A primary purpose of operational auditing standards is to provide
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Independent auditing can be best described as A) a professional activity that measures and communicates financial and business data B) a discipline that attests to the results of accounting and other functional operations and data Which of the following professional services is an attestation engagement? A) An income tax engagement to prepare
federal and state tax returns B) An engagement to report on compliance with statutory requirements Which of the following attributes is likely to be unique to audit work of CPAs as compared to the work performed by practitioners of other professions? A) Independence Operational audits generally have been conducted by internal auditors and governmental audit agencies but may be performed by certified public accountants. A primary purpose of an operational audit is to provide: A) the results of internal examinations of financial and accounting matters to a company's top-level management B) a measure of management performance in meeting organizational goals In comparison to the external auditor, an internal auditor is more likely to be concerned with A) internal control Which of the following best describes the operational audit? A) It concentrates on implementing financial and accounting control in a newly organized company D) It concentrates on seeking aspects of operations in which waste could be reduced by the introduction of controls Compliance auditing extends beyond audits leading to the expression of opinions on the fairness of financial presentation and includes audits of efficiency, economy, effectiveness, as well as A) accuracy B) adherence to specific rules and procedures Auditing is the accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between information and established criteria. Auditing should be done a __________, __________ person. To do an audit, there must be information in a __________ form and some __________ by which the auditor can evaluate information. Verifiable Evidence is any information used by the auditor to determine whether the information being audited is stated in accordance with the established criteria. (I.e. Transaction data, client testimony, written and electronic communications w/ outsiders, and observations) The __________ communicates the auditor's findings to users. Accounting is the recording, classifying, and summarizing of economic events for the purpose of providing financial information used in decision making. Auditing can have a significant effect on __________. __________ reflects the possibility that the information upon which the business risk decision was made was inaccurate. What are the causes of information risk? 1. Remoteness of information How do we reduce information risk? 1. User verifies
information What is the relationship between the client and auditor? Client or audit committee hires auditor What is the relationship between the auditor and the external users? Auditor issues report relied upon by users to reduce information risk What is the relationship between the client and the external users? The client provides financial statements to the external users, while the external users provide the client with capital. An __________ is an independent professional service that improves the quality of information for decision makers. __________ can be performed by CPAs or by a variety of other professionals. (I.e. Consumer Reports & Better Business Bureau) An __________ is a type of assurance service in which the CPA firm issues a report about a subject matter or assertion that is made by another party. What are the other types of attestation services? 1. Audit of Historical Financial Statements What other type assurance services are available? 1.
Controls over and risks related to investments, including policies related to derivatives What are some examples of non-assurance services? 1. Other management consulting An operational audit evaluates the efficiency and effectiveness of any part of an organizations operating procedures and methods. It is (1) a review of an organizations financial records performed to determine whether the organization is following specific procedures, rules, or rules set by some higher authority. (2) An audit performed to determine whether an entity receives financial assistance from the federal government has complied with specific laws and regulations. Define Financial Statement Audit An audit conducted to determine the overall financial statement of an entity are stated in accordance with specified criteria (usually U.S. Or International accounting standards) Auditor must have a thorough understanding of the entity and its environment Extensible Business Reporting Language It enables sorting and comparing of financial data. Public companies required to provide interactive financial statement data. What is a Certified Public Accounting Firm? Responsible for auditing the published historical financial statements of all publicly traded companies, most other reasonably large companies, and many smaller companies and no commercial organizations. (AKA "external auditors" or "independent auditors") What are Government Accountability Office Auditors? An auditor working for the U.S. Government Accountability Office (GAO); The GAO reports to and is responsible solely to Congress. What are Internal Revenue Agents? Auditors who work for the Internal Revenue Service (IRS) and conduct examinations of taxpayers returns. What are Internal Auditors? Auditors employed by a company to audit for the company's board of directors and management. Lack independence compared to CPA firms What is a Certified
Public Accountant (CPA)? A person who has met state regulatory requirements, including passing the uniform CPA examination, and has thus been certified; a CPA may have as his or her primary responsibility the performance of the audit function on published historical financial statements of commercial and non commercial financial entities. What is the educational requirement to become a CPA? Undergraduate/Graduate degree in accounting with 150 semester credit hours (225 quarter credits) What is the Uniform CPA Exam requirement? 1. Auditing and Attestation (AUD) - 4 hours What is the experience requirement to become a CPA? Varies widely from no experience to 2 years, including auditing Which of the following best describes why an independent auditor is asked to express an opinion on the fair presentation of financial statements? A) It is management's responsibility to seek available independent aid in the appraisal of the financial information shown in its
financial statements C) The opinion of an independent auditor is needed because a company may not be objective with respect to its own financial statements What is the purpose of operational auditing?Operational/Controls Audits
Provide an unbiased evaluation of processes, systems and operations and determine whether internal controls are in place and operating effectively to mitigate risks and ensure that organizational goals and objectives are met.
What is the purpose of an operational audit quizlet?Purpose: The purpose of operational auditing of internal control is to evaluate efficiency and effectiveness. Scope: The scope of operational auditing concerns any control affecting efficiency or effectiveness.
What are the main purpose of setting audit standards?1. The purpose of this Statement of Auditing Standards (SAS) is to establish standards and provide guidance on the objective and general principles governing an audit of financial statements.
What is the purpose of auditing standards quizlet?The purpose of generally accepted auditing standards is to meet the following objectives of an audit examination: To obtain reasonable assurance about whether the financial statements as a whole are free of material misstatement, whether due to error or fraud.
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