Tag Archives | Audits

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How Auditors Assess Risk When Preparing Financial Statements

Every year, your audit firm will conduct a fresh risk assessment before the start of fieldwork. Why? Because your auditor wants to mitigate the risk of expressing an incorrect opinion regarding the accuracy and integrity of the company’s financial statements. Inadvertently signing off on financial statements that contain material misstatements can open a Pandora’s box […]

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Benchmarking Receivables

Accounts receivable represents a major asset for many companies. But how do your company’s receivables compare to others? Here’s the skinny on receivables ratios, including how they’re computed and sources of potential benchmarking data. Starting point A logical starting point for evaluating the quality of receivables is the days sales outstanding (DSO) ratio. This represents […]

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How Auditors Evaluate Fraud Risks

Assessing fraud risks is an integral part of the auditing process. Statement on Auditing Standards (SAS) No. 99, Consideration of Fraud in a Financial Statement Audit, requires auditors to consider potential fraud risks before and during the information-gathering process. Business owners and managers may find it helpful to understand how this process works — even […]

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FAQs About Agreed Upon Procedures

An agreed upon procedures (AUP) engagement uses procedures similar to an audit, but on a smaller and limited scale. Here’s how a customized AUP engagement differs from an audit and can be used to identify specific problems that require immediate action. How do AUPs compare to audits? The American Institute of Certified Public Accountants (AICPA) […]

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Sorting Through the “Levels of Assurance” in Financial Reporting

How confident (or assured) are you that your financial reports are reliable, timely and relevant? In order of increasing level of rigor, accountants generally offer three types of assurance services: compilations, reviews and audits. What’s appropriate for your company depends on the needs of creditors or investors, as well as the size, complexity and risk […]

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Are You Ready for Audit Season?

It’s almost audit season for calendar-year entities. A little preparation can go a long way toward facilitating the external audit process, minimizing audit adjustments and surprises, lowering your audit fees in the future and getting more value out of the audit process. Here are some ways to plan ahead. The mindset Before fieldwork begins, meet […]

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How Accounting Estimates are Audited

Measuring accounting estimates involves some level of uncertainty. As a result, accounting estimates — such as allowances for doubtful accounts, impairments of long-lived assets, and valuations of financial and nonfinancial assets — require extra attention from auditors. Here’s a closer look at the current standards for auditing estimates and examples of specialists who may be […]

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