Chapter 1

• General Accepted Accounting Standards
• Standards that provide a measure of audit quality and the objectives to be achieved in an audit
• Measures of the quality of the auditors performance
• 10 standards- 3 general, 3 field work and 4 standards of reporting
• Binding on members of the AICPA

• Statements on Auditing Standards
• _{Codified within the framwork of the 10 standards of GAAS}

• AICPA
• _{American Institue of Certified Public Accountants}

• Public Company Accounting Oversight Board
• Created by Sarbanes-Oxley Act of 2002.
• _{The PCAOB is required to cooperate with the AICPA and other groups in setting auditng standards and may adopt other proposals.}

AICPA

Authorized to amend, modify, repeal, or reject any such standards of the AICPA

• American Institute of Certified Public Accountants.
• Establish Standards
• _{SAS-Statements on Auditing Standards}
• SSAE's- Statements on Standards for Attestation Engagements, which are guidance for attesting to information.
• Research and Publication
• Continuing Professional Education
• Self-Regulation
• _{Code of Professional Conduct-ethical rules for CPA's}

• SEC has oversight authority of the 5 member board
• Adopt auditing , attestaion, quality control, ethics and independent standards relating to the preperation of audit reports for the SEC regristrants
• Oversee and discipline CPA's and CPA firsm taht audit public companies

• Tax services
• Management Consulting services
• other

• Attestation Services
• _ex: audit of financial statements, examinations of internal contol

To provide assuance as to its relaiability

A practitioner is engaged to issue or does issue an examination, a review or an agreed upon procedures report on subject matter or assertion about subject matter that is the reponsibiltiy of another party (e.g Management)

• Audits lend credibility to infomation by reducing information risk, the risk that infomation is materially mistated.
• Audits do not directly address business risks

The risk that infomation is materially misstated

the risk that a company will not be able to meet its financial obligations due to economic conditions or poor management decisions.

• Covers the balance sheet and related statements of income, retained earnings and cash flows
• Goal is to determine if prepared in conformity with GAAP

• Assurance on both the financial statements and effectiveness of internal control over financial reporting.
• _{SOX requires integrated audits}

• Standards established or developed by group of experts.
• _Ex: internal control audit- standards established by a committee of experts on internal control
• _Ex: Financial statements Audit- Standards of GAAP

• Auditors gather evidence and provide a high level of assurance that FS follow GAAP
• Audit involves searching and verifying accounting records
• Evidence necessary to issue an audit report that states auditors opinion

Focuses on whether the financial statements are presented in accordance with GAAP

Created as a result of the financial crisis during the great depression

• Objectives
• _{Protect investors and public requiring full disclosure of financial information by companies offering stock to public}
• Prevent fraud or deceit in sales of stocks.

Ex: Government Grants

• Ex: Effectiveness of operations of Receiving Department of a manufacturing Company
• Ex: efficiency of energy consumption or facility storage.

• employed by a company as an employee
• Perform operational and compliacne audits
• address internal controlr

Perform Compliance: operational and financial audits of government agencies

• Attestation and Assurance
• Tax
• Consulting
• Accounting
• Personal Financial Planning
• Litigation Support
• Fraud Investigation