Auditing Standards Exercise
SEC, AICPA, PCAOB, IAASB (3 points)
This exercise is intended to provide you
with general familiarity with (1) the contents of reports filed with the SEC
and (2) the auditing standards of three organizations—the AICPA’s Auditing
Standards Board, the Public Company Accounting Oversight Board (PCAOB) and the International
Auditing and Assurance Standards Board (IAASB). It should not take a long
time. But make sure that your report is
professional in appearance; related, each subsection requirement should have a
heading so that it is easy to find (e.g., your reply for part A-2 should have a
heading saying A-2, and its subsections a, b, and c clearly marked). Use Word to
complete the entire exercise, using some cut/paste as appropriate (Part A).
Use the SEC’s EDGAR system (Electronic Data
Gathering Analysis and Retrieval) to select and analyze one company’s most
recent Form 10-K, Form 10-Q, and Form 8-K.
It’s best to determine the
accurate name of a company prior to using EDGAR; it is even better to find its
“ticker symbol” to input into EDGAR rather than the company name (Google “[your
company’s name] ticker”).
Some companies file forms
(e.g., 10-K) without an “index” or “table of contents” at the very front. Completing
Part A will be harder with these companies.
Some companies do not include
their financial statements in the 10-K and refer to them being filed in their
annual report (e.g., IBM). You may use them by going to the annual report if
you can find it. You can use one of these companies for the exercise, it will
just be harder.
If you find a company that does
not have a 10-K, 10-Q and 8-K – select a company that does. Also, make sure that it has exactly these
forms (for example, don’t pick one with something like a form 10-KA instead of
Access EDGAR via this link: .sec.gov/edgar.shtml”>http://www.sec.gov/edgar.shtml
Go to “Search for Company Filings.” Then
select “Company or fund name…” link. You will then have an option of searching
by name (on the left of the screen) or by ticker (on the right of the screen).
Either one works. Find the company you want to use. You will then get to a page
that will look something like this:
Fill in the following
Company’s most recent
Company’s most recent
Company’s most recent
When viewing a document, you may be given a choice of “document” or “interactive
data”—unless you are adventuresome, go with “documents.”
Answer the following questions:
From the index (or table of contents)
of the 10-K, how many “Parts” are included in the 10-K filing (ordinarily there
are 4)? For each Part, write one sentence
to describe the nature of the information included in the part.
As per earlier, if you have selected a company with a document without a
table of contents, or one without explicitly detailed “Parts” you may either
select another company, or search your way through it to find the parts. Note that the easiest to work with are the
ones with a “Part I, Part II, etc.” Beware:
If you choose one without parts, things might get ugly.
Locate, copy, and paste into
your report, the audit report(s) filed with the annual financial statements in
the 10-K report. There may be one audit
report on the financial statements and one on the internal control, or they may
be combined as one report; so your report may include either one or two
reports. Indicate what type of opinion
was issued on:
The company’s financial
statements (e.g. standard unqualified, qualified due to a scope limitation,
The company’s internal control
(e.g., unqualified, adverse, disclaimer, etc.)
Were there separate reports on
the financial statements and the internal control, or were these combined into
Be careful here. PCAOB separate reports each refer to the other in a
final paragraph. See page 47 of text
example (We also have audited…). That is
not a combined report as it simply is referring to the IC report (see final
Select the latest 10-Q. Are the quarterly financial statements
audited or unaudited? If there is a CPA
report (probably there isn’t), copy and paste it into your report.
Scan your company’s data for the
most recent 8-K filing. In 1-2 sentences
summarize what event or condition this filing is about. 8-Ks are often on audit or accounting
Review the textbook section onAuditing Standardsin Chapter 2 (pages
35-40). Pay particular attention to the paragraph on the relationships between
SASs and AU sections. Note: the textbook
sometimes uses AU, where we are going below uses AU-C—they are the same thing.
Access the AICPA Professional
Standards online as follows:
Log in into ASU Online Library by going
clicking on SIGN IN link at the top right corner.
Click (or copy/paste) the following.ezproxy1.lib.asu.edu/app/main/srchFrame?usid=2542bam16f890&feature=tcheckpoint&iploc=arizonaunivdept&lastCpReqId=15e5069&practice=7&tabPg=40″>https://checkpoint-riag-com.ezproxy1.lib.asu.edu/app/main/srchFrame?usid=2542bam16f890&feature=tcheckpoint&iploc=arizonaunivdept&lastCpReqId=15e5069&practice=7&tabPg=40
Go to the “Home” tab (towards top of
page, far left).
Change “Current View” toAccounting
& Auditingin the drop-down
box at the upper top part of the page.
Under “Standards & Regulations,” (on
right side of screen), you will see links to AICPA and PCAOB Standards, among
Click on Professional Standards.
Click on US Auditing Standards (AICPA
Clarified). Among other things you will see the AU-C sections (standing forAuditingStandards—Clarified)
List the names of the seven overall sections
(hint: they start with “AU-C Section…”).
Now go to the PCAOB website (pcaobus.org)
and find the professional auditing standards.
C-1. Provide the title of AS
No. 8 of the PCAOB Auditing Standards (not interim standards).
C-2. Provide the title of the
“interim standard” AU 342.
C-3. In 2-3 sentences, what
is the relationship between the PCAOB “Standards” and “interim standards”?
Now find the International Standards on
Auditing by googling “International Auditing and Assurance Standards
Board.” Go to that organization’s
website and find its auditing standards (Clarity Centerà The Clarified Standards).
Provide the title of ISA 530.
When auditing financial statements,
when do the following standards apply?
Auditing Standards Board Standards.