In this vignette, the audit team has identified a potential error in the income statement. On Monday evening, the engagement team realized that the income statement analytic showed a decrease in marketing expenses for the quarter and the year. However, the engagement team’s expectation was that the company would have...

In these vignettes, the audit team’s substantive testing detected an error in a prepaid insurance account; the company didn’t record amortization on a prepaid insurance arrangement. In the first vignette, the partner, the manager and the senior associate are discussing the design of the control over the account, how it...

In these vignettes, the focus is on breakdowns in review controls and steps external auditors take in order to evaluate the design and effectiveness of controls. The audit manager is evaluating the management review control over goodwill impairment estimates. Vignette 1 (a): A Meeting between the Audit Manager and the Company...

Alert Public Policy and Technical Alert, December 2017 Friday, January 5, 2018 Download PDF As part of the Center for Audit Quality’s ongoing effort to keep members and stakeholders informed on significant public policy and accounting matters, we are pleased to offer the Public Policy and Technical Alert (PPTA). Each month, the PPTA...

In this video, the expert panel discusses the factors that auditors take into account when performing the risk assessment. The PCAOB has a suite of risk assessment standards that address audit procedures performed throughout the audit, from the initial planning stages through the evaluation of the audit results. In addition...

PCAOB auditing standards establish requirements regarding the auditor’s consideration of materiality in planning and performing the audit. This consideration is one of the most important judgments that an auditor makes. In this video, the expert panel discusses the challenges that auditors face in determining the quantitative and qualitative elements of...

Under PCAOB auditing standards, the auditor should determine tolerable misstatement for the individual locations or business units. In this video, the expert panel describes some of the key challenges that auditors face in making those decisions. Download panelists’ bios

In this video, the expert panel discusses the challenges that auditors face in adequately documenting their judgments and conclusions around the risks identified in the risk assessment process. They mention the importance of articulating the variable audit response required for low, medium, and high risks. The panel also addresses this...