Question

The American Institute of Certified Public or the AICP has developed seven principles governing audits. Which two of the seven principles specifically relate to audit reporting?

Answer 1

The AICPA 2nd and 7th principles governing an audit conducted in accordance with GAAS describe principles underlying audit reporting. The seven principles are-

Preamble- Membership is voluntary and if onces accepted, member assumes an obligation of self-discipline above and beyond the requirements of laws and regulations.

Responsibilities- In carrying out their responsibilities as professionals, members should exercise sensitive professional and moral judgments in all their activities

Public Interest- e. Members should accept the obligation to act in a way that will serve the public interest, honor the public trust, and demonstrate a commitment to professionalism.

Integrity- To maintain and broaden public confidence, members should perform all professional responsibilities with the highest sense of integrity

Objectivity and independence principle- a member should maintain objectivity and be free of conflicts of interest in discharging professional responsibilities. A member in public practice should be independent in fact and appearance when providing auditing and other attestation services.

Due care principle- a member should observe the profession’s technical and ethical standards, strive continually to improve competence and the quality of services, and discharge professional responsibility to the best of the member’s ability

Scope and nature of services principle- a member in public practice should observe the Principles of the Code of Professional Conduct in determining the scope and nature of services to be provided.

Responsibilities and Scope & Nature of Services principles guide an auditor in reporting. These principles require auditors to either:

i.Express an unqualified opinion on the entire set of financial statements and related footnotes, or

ii.State the reasons that such an opinion cannot be expressed