ACCT 6300 Final Exam Review

ACCT 6300 Final Exam Review Instructor written questions Audio Clip Link:

http://breeze.uhv.edu/p94729733/

Chapter 5 Auditors’ Report  Ten GAAS: TIP PIE ACDO  Types of Fraud and the fraud triangle: 

Auditors’ Report 

Five types of opinions • standard unqualified • modified unqualified • ANGEL modifications still provide an unqualified opinion

• Qualified: Material GAAP or GAAS problem • Disclaimer: highly material GAAS problem • Adverse: highly material GAAP problem

Auditors’ Report 

Auditors’ Report • Three standard paragraphs for standard unqualified opinion: introductory, scope and opinion. • An explanatory paragraph (or languages) will be added if a standard unqualified opinion cannot be expressed. • Position of the explanatory paragraph • For qualified or adverse opinion: before the opinion paragraph • For modified unqualified opinion: after the opinion paragraph  However, the explanatory paragraph can be either before or after the opinion paragraph: (a) Necessary GAAP Departure,and (b) Emphasis of a matter.

Ten GAAS Mnemonics per Becker CPA review: TIP PIE ACDO 

Three general standards (TIP):  Training  Independence  Professional Care

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Three field work standards (PIE):  Planning and Supervision  Internal Control  Evidence

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Four reporting standards (ACDO)    

Accounting=GAAP Consistency Disclosure Opinion

Accounting Fraud 

Types of Fraud ◦ fraudulent financial reporting (lying); ◦ asset misappropriation (stealing); ◦ corruption (cheating)

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Fraud triangle ◦ pressure/incentive; ◦ opportunity; ◦ rationalization/attitude

Chapter 6 Auditors’ legal liability (exhibits 6.1 and 6.2 ; my extra notes)  Regulatory obligations (general requirements) 

Auditors’ legal liability 

An auditor(accountant) could be held liable for : ◦ breach of contract: privity relationship. ◦ ordinary negligence: missed certain information or omitted a certain procedure ◦ gross negligence/constructive fraud: did not pay even minimal care, fail to follow GAAS/GAAP ◦ fraud: fraudulent or deceitful behavior or actions

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Disputes exist regarding whether an auditor (accountant) should be liable for a third party for ordinary negligence. Under common law, the courts have applied different approaches (exhibit 6.2) ◦ Four approaches adopted in four classic court cases  privity