Professional Auditing Standards:
There are various standards that practitioners must abide by when performing audit and attestation engagements. Furthermore, certain standards apply to different entity sizes (e.g. issuers vs nonissuers). This section is often referred to as the “Audit” section of the CPA exam, when in reality, this section will test the candidate on various types of assurance engagements. While studying for the Audit exam, you will cover topics on not only audit engagements, but also other assurance engagements such as examinations, reviews, preparations, and agreed upon procedures, to name a few. Additionally, it is critical to your fundamental understanding that you are aware of the professional standards that apply to these engagements. The professional standards that are covered on the exam consist of:
The primary purpose of audit engagements is to provide readers of the financial statement with an opinion (provided by auditors) on whether company financial statements are presented fairly, in all material respects, in accordance with applicable financial reporting framework. Audit opinions provide assurance to the general public that the financial statements in which they are reading are verified by professionals who conducted their work in accordance with relevant professional and regulatory requirements. Auditors will form their opinions based on the applicable financial reporting framework as well as any specific laws and regulations pertaining to certain industries.
You might also be interested in...
2021 Pass Rates for CPA Exam
The AICPA releases the number of candidates and the pass rates for each section of the CPA exam on a quarterly basis. The results for Q1 2021, Q2 2021, and Q3 2021 are shown in the table below: Observations by Universal CPA BEC: It is interesting to see that the pass rates for BEC remained […]
What is the difference between an issuer and a nonissuer?
When conducting audit, auditors will either be performing their engagement on issuers or nonissuers. Issuers are defined by the Securities and Exchange Commission (SEC) as entities that must file or register their financial statements with the SEC. In addition, audit engagements of issuers must follow standards stated by the Public Company Accounting Oversight Board (PCAOB). Whereas nonissuers are defined […]
Who selects the external auditor?
The external auditor (not the internal auditor) is normally selected by the audit committee for public companies and those charged with governance for nonpublic companies. The external auditor is an audit firm that is a 3rd party, such as PwC, Deloitte, E&Y, KPMG, etc. Those Charged with Governance: Those Charged with Governance will also be […]