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ADMS 4551 (3)

ADMS 4551-2.docx

4 Pages

Administrative Studies
Course Code
ADMS 4551
Larry Yarmolinsky

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ADMS 4551: CHAPTER 2 (WEEK 1) Structure of public accounting firms  Three main factors influence the organizations structure of all firms: o The need for independence from clients: Independence allows auditors to remain unbiased in drawing conclusions about their clients' financial statements o The importance of a structure to encourage competence: The ability of the structure to encourage competence permits auditors to conduct audits and perform services efficiently and effectively o The increased litigation risk faced by auditors: Firms continue to experience increases in litigation related costs. Some organizational structure allows for protection from lawsuits to individual firm members  Canadian Auditing Standards require that the audit be conducted using a risk assessment approach  First, the auditor must identify and assess the potential risks of material misstatement in the financial statements  Based upon these risks, the auditor will provide a risk response, which includes the design and execution of the evidence gathering process to assess the likelihood of these material misstatements actually occurring  The auditor continually evaluates the evidence to enable preparation of the audit report.  The audit report is an opinion, not a guarantee, that provides reasonable assurance that the financial statements are free of material misstatement Assurance Standards are issued by the Auditing and Assurance Standards Board, and are the  requirements underlying the audits, assurance engagements, and related services activities carried out by public accountants, and are considered to be authoritative requirements Generally Accepted Auditing Principles  Are general requirements designed to aid auditors in fulfilling their professional responsibilities in the audit of historical financial statements  Include quality control standards, c
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