Accounting and Auditing for CPAs
Being an excellent accountant or auditor requires knowledge in:
Accounting
Accounting standards primarily come from the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB). Other types of reporting frameworks include cash-basis, modified-cash basis, tax-basis, contractual, and regulatory. An accounting framework is used to create financial statements. The selection of the reporting framework is based on legal and regulatory requirements we well as the needs of users.
Once financial statements are created, they may be subject to attest procedures performed by a third-party CPA or CPA firm. Possibilities include a compilation engagement, a review engagement or an audit.
Many accountants are not auditors, but some are.
Auditing
Auditing is the inspection of accounting records, usually financial statements, by a third party CPA or CPA firm. The standards for auditing U.S. entities primarily come from the Association of International Certified Professional Accountants (AICPA) and are called Statements on Auditing Standards (SASs). Additionally, the AICPA provides attestation standards in the form of Statements on Standards for Attestation Engagments (SSAEs). Whether the SASs or SSAEs are used, the accountant–as an independent third party–uses these standards to add credibility to the information by rendering a opinion or report about the subject matter.
Auditors must understand accounting and audit standards.
Below are articles I’ve published to help you improve your accounting and auditing skills.
Accounting Articles
Below are articles about FASB and GASB standards.
How to Address Accounting Changes and Errors with GASB 100
Does your government ever have accounting changes or error corrections? If yes, know that GASB 100,…
A Powerful Control: Reconciling Balance Sheet Accounts Before Close
In this article, I explain why you need to reconcile balance sheet accounts before closing your…
How to Understand Special Purpose Accounting Frameworks: Three Videos
In this post, I provide three videos explaining these bases of accounting: (1) cash basis, (2)…
Understand Deferred Outflows and Deferred Inflows in Governments (with Video)
GASB 63 and 65 provide guidance regarding deferred outflows and inflows in governments. This article provides…
How to Understand Nonprofit Financial Statements: A Video Overview
Nonprofit financial statements are unique and can be confusing to understand. The Financial Accounting Standards Board…
Journal Entries Made Easy: New Bookkeeping Book on Amazon
Journal Entries Made Easy, an Introduction to Accounting is my new book available on Amazon. Are…
Eight Types of Accounting Journal Entries
In this article, I provide eight different types of accounting journal entries. Understanding journal entries is…
Understanding the Chart of Accounts: A Fundamental Guide
What is a chart of accounts? If you are new to accounting, you may not know…
How to Account for Lessee Finance and Operating Agreements: ASC 842
Most CPAs grapple with leases from the lessee’s point of view, so in this post, we’ll…
How to Understand the New Lease Accounting Standard
Do you need help in understanding the new lease accounting standard? This article provides you with…
Auditing Articles
Below are articles about auditing and attestation standards.
Learn How to Test Journal Entries to Detect Fraud
Here’s a video explaining how to test journal entries as an auditor. By doing so the…
Understand the Audit Differences for Supplementary Information, Other Information, and Required Supplementary Information
What are the differences in supplementary information, additional information, and required supplementary information? Does the audit…
Finish Audits On Time: 8 Steps for Success
How can you finish audits on time? If firms cannot complete audits, they cannot bill (at…
A Video Explanation of the Various Governmental Auditing Standards
If you perform governmental audits, you know that different governmental auditing standards can come into play…
Demystifying Group Audits: Key Definitions and Requirements
SAS No. 149, Special Considerations — Audits of Group Financial Statements (Including the Work of Component Auditors…
Five Powerful Ideas to Test for Fraudulent Payments
Are you looking for ways to test for fraudulent payments? Here are five ideas.
Audit Mistakes: Seven Deadly Sins
Seven deadly audit sins can destroy you. These audit mistakes kill your profits and effectiveness. You…
Reporting Duties When No Internal Control Issues are Noted
This article tells you what to report when there are no internal control issues. I discuss…
Tips for Communicating with a Predecessor Auditor
Communicating with a predecessor auditor can be trying. Even so, audit standards require that you (at…
Client Acceptance: How to Do It Right
Client acceptance and continuance may be the most critical step in an audit, but it’s one…
See Why a Test of Controls Can be Helpful or a Waste of Time
Auditors sometimes waste precious time testing controls when it may not be necessary. But in some…
See Payroll Audit Mistakes and Right Approaches
Learn to audit payroll with this article. Sometimes, payroll is more than 50% of your expenses,…
When is a Gift a Bribe?
When is a gift a bribe?Vendors often give sporting event tickets to clients. Or maybe they…
Understand Engagement Quality Reviews and Monitoring and Remediation
The new quality management standards include (1) engagement quality reviews and (2) monitoring and remediation. So…
AICPA Quality Management: Why You Need to Start Now
All firms performing any engagement in an accounting and auditing practice must comply with the new Quality…
Audit or Tax, Which is the Better Job?
Should you work in tax or audit?If you’re near graduation, you may wonder, “Which is best…
See How to Audit Journal Entries: AU-C 240
Journal entry testing is required in all audits. Why? The use of journal entries to manipulate…
SAS 143, Auditing Accounting Estimates
In this article, I explain SAS 143, Auditing Accounting Estimates and Related Disclosures, a new audit standard applicable…
Are You Over Auditing and Wasting Time?
Are you over auditing? In this article, I explain how you can stop over auditing and…
Segregation of Duties: How to Overcome
Segregation of duties is key to reducing fraud. But smaller entities may not be able to…
Unpaid Fees and Attest Independence
Unpaid fees can impair your independence in attest engagements. This article explains changes in the Unpaid…
Internal Control Weakness Reporting
Auditors often fail to capture and communicate internal control weaknesses, even though such communications are required…
Gain Insight into Audit Opinion Types Now
In this post, you’ll gain an understanding of unmodified and modified audit opinions using the guidance…
How to Audit Equity and What’s Important
Auditing equity can be simple, but it can be complex in some organizations. This article shows…
Audit Lessons from a Brain Tumor
Did you know you can learn audit lessons from a brain tumor? Here’s my story. One…
See Why Auditing Debt Correctly is Important
Debt can easily be the most significant liability of a company. That’s why it’s essential to…
Auditing Investments the Right Way by Understanding Risks
Different types of investments create different types of risk. So, our audit responses should vary accordingly…
Know How to Audit Receivables & Revenues
Receivables and revenues is a critical audit area. Read this article to learn how you can…
How to Audit Cash: A Comprehensive Guide for Accountants
Learn about common relevant cash assertions, primary risks, control deficiencies, and proper audit responses.
Preliminary Analytical Procedures as a Powerful Risk Assessment Step
Preliminary analytics assist auditors in detecting signs of material misstatement. See how to use this tool…
How to Use Agreed Upon Procedures as an Attest Option
On December 19, 2019, the AICPA released SSAE 19, Agreed-Upon Procedures Engagements. AUPs provide you with…
Significant Risks in Audits of Financial Statements
Peer reviews find that many CPA firms don’t identify significant risks in audits, and that’s a…
Master the Audit of Accounts Payable and Expenses Now
One of the most important audit areas is accounts payable and expenses. This article tells you…
See How Control Risk Affects Financial Statement Audits
Control risk continues to create confusion in audits. Some auditors assess control risk at less than…
How to Plan Your Audits Using SAS 145 Risk Assessment
Statement on Auditing Standards No. 145 (SAS 145), Understanding the Entity and Its Environment and Assessing the…
Related Party Transactions: Fraud
Related party transactions can be a means to fraudulent financial reporting. Yet, auditors often don’t detect…
Work Paper Mistakes: A List of 40 Common Errors
Today, I offer you a list of forty work paper mistakes. If you’re an auditor or…
How to Identify and Manage Audit Stakeholders
This is a guest post by Harry Hall. He is a Project Management Professional (PMP) and…
Project Management in Audits: Key to Profit
On the first day of your audit, you’re confident you’ll deliver your report on time. You…
Fake Bank Confirmation Responses: $6 Million Theft
The Western District of North Carolina U.S. Attorney’s Office issued a press release on June 17,…
Inherent Risk in Financial Statement Audits: How to Understand Now
Do you know how to assess inherent risk? Knowing when this risk is low is a…
A Lack of Audit Documentation is a Big Danger
Peer reviewers are saying, “If it’s not documented, it’s not done.” Why? Because standards require sufficient…
See How to Use Audit Risk Assessment
Today we look at one of most misunderstood parts of auditing: audit risk assessment. Are auditors…
Auditing for Fraud: The Why and How
Auditing for fraud is important, but some auditors ignore this duty. Even so, fraud risk is…
See Why Substantive Analytical Procedures are Powerful
Are you using substantive analytical procedures in your audits? Many auditors rely solely on tests of…
When are SOC Reports Needed by an External Auditor?
Service organization control (SOC) reports are often necessary to understand outsourced accounting services. So, what are…
Audit Planning: Develop Your Audit Plan and Strategy
This article teaches you how to develop your audit plan and strategy. Once you complete your…
Relevant Assertions in Financial Statement Audits
In this article, I address audit assertions and why they are critical to the audit process…
Use of a Specialist: How to Document
As an auditor, you often use the work of specialists such as actuaries, appraisers, and engineers…
Unpredictable Audit Procedures
In this article I explain how you can use unpredictable audit procedures. The audit standards require…
Charles Hall
I am a practicing CPA. I have primarily audited governments, nonprofits, and small businesses for the last forty years.
My sweet spot is governmental and nonprofit fraud prevention. I am the author of (1) Journal Entries Made Easy, (2) The Little Book of Local Government Fraud Prevention, (3) Preparation of Financial Statements & Compilation Engagements, (4) The Why and How of Auditing, and (5) Audit Risk Assessment Made Easy. I frequently speak at continuing education events.
I consult with CPA firms, assisting them with auditing and accounting issues. Contact Charles
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The Why and How of Auditing
Auditing Made Easy
Learn auditing from client acceptance to audit opinion issuance!
Over 140 favorable reviews!
Thanks, Charles for clarifying what’s important in an audit. Recommended reading for any auditor level.
Jay Miyaki, CPA, Partner
Jay Miyaki, LLC
Honolulu, Hawaii