1. When the auditor has no reservations about management's financial statements or internal controls, the audit opinion is said to be unqualified.
2. Independence is referred to as the cornerstone of the auditing profession.
3. The sole responsibility of management with regard to financial reporting involves preparing and presenting financial statements in accordance with the applicable financial reporting framework.
4. The internal audit function is designed primarily to assist the external auditor in providing assurance to third party users of the financial statements.
5. The Big 4 audit firms are the only types of firms that conduct financial statement audits.
6. With regard to working in a team environment, larger audit firms have teams with more continuity and overlap across engagements, whereas smaller audit firms have multiple teams that typically disband after each engagement.
7. Congress passed the Sarbanes-Oxley Act of 2002 in response to a variety of major economic shocks during the early 2000s.
8. The AICPA sets auditing standards for nonpublic companies in the United States.
9. Audit quality is achieved when the audit is performed in accordance with GAAS and when it provides reasonable assurance that the financial statements have been presented in accordance with GAAP and are not materially misstated due to errors or fraud.
10. One of the key drivers of audit quality is the gross margin achieved by the audit firm and the ability of the engagement partner to maintain those margins over the duration of the audit engagement.
11. There exist three types of review programs: (1) external inspections/peer reviews, (2) engagement quality reviews, and (3) interoffice reviews.
12. The engagement letter states the scope of the work to be done on the audit so that there should be no doubt in the mind of the client, external auditor, or the court system as to the expectations agreed to by the external auditor and the client.

  • CreatedSeptember 22, 2014
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