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Chapter 17

Chapter 17. Auditing and Evaluating the AIS. Outline. Learning objectives Types of audits Audit Clarity Project Generally accepted auditing standards Financial statement audit steps. Learning objectives. Describe the various kinds of audits you might encounter in your accounting career.

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Chapter 17

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  1. Chapter 17 Auditing and Evaluating the AIS

  2. Outline • Learning objectives • Types of audits • Audit Clarity Project • Generally accepted auditing standards • Financial statement audit steps

  3. Learning objectives • Describe the various kinds of audits you might encounter in your accounting career. • Explain the purpose of the Audit Clarity Project and summarize its essential components. • Explain ten generally accepted auditing standards & their role in a financial statement audit. • Discuss the basic steps associated with a financial statement audit. • Explain the connection between auditing and accounting information systems.

  4. Types of audits • Financial audit Express an opinion on the fairness of a company’s financial statements • Operational audit Determine if a company’s business processes & policies “make sense” • Systems audit Ascertain whether information technology is producing expected results

  5. Types of audits • Compliance audit Examine the AIS and financial statements of GNFP entities • Management audit Determines the way management decisions are supported • Investigative audit Investigates the AIS and related data to determine if fraud has occurred • International audit Applies and combines one or more of the other types in international contexts

  6. Audit Clarity Project Four main change areas to financial statement audit standards • Format • Terminology • Additional requirements • Audit report The ACP’s goals were to make audit standards easier to read and to converge them with international audit standards.

  7. Audit Clarity Project

  8. Audit Clarity Project • Terminology • Applicable financial reporting framework • US GAAP • IFRS • Emphasis of matter paragraph Calls attention to something in the statements and / or the disclosures

  9. Audit Clarity Project • Additional requirements • Ensure appropriateness of applicable financial reporting framework if other than US GAAP • Obtain agreement from management regarding their responsibilities for financial statements & internal control • Adhere to quality control standards throughout the audit

  10. Audit Clarity Project

  11. Generally Accepted Auditing Standards Figure 17.3

  12. Financial statement audit steps Figure 17.4

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