ACC 2101 Study Guide - Midterm Guide: Financial Statement
Document Summary
Seeks to understand the relevant facts and available information concerning the issue. This might include obtaining facts and information about key inputs and assumptions to a transaction, event, or situation through discussions with client personnel who are knowledgeable of the situation. To evaluate the effect of the issue on the audit of the financial statements, Auditor should consider the accounting and auditing standards and rules relevant to the issue. The next element of the professional judgment process involves analyzing the issue based on the facts and information gathered and the relevant authoritative literature identified. For example, the auditor would determine if the facts and information associated with the unusual sales transaction satisfy the accounting criteria for revenue recognition and related financial statement disclosure. Once the analysis of the facts and information has been completed, the auditor applies judgment to make a decision. Review and complete the documentation and rationale for the conclusion.
