Chapter 1: The Demand for Audit and Assurance Services
Objectives
After studying this chapter, you should be able to:
- Describe assurance services and distinguish audit services from other assurance and nonassurance services provided by CPAs.
- Explain the importance of auditing in reducing information risk.
- List the causes of information risk, and explain how this risk may be reduced.
- Describe auditing.
- Distinguish between auditing and accounting.
- Differentiate the three main types of audits.
- Identify the primary types of auditors.
- Describe the requirements for becoming a CPA.
Chapter 2: The CPA Profession
Objectives
After studying this chapter, you should be able to:
- Describe the nature of CPA firms, what they do, and their structure.
- Describe the key functions performed by the AICPA.
- Use generally accepted auditing standards as a basis for further study.
- Identify quality control standards and practices within the accounting profession.
- Summarize the role of the Securities and Exchange Commission in accounting and auditing.
Chapter 3: Audit Reports
Objectives
After studying this chapter, you should be able to:
- Describe the parts of the standard unqualified audit report.
- Specify the conditions required to issue the standard unqualified audit report.
- Describe the five circumstances when an unqualified report with an explanatory paragraph or modified wording is appropriate.
- Identify the types of audit reports that can be issued when an unqualified opinion is not justified.
- Explain how materiality affects audit reporting decisions.
- Draft appropriately modified audit reports under a variety of circumstances.
- Determine the appropriate audit report for a given audit situation.
Chapter 4: Professional Ethics
Objectives
After studying this chapter, you should be able to:
- Distinguish ethical from unethical behavior in personal and professional contexts.
- Resolve ethical dilemmas using an ethical framework.
- Explain the importance of ethical conduct for the accounting profession.
- Describe the purpose and content of the AICPA Code of Professional Conduct.
- Apply the AICPA Code rules and interpretations on independence and explain their importance.
- Understand the requirements of other rules under the AICPA Code.
- Describe the enforcement mechanisms for the rules of conduct.
Chapter 5: Legal Liability
Objectives
After studying this chapter, you should be able to:
- Understand the litigious environment in which CPAs practice.
- Explain why the failure of financial statement users to differentiate among business failure, audit failure, and audit risk has resulted in lawsuits.
- Use the primary legal concepts and terms concerning accountants’ liability as a basis for studying legal liability of auditors.
- Describe accountants’ liability to clients and related defenses.
- Describe accountants’ liability to third parties under common law and related defenses.
- Describe accountants’ civil liability under the federal securities laws and related defenses.
- Specify what constitutes criminal liability for accountants.
- Describe what the profession and the individual CPA can do and what is being done to reduce the threat of litigation.
