Standards for Audit

Many practitioners along With critics Of the profession believe the tankards should provide more clearly defined guidelines as an aid in determining the extent of evidence to be accumulated. This would eliminate some of the difficult audit decisions and provide a source of defense if the CPA is charged with conducting an inadequate audit. On the other hand, highly specific requirements could turn auditing into mechanical evidence gathering, void of professional judgment.From the point of view of both the profession and the users of auditing services, there is probably a greater harm from defining authoritative guidelines too specifically than too broadly. -AAA. (1) b. (2) c. (3) d.

(3) 2-20 a. Rossi and Montgomery primary ethical consideration is their professional competence to perform all of the audit work for filing with the SEC. In addition, if Rossi and Montgomery have performed bookkeeping services or certain consulting services for Mobile Home, they will not be independent under APACE and SEC independence requirements.The firm must also be a registered firm vita the PEPCO_ b. The filing With the SEC, in addition to normal audited financial statements, Will require completion and registration with the SEC of Form S-l which includes an edited summary Of operations for the last five fiscal years as well as many additional schedules and descriptions of the business. Each quarter subsequent to the filing, Form 10-Q must be filed; and within go days of the end of each fiscal year Form 10-K must be filed with the SEC.In addition, Form 8.

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K must be filed whenever significant events have occurred which are of interest to public investors. These forms must be filed in conformity with Regulation S-X, which requires considerable disclosures in addition to those normally required in audited financial statements. -23 a, 3-25 a, 3-26 a, “Correctly stated” implies absolute accuracy, whereas the alternative report states that no material misstatements exist.B.The reference to generally accepted accounting principles specifies rules that ever followed in accounting for the transactions to date; whereas “the true economic conditions” does not identify the specific accounting procedures applied.

The opinion paragraph is not intended to be a certification or a guarantee Of the accuracy and correctness of the financial statements, but rather is intended o be an expression Of professional judgment based upon a reasonable audit Of the statements and underlying records.D. The name of the CPA firm rather than that of the individual practitioner should appear on the accountant’s report because it is the entire firm that accepts responsibility for the report issued. E. “Our audit was performed to detect material misstatements in the financial statements” is flawed because the purpose of the audit is to determine whether financial statements are fairly stated, not to specifically search for material errors and fraud.

It also tails to recognize the audit standards followed by the auditor. We conducted our audit in accordance with auditing standards generally accepted in the United States of America” identifies the auditor’s responsibilities for conduct of the audit, accumulation of evidence and reporting requirements, It is a much broader statement than the alternative clause It also implies that if the auditor has conducted the audit in accordance with generally accepted auditing standards but does not uncover certain material errors or fraud, the auditor is unlikely to have responsibility for failing to do so.