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Auditing Practices and Standards Overview

Omar, a CPA, agreed to conduct an audit of a small company's records to submit audited financial statements for a bank loan. Omar accepted the engagement immediately and agreed to complete the audit within three weeks in exchange for a fixed fee plus a bonus if the loan was approved. However, Omar's independence is compromised because he accepted a contingent fee based on the loan being approved.

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youssefasaad
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8 views4 pages

Auditing Practices and Standards Overview

Omar, a CPA, agreed to conduct an audit of a small company's records to submit audited financial statements for a bank loan. Omar accepted the engagement immediately and agreed to complete the audit within three weeks in exchange for a fixed fee plus a bonus if the loan was approved. However, Omar's independence is compromised because he accepted a contingent fee based on the loan being approved.

Uploaded by

youssefasaad
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Accounting and Financial Control Department Auditing

W 2019
Tutorial (2): Chapter (1) The Auditing Profession

1
Accounting and Financial Control Department Auditing
W 2019

Question 1: Case

Youssef , the owner of a small company, asked Omar, a CPA, to conduct an audit of the
company’s records. Youssef told Omar that an audit was to be completed in time to
submit audited financial statements to a bank as part of a loan application. Omar
immediately accepted the engagement and agreed to provide an auditor’s report within
three weeks. Youssef agreed to pay Omar a fixed fee plus a bonus if the loan was
granted.

Holmes’ Actions resulting in failure to


Brief Description of the GAAS
comply with GAAS

General Standards

Standards of Fieldwork

2
Accounting and Financial Control Department Auditing
W 2019

Question 2 : Multiple choice Questions

1) Which of the following is not a similarity between external and internal auditors?

A) Both must be independent of the company.


B) Both must be competent.
C) Both follow a similar methodology in performing their audits.
D) None of the above .

2) Internal auditors are responsible to:

A) Creditors.
B) Management.
C) Investors
D) both A and B.

3) An audit designed to provide reasonable assurance of detecting material misstatements


resulting from noncompliance with provisions of contracts agreements

A) Performance audit.
B) Management audit.
C) Operational audit.
D) Compliance audit.

4) A typical objective of an operational audit is to determine whether an entity's:

A) Internal control is adequately operating as designed.


B) Financial statements present fairly the results of operations.
C) Specific operating units are functioning efficiently and effectively.
D) Operational information is in accordance with generally accepted government auditing
standards.

3
Accounting and Financial Control Department Auditing
W 2019
Question 3: For the below examples, state the most likely type of auditor (CPA, GAO,
IRS, and IA) and the type of audit (Financial Statements Audit, Operational Audit,
Compliance Audit).
In the normal course of performing their responsibilities, auditors often conduct audits of the
following:
Type of Type of
Information
Auditor Audit

1. Disbursements made by a branch of the federal government for a


special research project to determine whether it would have been possible
to accomplish the same results at a lower cost to the taxpayers.

2. Computer operations of a corporation by external auditor to evaluate


whether the computer center is being operated as efficiently as possible.

3. Assessing annual statements for the use of management.

4. Operations of the Internal Revenue Service Agency to determine


whether the internal revenue agents are using their time efficiently in
conducting audits.

5. Examining income tax returns of a corporation to determine whether


the tax laws have been followed.

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