Auditing Theory

Compare the primary auditor objectives in auditing historical financial statements to auditing internal controls over financial reporting. Identify at least two (2) objectives that are the most significant in reducing the risk of reporting errors or misstatements in financial statements. Provide a rationale for your response.

The auditor must review disclosures for adequacy, and if the auditor concludes that information disclosures are not reasonably adequate, the auditor must state so in the auditor’s

3. (TCO 3) The Sarbanes-Oxley Act requires the _____ to vouch for the truthfulness and fairness of the firm’s financial disclosures

AS 3 goes on to state in paragraph A9 that “the documentation requirements in this standard should result in more effective and efficient oversight of registered public accounting firms and associated persons, thereby improving audit quality and enhancing investor confidence”.

It is common industry knowledge that an audit plan provides the specific guidelines auditors must follow when conducting an external audit. External public accounting firms conduct external audits to ensure outside stakeholders that the company’s financial statements are prepared in accordance with generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS) standards.

Margin borrowing by investors allowed huge amounts of debt to be taken on without proper risk mitigation. Investors, knowing no better, had dumped small fortunes into the market. The fragile infrastructure of the system couldn’t handle the load and eventually caved in. Those companies that would survive the crash needed standardization and change in order for the investors’ faith to be restored. The Federal Trade Commission stepped in to fill this need. The first official document: “Verification of Financial Statements,” which was solely dedicated to provide guidance for audit, was released the same year as the crash. This document dove further than the previous decades’ pamphlets did, focusing in on small and medium sized companies, as well as the general need for the customized auditing tailored to each different companies, based on need.

This was designed to show accuracy of financial data and confidence because of adequate controls that safeguarded the financial data. End of year financial reports were also required to contain an assessment of the effectiveness of the internal controls. The issuer's auditing firm is required to attest to that assessment, after reviewing controls, policies, and procedures during a Section 404 audit, conducted along with a traditional financial audit (Thomas & Klutz, n.d.).

The second type of engagement that provides no assurance is a compilation. According to AR-C 80, the objective of a compilation engagement is for the accountant “to apply accounting and financial expertise to assist management in the

e. “The auditor considers the level of assurance, if any, he wants from substantive testing for a particular audit objective and decides, among other things, which procedure, or combination of procedures, can provide that level of assurance. For some assertions, analytical

Considering the Federal Government is one of the most important clients of PwC PSP, they must comply with accounting and Federal Government regulations (PwC PSP MBNQA Application, 2014). Also, they must adhere to additional regulations required by state or local governments they serve. Internally, PwC PSP workforce is aligned to both vertical Sectors and their horizontal Competency Structure. Also, their core competencies include attributes expected to be demonstrated by staff and partners, to be recognized as trusted advisors to their clients.

This report analyses Virgin Australia (ASX code VAH) and identifies its potential business and audit risks that will need to be addressed in the 2014 audit. It is presented to the Virgin Australia Audit Committee as part of the 2014 Audit planning process.

Auditors should plan the audit so that the engagement is conducted in an effective manner.

3. What potential implications arise for the accounting firm if they issue an unqualified report without the going-concern explanatory paragraph?

Auditors having the appropriate competence and capabilities to perform the audit, and follow ethical requirements, and maintain professional skepticism throughout the audit.

Assurance- deals wth objective examination of independent assessment on governance risk management and so forth. Checking to see if everything is going well within the company.