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Audit Questions

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1. From the Key Players: Why is it important for the auditor to report to the audit committee?
2. If the CPA auditor's spouse is a senior manager at the company to be audited, does the auditor have independence
3. What is the PACOB and why is it important for CPA's?
4. Give an example of an Audit firms systems of quality control.
5. What if an auditor does not have experience in a particular industry, should they take a class and then accept the audit?
6. What if the potential client doesn't want the new auditor to communicate with the previous audit firm? Is this a potential risk?

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Solution Summary

This solution briefly explains each of the audit questions presented. The PACOB is defined and the expert determines why it is important for CPAs.

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Let's take a look at each of your study questions.

1. From the Key Players: Why is it important for the auditor to report to the audit committee?

-- The basic purpose of an audit committee is to provide oversight in key areas that include oversight of financial reporting, audit processes, and the internal control system. Due to these functions, the auditor is to report to the audit committee in order to fulfill oversight obligations of the audit process. This builds a system of transparency between the auditor, the audit committee, and the company's shareholders. As a result of the Sarbanes Oxley Act, the audit committee must be aware of the auditor's processes, results and findings, as well as major issues that arise during the audit process as discovered by the auditor. This cycle of events reduces the risks associated with fraud by the auditor and also ensure that there is a greater degree of auditor accountability within the audit process itself.

2. If the CPA auditor's spouse is a senior manager at the company to be audited, does the auditor have independence

-- If the auditor's spouse is a member of senior management, the auditor does not have ...

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