation when the client is responsible.
Failure to obtain representation letter is also a limitation.
Attest documentation (working papers) should be prepared and maintained. |
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Term
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Definition
Training and proficiency
Independence
Due professional care
Planning
Internal control
Sufficient appropriate audit evidence
Conformity w/GAAP
Consistency
Disclosure
Expression of an opinion |
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Term
| objective of independent, external audit |
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Definition
| The objective of an independent, external audit in accordance w/GAAS is to attest to whether an entity's F/S present fairly, in all material respects, its financial position, results of operations, and cash flows in conformity w/GAAP. |
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Term
management's assertions are given in terms of...
(not asking for what the assertions are) |
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Definition
| recognition, measurement, presentation, and disclosure. |
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Term
| management assertions (CAVE CROC) |
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Definition
| completeness, accuracy, valuation/allocation, existence, cutoff, rights and obligations, occurrence, and classification and understandability. |
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Term
| assertions related to transactions and events |
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Definition
(IS/SCF)
Occurrence- recorded transactions/events actually occurred
Completeness
Accuracy
Cutoff (proper period)
Classification (proper accounts) |
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Term
| account balances at period-end |
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Definition
(B/S)
Existence- assets, liabilities, and equity positions actually exist.
Rights and Obligations- entity controls the assets in question and has the liabilities as obligations
Completeness
Valuation and Allocation |
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Term
| presentation and disclosure |
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Definition
(notes to F/S)
Occurrence
Rights and Obligations
Completeness
Classification and Understandability- clearly expressed
Accuracy and Valuation |
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Term
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Definition
Existence/Occurrence
Completeness
Valuation/Allocation
Rights and obligations
Presentation and disclosure |
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Term
| Who is responsible for F/S? What is the auditor's responsibility? |
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Definition
| Management. Auditor's responsibility is confined to the expression of an opinion. |
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Term
| purpose of auditing standards |
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Definition
| address the quality of audit performance and the objectives to be attained; professional judgment is needed. |
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Term
| Who is bound to auditing standards? |
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Definition
| Both AICPA and non-AICPA practitioners. |
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Term
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Definition
| provide recommendations on the application of the SASs but do not have the status of auditing standards. |
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Term
| Accounting and Review Services Committee |
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Definition
| Designated by AICPA bylaws as the senior technical committee authorized to issue pronouncements in connection with the unaudited financial statements or other unaudited financial information of a nonissuer. |
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Term
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Definition
| presentation in statement form of information that is the representation of management. The accountant expresses no assurance but a disclaimer. Independence not needed to compile F/S. |
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Term
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Definition
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Term
| prospective financial statements (PFS) |
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Definition
Includes summaries of significant assumptions and accounting policies.
Examine, compile, or apply agreed-upon procedures to PFSs if they are expected to be used by a third party. Independence required. |
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Term
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Definition
| prospective F/Ss (PFSs) that present to the best of the responsible party's knowledge and belief, an entity's expected financial position, results of operations, and cash flows. |
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Term
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Definition
| based on responsible party's assumptions reflecting conditions it expects would exist, or premises, and the course of action it expects would be taken, given one or more hypothetical assumptions. |
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Term
| pro forma financial information (PFFI) |
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Definition
what the significant effects on historical financial information would have been had a consummated or proposed transaction/
event occurred at an earlier date. |
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Term
| examination of internal control over financial reporting (ICFR) |
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Definition
Practitioners may perform an examination on a nonissuer's ICFR and express an opinion in coordination w/ the F/S audit.
Independence required. |
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Term
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Definition
| Independent practitioners can perform examinations leading to an opinion on company compliance or the effectiveness of IC over compliance. |
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Term
| management's discussion and analysis (MD&A) |
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Definition
| written assertion that may be examined by an independent practitioner, but the report cannot be filed w/the SEC. |
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Term
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Definition
independent professional services that improved the quality of information- or its context- for decision makers.
Encompass audit, attestation, and non-standard services. |
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Term
| traditional vs. new audit/attestation/assurance services |
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Definition
| Traditional audit-related services are highly structured and considered to be relevant to a large number of users, while newer assurance services are more customized and are intended to be highly useful in limited circumstances. |
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Term
| focus of assurance services |
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Definition
focus on improving information, not providing
Capture information, improve information reliability, and improve decision making. |
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Term
| three types of assurance services |
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Definition
| assurances about risks, performance, systems, |
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Term
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Definition
CPA risk advisory
ElderCare Services (PrimePlus) |
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Term
| assurances about performance |
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Definition
CPA performance review
Healthcare effectiveness |
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Term
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Definition
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Term
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Definition
| assesses the degree to which the entity's objectives are achieved or how its performance compares with that of its competitors |
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Term
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Definition
assesses whether an entity's internal IS provide reliable info for operating and financial decisions.
Tests for fair statement of online privacy, security, processing integrity, availability, and confidentiality.
Practitioners test the policies, communications, procedures, and monitoring systems using suitable criteria to assess the fairness of management's assertions about a particular principle. |
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Term
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Definition
| uses the same criteria as SysTrust |
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Term
| information security (IS) |
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Definition
| address reporting concepts and systems, transaction processing systems, management reporting systems, and risks within a business. |
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Term
| practice-monitoring program requirement |
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Definition
| You must be in an AICPA-approved practice-monitoring program to be in the AICPA. |
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Term
| quality control evaluation |
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Definition
| Quality control over audits of issuers will be evaluated during periodic PCAOB inspections. If a nonissuer, follow AICPA standards. |
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Term
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Definition
| GAAS apply to individual engagements, and quality control standards apply to the conduct of a firm's practice as a whole. Thus, quality control may affect audits, yet deficiencies in quality control do not in themselves signify a departure from GAAS. |
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Term
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Definition
| Statements on Quality Control Standards; require that a CPA firm have a system of quality control. |
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Term
| six elements of a quality control system (LECHEM) |
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Definition
Leadership responsibilities for quality within the firm (tone at the top).
Relevant ethical requirements.
Acceptance and continuance of client relationships and specific engagements.
Human resources
Engagement performance (responsibilities for performance, supervision, and review).
Monitoring |
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Term
| administration of quality control system |
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Definition
Responsibility for designing and maintaining policies and procedures be assigned to appropriate individuals.
Those policies and procedures be communicated so as to provide reasonable assurance that they are understood and complied with.
Consideration be given to whether and to what extent policies and procedures must be documented for effective communication, and
The firm appropriately documents the control policies and procedures as well as compliance with them. |
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Term
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Definition
part of AICPA practice-monitoring.
Includes engagements under SAS, SSARs, SSAEs, and GAS. |
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Term
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Definition
| on-site review required for a firm that performs the highest level of services; provides the reviewer with a reasonable basis for expressing an opinion on the firm's system of quality control |
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Term
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Definition
| for a firm not required to have a system review but not qualifiying for a report review. Provides a reasonable basis for expressing limited assurance on whether the F/S or reported information submitted materially conform with professional standards. |
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Term
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Definition
| for a firm that provides only compilations omitting substantially all disclosures. Report consists of comments and recommendations after review of sample of engagements. Comments based on professional standards. |
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Term
| SOX requirements for auditors |
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Definition
| a registered (public) accounting firm must adopt quality control standards. |
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Term
| required of all audit reports under SOX is... |
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Definition
| second partner review and approval |
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Term
| How often must the lead auditor and reviewing partner be rotated off the audit? |
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Definition
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Term
| Which rules have been expanded under SOX? |
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Definition
Independence rules- restricting non-audit services to clients.
Penalties for destroying documents have been expanded. |
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Term
| Management's responsibilities under SOX |
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Definition
| Management must assess the effectiveness of internal control and issue a report on its effectiveness. |
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Term
| Auditors' responsibilities under SOX |
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Definition
| The auditor must audit internal control and opine on its effectiveness. |
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Term
| engagement quality review (EQR) |
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Definition
An engagement quality review (EQR) and concurring approval of issuance are required for each audit of an issuer.
Reviewer's objective is to evaluate the significant judgments made and the related conclusions reached. |
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Term
| criteria for review in EQR |
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Definition
The reviewer must be an associated person of a registered public accounting firm; may be outside the firm.
The reviewer must have the competence to serve as a partner on the engagement.
The reviewer must have independence, integrity, and objectivity.
But an engagement partner on either of the two preceding audits ordinarily may not be the reviewer. |
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Term
| EQR reviewer should evaluate |
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Definition
Significant judgments
Risk assessment
Identified misstatements and control deficiencies
Audit firm independence
Engagement completion document
Statements, IC report, and audit report
Other information filed w/SEC
Consultations and communications regarding issues |
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Term
| concurring approval of issuance |
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Definition
| no significant engagement deficiencies are spotted. |
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