Question

Chapter 1 Principles of Auditing

What are the core values of CPAs?

Who is the client in an audit?

Who should internal auditors report to?

What are the two attestation services discussed in this chapter?

Answer 1

Core value of CPAs

Protest - Protecting the interests of accountants in public practice.

ethical - Promoting the highest standards of ethical conduct among members.

Respect - Establishing a respected public image of the accountant in public practice.

Professionalism  - Cultivating the spirit of professional cooperation among members.

community -Emphasizing and perpetuating the prestige and status of the public accounting profession.

Ask any auditor who they consider their client, and a good bet is they almost always say it’s the company. Management negotiates and pays the audit fee. But in fact, it is the investors who pay the fee and who trust the auditor to protect their investment interests. The investor is the client.

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness risks management, control and governance processes.

Internal auditor  should report to the board, audit committee or equivalent level.

Attestation service - A special form of assurance engagement, such as a financial

statement audit, in which the auditor evaluates the information provided by one

party, using suitable criteria, and issues a report about the reliability of this

information to another party.

a. Audit of historical financial statements

b. Review of historical financial statements