University Of Phoenix Material Week One Self-Guided Quiz

University of Phoenix Materialweek One Self Guided Quizthe Questions

The questions below generally follow the order of the topics as presented in the text in Chapters 1 and 2. However, you will need to read all chapters (1, 2, 25, 26) in order to get the complete picture of most of these topics as Chapters 25 and 26 and additional insight to topics found in Chapters 1 and 2 and contain original material addressed in later questions. Write a brief response, 30-90-words, for each question below.

1. In your own words, define “Auditing.”

2. Discuss the importance of “Evidence” in auditing.

3. Define “Independence” and “Objectivity” as they relate to auditing.

4. Audits typically consist of three phases: Planning; Fieldwork; Reporting. Describe activities that accompany each phase.

5. Distinguish between Assurance and Attestation Services.

6. Describe the following types of Audits : a. Operational Audits b. Compliance Audits c. Financial Statement Audits d. Informational Technology Audits (may need to go outside the text to address this)

7. Discuss the following types of Auditors : a. Auditors Working for CPA Firms b. Governmental Auditors (e.g. GAO, IRS, health inspectors) c. Internal Auditors

8. Identify the roles CPA firms play in society.

9. Briefly explain Sarbanes-Oxley (SOX) and the role the Securities and Exchange Commission (SEC) plays in regulating audits.

10. What is the role of the AICPA? The PCAOB? The Institute of Internal Auditors (IIA)?

11. Summarize the 10 components of Generally Accepted Auditing Standards (GAAS).

12. What are SAS, and for what are they used?

13. True or False – CPA firms are required to engage in quality control efforts of its audits? Why or Why not?

14. What is a Peer Review and how and when are they performed?

15. Why does government often have different auditing and accounting standards?

Paper For Above instruction

Auditing is a systematic process of examining and evaluating an entity's financial statements, records, and operations to ensure accuracy, compliance with applicable standards, and integrity. It involves assessing the validity and reliability of financial data, providing assurance to stakeholders regarding the organization's financial health.

The importance of “Evidence” in auditing cannot be overstated, as it forms the basis for forming audit opinions. Evidence includes documentation, physical assets, and observations, which collectively support the auditor's conclusions. Adequate and appropriate evidence ensures the credibility and reliability of the audit process and results.

“Independence” refers to an auditor's freedom from influence or bias, ensuring impartiality in their evaluations. “Objectivity” emphasizes the auditor’s ability to remain neutral and unbiased, avoiding personal or external pressures that could affect judgment. Both principles are critical for maintaining trustworthiness in auditing.

The three phases of an audit are Planning, Fieldwork, and Reporting. During Planning, auditors understand the client’s environment and identify areas of risk. Fieldwork involves collecting evidence through testing and observation. Reporting consolidates findings into a formal report expressing an opinion on financial statements.

Assurance services provide confidence to users about information's reliability, often through audits, while Attestation services involve issuing a report on a subject matter or an assertion, such as compliance or internal controls, often associated with specific criteria.

Types of audits include Operational Audits, which evaluate efficiency and effectiveness; Compliance Audits, to verify adherence to laws and regulations; Financial Statement Audits, which assess the fairness of financial statements; and Informational Technology Audits, focusing on computer systems and controls (which may require external sources for a detailed understanding).

Different types of auditors include CPA firm auditors who primarily conduct financial audits; Governmental Auditors, such as those from the GAO or IRS, who review government operations; and Internal Auditors, who evaluate internal processes within organizations to improve controls and efficiency.

CPA firms play vital societal roles by providing independent assurance on financial accuracy, promoting transparency, and supporting economic stability. They also serve as trusted advisors for financial and strategic decision-making.

Sarbanes-Oxley (SOX) was enacted to increase corporate accountability and prevent fraud, imposing stricter regulations on financial reporting. The SEC enforces federal securities laws, overseeing public company audits and compliance to protect investors and ensure market integrity.

The AICPA sets ethical standards and provides guidance for CPAs. The PCAOB regulates the audits of public companies to ensure quality and compliance with standards. The IIA focuses on internal audit standards and professional development for internal auditors.

The 10 components of GAAS include purpose of an audit, responsibility, performance standards, reporting standards, and quality control, among others, guiding auditors in conducting high-quality audits that meet professional standards.

SAS (Statements on Auditing Standards) are issued by the AICPA to provide detailed guidance on auditing procedures, ensuring consistency and quality across audits.

True. CPA firms are required to implement quality control measures such as policies and procedures to ensure the quality of their audits, maintaining professional standards and reducing risk.

A Peer Review is an independent evaluation of an accounting firm's compliance with quality standards, performed periodically (usually every three years) to maintain professional integrity and improve audit quality.

Government standards often differ because of varying objectives; government agencies prioritize transparency, compliance, and public accountability, necessitating specific standards distinct from those used in the private sector.

References

• Arens, A. A., Elder, R. J., & Beasley, M. S. (2020). Auditing and Assurance Services: An Integrated Approach. Pearson.
• Skousen, C. J., & Zhang, P. (2021). Principles of Auditing & Assurance. Cengage Learning.
• Whittington, O. R., & Pany, K. (2019). Principles of Auditing & Other Assurance Services. McGraw-Hill Education.
• Public Company Accounting Oversight Board. (2022). Auditing Standards. PCAOB.
• American Institute of CPAs. (2023). Audit and Attest Standards (AU Sections). AICPA.
• Government Accountability Office. (2022). Government Auditing Standards (Yellow Book). GAO.
• U.S. Securities and Exchange Commission. (2023). Rules and Regulations. SEC.
• Institute of Internal Auditors. (2023). International Standards for the Professional Practice of Internal Auditing. IIA.
• Carcello, J. V., & Nagy, A. L. (2019). Audit Firm Quality Control and Peer Reviews. Auditing: A Journal of Practice & Theory.
• Francis, J. R. (2018). Achieving High-Quality Audits. The Accounting Review.