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    The auditor expresses an opinion on a company's financial statements. An audit adds credibility to financial reports by providing an unbiased examination. Without independent audits, company financial reports would lack meaning. Auditing standards include GAAS (Generally Accepted Auditing Standards), GAGAS (Generally Accepted Government Auditing Standards), and oversight of public company audits by the PCAOB (Public Company Accounting Oversight Board). The standard auditor's report includes an introduction stating the financial statements were audited according to GAAS. It provides an opinion that the statements fairly represent the company's financial position in accordance with GAAP (Generally Accepted Accounting Principles).

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    The auditor expresses an opinion on a company's financial statements. An audit adds credibility to financial reports by providing an unbiased examination. Without independent audits, company financial reports would lack meaning. Auditing standards include GAAS (Generally Accepted Auditing Standards), GAGAS (Generally Accepted Government Auditing Standards), and oversight of public company audits by the PCAOB (Public Company Accounting Oversight Board). The standard auditor's report includes an introduction stating the financial statements were audited according to GAAS. It provides an opinion that the statements fairly represent the company's financial position in accordance with GAAP (Generally Accepted Accounting Principles).

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    18 views2 pages

    Audit 1 Notes

    Uploaded by

    mohsind182
    The auditor expresses an opinion on a company's financial statements. An audit adds credibility to financial reports by providing an unbiased examination. Without independent audits, company financial reports would lack meaning. Auditing standards include GAAS (Generally Accepted Auditing Standards), GAGAS (Generally Accepted Government Auditing Standards), and oversight of public company audits by the PCAOB (Public Company Accounting Oversight Board). The standard auditor's report includes an introduction stating the financial statements were audited according to GAAS. It provides an opinion that the statements fairly represent the company's financial position in accordance with GAAP (Generally Accepted Accounting Principles).

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    of 2

    The auditor expresses opinion on the financial statements produced by said company.

    The Audit adds credibility without bias or conflict of interest. Without an audit a company’s reports
    would be meaningless.

    GAAS – Generally Accepted Auditing Standards – The big one


    GAGAS – Generally Accepted Government Auditing Standards
    PCAOB – Any CPA firm that audits any public company is oversight by this board.

    Sarbanes Oxley Act – SOX

    GAAS –
    A. General Standards - TIP
    a. Training – properly trained
    b. Independence – in-fact and in appearance
    c. Professional Care
    B. Standards of Fieldwork - PIE
    a. Planning and Supervision –
    b. Internal Control, Entity, and Environment – Get an understanding of the environment
    and entity and controls.
    i. Weak internal controls means more evidence is needed. You don’t have to give
    an adverse opinion just need more evidence
    c. Evidence
    C. Standards of Reporting - ACDO
    a. Accounting - Must state if the financial statements are in accordance withGAAP – Must
    state (EXPLICIT)
    b. Consistency – Identify in the auditor’s report – Silence is OK (Implicit)
    c. Disclosure- Can state in the auditor’s report if disclosure is not adequate – Silence is OK
    (Implicit)
    d. Express opinion – Must state (Explicit)
    i. We want to let the reader know what we are assuming responsibility for and
    what we are not assuming responsibility for.
    ii. Different in opinions are okay
    iii. One statement opinions okay

    Auditor’s Standard Report (Unqualified Opinion)


    A. Title – ‘Independent’ must be included in the title
    B. Addressee – Shareholders or the board of the company
    C. Intro Paragraph
    a. Statement that the financial statements were audited
    b. RR – Responsibility of management is financial statements; Responsibility of auditor is
    the Opinion
    D. Scope Paragraph (2nd Paragraph of 3) – Accordance to GAAS
    a. AA - Statement the audit was in accordance with U.S. GAAS
    i. For Audits of publicly traded companies a reference is made to PCAOB
    standards instead of GAAS
    b. PP - audit was Planned and Performed to obtain reasonable assurance
    c. MM - that the financial statements are free from Material Misstatement
    d. EE - audit included Examining Evidence on test basis
    AA - Assessing the Accounting Principles used
    MM - significant estimates Made by Management
    E. Opinion Paragraph – Accordance to GAAP
    a. Opinion to the fair representation of the financial statements.
    b. Statement to the conformity of GAAP.
    F. Firm Name – Signed or printed on the report
    G. Report Date – on or after the last date the evidence was received to support the opinion.

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