ACC 330 Study Guide - Fall 2019, Comprehensive Final Exam Notes - Accounting, Final Fantasy Xiii, U.S. Securities And Exchange Commission

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ACC 330
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Chapter 1: Auditing and Assurance Services
I. User Demand for Reliable Information
a. Information risk
i. The risk that the information disseminated by a
company will be materially false or misleading.
ii. Users demand an independent third-party assessment
of the information.
b. World of big data- four
environmental conditions that
increase the need for reliable
and relevant information
i. Complexity
ii. Remoteness
iii. Time Sensitivity
iv. Consequences
c. Business risk
i. The risk that an entity will fail to meet its stated
business objectives
II. Definition of Financial Statement Auditing
a. Auditing is a systematic process of objectively obtaining and
evaluating evidence regarding assertions (F/S) about
economic actions and events to ascertain the degree of
correspondence between the assertions and established
criteria (GAAP) and communicating the results (auditors
reports) to interested users (person who rely on financial
reports: creditors and investors)
III. Management’s F/S Assertions (PCAOB)
i. PCAOB sets all audit standards to be followed on
audits of public companies
Complexity Remoteness
Time
Sensitivity Consequences
Big Data
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1. Required to perform inspections of audit work
completed and quality control processes
employed by audit firms
b. Existence or occurrence- assets and liabilities included in the
accounts exist and recorded transactions are valid and have
actually occurred.
c. Rights and obligations- entity has a legal claim on all assets
and revenues reported and has a legal responsibility for all
liabilities and expenses.
d. Completeness- all balances and transactions have been
recorded in the F/S
e. Valuation or allocation- assets, liabilities and recorded
transactions have been valued in accordance with GAAP
f. Presentation and disclosure- all accounts are presented in
the appropriate place and all information required has been
disclosed in the statements and footnotes.
IV. Management’s F/S Assertions (ASB)
a. Assertions about Events and Transactions
i. Occurrence- Events giving rise to transactions are valid
and have taken place
ii. Completeness and cutoff- all transactions have been
recorded and are recorded in the appropriate period.
iii. Accuracy- transactions are recorded at the correct
amount.
iv. Classification- transactions have been posted to the
proper amount.
b. Assertions about Account Balances
i. Existence- Balances include only assets and liabilities
that exist.
ii. Rights and obligations- entity has legal claim on all
assets and revenues reported and has legal
responsibility for all liabilities and expenses.
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