If the analytical procedure indicates that a misstatement might exist, but not its approximate amount, the auditor ordinarily would have to employ other procedures to enable him or her to estimate the likely misstatement in the balance or class.04 When the auditor tests an account balance or class of transactions and related assertions by an analytical procedure, he or she ordinarily would not specifically identify misstatements but would only obtain an indication of whether misstatements might exist in the balance or class and possibly its approximate magnitude. With regard to analytical procedures, section 312.35 states, in part. For example, if an auditor applies sampling procedures to a certain class of transactions that identify a known misstatement in the items sampled, the auditor will then determine the likely misstatement by projecting the known difference identified in the sample to the total population tested. Section 312.35 refers to likely misstatements as "the auditor's best estimate of the total misstatements in the account balances or classes of transactions…." Likely misstatements may be identified when an auditor performs analytical or sampling procedures. Section 312.35 refers to known misstatements as "the amount of misstatements specifically identified." For example, the failure to accrue an unpaid invoice for goods received or services rendered prior to the end of the period presented would be a known misstatement. Misstatements may be of two types: known and likely. The omission of information required to be disclosed in accordance with generally accepted accounting principles.A financial statement disclosure that is not presented in accordance with generally accepted accounting principles.The omission of a financial statement element, account, or item.A difference between the amount, classification, or presentation of a reported financial statement element, account, or item and the amount, classification, or presentation that would have been reported under generally accepted accounting principles.fn 1 A misstatement may consist of any of the following: Interpretation-In the absence of materiality considerations, a misstatement causes the financial statements not to be in conformity with generally accepted accounting principles. What is the meaning of the term misstatement?. The term misstatement is used throughout generally accepted auditing standards however, this term is not defined. 04, states that financial statements would be considered materially misstated if "they contain misstatements whose effect, individually or in the aggregate, is important enough to cause them not to be presented fairly, in all material respects, in conformity with generally accepted accounting principles." Section 312.04 also states that misstatements can result from errors or fraud. Question-Section 312, Audit Risk and Materiality in Conducting an Audit, paragraph. 17) Considering the Qualitative Characteristics of Misstatementsġ. 14) Quantitative Measures of Materiality in Evaluating Audit Findings Small Business and Broker-Dealer Forums.PCAOB International Institute on Audit Regulation.Conference on Auditing and Capital Markets.Information for Auditors of Broker-Dealers.The International Forum of Independent Audit Regulators and Other International Organizations​.Audit Reports Issued by PCAOB-Registered Firms Located Where Authorities Deny Access to Conduct Inspections.Board Determinations Under the Holding Foreign Companies Accountable Act. PCAOB Cooperative Arrangements with Non-U.S. Updated PCAOB Staff Considerations on Recommending the Identification of Issuers and/or Broker-Dealers in Settled Enforcement Orders.Inspections-Related Board Reports and Statements.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |