Recent studies

I've been updating my accounting knowledge recently. One of the many accounting courses I haven't had yet is a course in auditing. Here is a little of what I have picked up so far.

Auditing is a service accountants perform to assure readers of financial statements that the information they are reading is reliable for making investment decisions. Auditing also includes operational assurance and compliance assurance. An operational audit is to confirm that parts of a business' procedures are being run efficiently and effectively. It is possible to have one without the other. A compliance audit is to confirm that specific rules - GAAP, IRS or other guidelines - are being followed correctly.

When auditing financial statements provided by a client, an auditor is required to have adequately educated and informed personnel participating in an audit. The audit is to have a specific scope and enough evidence must be gathered to warrant the auditor giving an opinion on the information being audited. Once the audit is complete, an opinion of the results is issued by the auditor. The opinion, presented in a report in the format of a letter to the client, may be unqualified, unqualified with explanations or modifications to a format standardized by the AICPA, qualified or else adverse/disclaimer. The AICPA (American Institute of Certified Public Accountants) has specific requirements about what determines what level of opinion the auditor may issue. Once the opinion is issued, it is up to the reader of the audited financial statements to determine how much trust to put in the financial statements so the appropriate investment decision can be made.

That's enough for now. Have a good week.