Assignment Description: Please Read The Scenario Below And T

Assignment Descriptionplease Read The Scenario Below And Then Answer

Please read the scenario below, and then answer the questions that follow in a 3 page analysis. The questions will guide your analysis of the situation, but need to be presented as part of a complete analysis of the audit process. Scenario: Please watch the following video and then respond to the associated questions. Go and watch video @ youtube.com and search for Audit and Assurance Services Chapter 1 What type of audit objectively obtains and evaluates evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicates the results to interested users? What type of company sells its stocks or bonds to the public, giving the public a valid interest in the proper use of the company’s resources? Who represents independent professional services that improve the quality of information, or its context, for decision makers? What type of audit is related to the financial accounting information of a company? What are the three major categories of audits? What type of audit does the Sarbanes–Oxley Act requires auditors of publicly traded companies in the United Sates perform to provide assurance on both the financial statements and the effectiveness of internal control over financial reporting? What is a major subset of assurance services called? What does the definition of attest engagements refer to? What type of attestation refers to an audit that involves historical financial statements and provides the highest form of assurance that CPAs can offer. What type of audit is dependent upon the existence of verifiable data and of recognized criteria of standards, such as established laws and regulations or an organization’s policies and procedures? What is an attest engagement that is substantially lesser in scope than an examination and is designed to lend only a moderate degree of assurance? What type of risk includes the possibility that the financial statements might contain material that depart from generally accepted accounting principles? What is the principal goal auditors when investigating and appraising the effectiveness with which the various organizational units of the company are carrying out their assigned functions? What examination is a uniform national examination prepared and graded by the American Institute of Certified Public Accountants? What type of risk is related to information used to assess business risk that is not accurate? Submitting your assignment in APA format means, at a minimum, you will need the following: Title page : Remember the running head. The title should be in all capitals. Length : 3 pages minimum Abstract : This is a summary of your paper, not an introduction. Begin writing in third person. Body : This begins on the page following the title page and abstract page and must be double-spaced (be careful not to triple- or quadruple-space between paragraphs). The typeface should be 12-pt. Times Roman or 12-pt. Courier in regular black type. Do not use color, bold type, or italics, except as required for APA-level headings and references. The deliverable length of the body of your paper for this assignment is 5 pages. In-body academic citations to support your decisions and analysis are required. A variety of academic sources is encouraged. Reference page : References that align with your in-body academic sources are listed on the final page of your paper. The references must be in APA format using appropriate spacing, hanging indent, italics, and uppercase and lowercase usage as appropriate for the type of resource used. Remember, the Reference page is not a bibliography but a further listing of the abbreviated in-body citations used in the paper. Every referenced item must have a corresponding in-body citation.

Paper For Above instruction

The discipline of auditing plays a crucial role in maintaining transparency and integrity in financial reporting, especially within publicly traded companies. This paper aims to analyze various aspects of the audit process, including its types, scope, significance under legislative frameworks like the Sarbanes–Oxley Act, and associated risks, supported by scholarly academic sources. The following discussion responds to the core questions derived from the scenario and provides a comprehensive understanding of the audit profession.

Understanding the Nature and Objectives of Audits

An audit, as defined within the accounting profession, is an objective process that involves obtaining and evaluating evidence regarding assertions about economic actions and events to determine their correspondence with established criteria (Arens et al., 2017). The primary purpose of an audit is to provide credible assurance to interested parties, such as investors, regulators, and stakeholders, about the fairness and reliability of financial statements prepared by management (Knechel, 2018). The objective evaluation ensures that users can make informed decisions based on verified financial information.

Types of Companies and the Role of Auditing

Companies that sell stocks or bonds to the public are classified as publicly traded or publicly held companies. These entities are subject to rigorous audit requirements due to their obligation to provide accurate financial disclosures to the investing public, which enhances market transparency (PCAOB, 2020). Consequently, the public's interest in the proper use of corporate resources necessitates high Standards of external audit assurance, ensuring investor confidence and protecting market integrity.

The Role of Auditors and Assurance Services

Independent professional services that aim to improve the quality of information for decision makers are called assurance services. These services encompass a broad range of evaluations and attestations that enhance the reliability of information (IFAC, 2017). Certified Public Accountants (CPAs) often provide these assurance services, which support stakeholders in assessing the credibility of financial data and other non-financial information.

Major Categories of Audits

Audits are generally classified into three major categories: financial audits, compliance audits, and operational audits (Arens et al., 2017). Financial audits focus on verifying the fairness of financial statements, compliance audits assess adherence to laws and regulations, and operational audits examine the efficiency and effectiveness of organizational processes.

Audits Under the Sarbanes–Oxley Act

The Sarbanes–Oxley Act of 2002 mandates certain audit procedures for publicly traded companies in the United States. Specifically, it requires auditors to perform integrated audits that provide assurance on both the financial statements and the effectiveness of internal controls over financial reporting (SEC, 2021). This comprehensive approach aims to reduce financial misstatements and improve corporate governance practices.

The Subset of Assurance Services: Attest Engagements

A major subset of assurance services is called attest engagements. These engagements involve issuing a report that expresses a conclusion about a subject matter or assertion, providing a level of assurance to the intended users (AICPA, 2019). The most prominent form of attest engagement is the audit of historical financial statements, which offers the highest level of assurance that CPAs can provide (AICPA, 2019).

Attestation and Audit Definitions

Attestation engagements are defined as professional services where auditors issue a report that expresses a conclusion on a written assertion that is the responsibility of another party (AICPA, 2019). An audit involving historical financial statements, therefore, constitutes an attestation engagement that provides high assurance due to its scope and depth.

Standards and Verification in Audits

Effective audits depend upon verifiable data and established recognition criteria such as laws, regulations, and organizational policies (Knechel, 2018). Verifiability ensures the integrity of audit conclusions and compliance with applicable standards, reducing the risk of errors or misrepresentations.

Limited Scope Attest Engagements

Less comprehensive attest engagements, such as reviews, are designed to lend only a moderate degree of assurance. These engagements involve limited procedures relative to audits and do not furnish the same level of certainty, serving primarily as a means to provide preliminary insights (AICPA, 2019).

Audit Risks

Material misstatement risk refers to the possibility that financial statements may contain errors or omissions that depart materially from generally accepted accounting principles (GAAP). This risk necessitates rigorous audit procedures aimed at reducing the likelihood of undetected material misstatements (Arens et al., 2017).

Primary Goals of Auditing

The principal goal of an audit is to provide independent assurance that organizational units are effectively carrying out their functions in accordance with policies, laws, and regulations. It involves examining internal control systems, evaluating accuracy, and promoting accountability within the organization (Knechel, 2018).

National Examinations and Business Risks

The American Institute of Certified Public Accountants (AICPA) develops and administers the Uniform CPA Examination, a standardized assessment for licensing CPAs across the United States. An essential aspect of audit risk management involves identifying and understanding business risks, including inaccuracies in information used to assess these risks, which can lead to flawed decision-making (PCAOB, 2020).

Conclusion

In conclusion, auditing is a vital component of financial oversight, with various types and scopes tailored to organizational needs and regulatory requirements. Understanding the different audit categories, legislative influences like the Sarbanes–Oxley Act, and the inherent risks involved enhances the comprehension of the audit process. As financial landscapes evolve, the role of audits remains central to ensuring transparency, accountability, and stakeholder confidence in financial reporting.

References

• Arens, A. A., Elder, R. J., & Beasley, M. S. (2017). Auditing and Assurance Services: An Integrated Approach (16th ed.). Pearson.
• American Institute of Certified Public Accountants (AICPA). (2019). Attestation Standards Section 105 — Concepts Common to All Attestation Engagements. Journal of Accountancy.
• International Federation of Accountants (IFAC). (2017). International Framework for Assurance Engagements. IFAC.
• Knechel, W. R. (2018). Auditing: The Role of Risk and Evidence. Auditing: A Journal of Practice & Theory.
• Public Company Accounting Oversight Board (PCAOB). (2020). Standards for Audits of Public Companies. PCAOB.
• SEC. (2021). Implementation of the Sarbanes–Oxley Act of 2002. U.S. Securities and Exchange Commission.