July 2015 – Bridge the GAAP

Accounting for Aliens (and Auditing Standard AU-C 240)

Today the topic of our accounting podcast is a little unconventional. We’re going to trace the concept of the fraud triangle back into an unusual case study involving a message from another world. By doing so, we will answer the question, What do an alien prophecy, Auditing Standard AU-C 240, and a billion-dollar Ponzi schemer all have in common?

Along the way we’ll discuss the objectives and requirements of Auditing Standard AU-C 240, and how it relates to the requirements established under Auditing Standard AU-C 315, which discusses the auditor’s requirement to understand the entity and its internal control. We’ll discuss what fraud risk factors are and cover the documentation required by AU-C 240.

The podcast includes a discussion about Ponzi scheme fraudster Scott Rothstein, which is used to shed some light onto the rationalization process. So with all the themes interwoven, there’s a decent amount of psychology that found its way into this week’s conversation. I really enjoyed this podcast, and I hope you do to.

View the text of clarified auditing standard AU-C 240.

Auditing Standard AU-C 320: Materiality

Today the topic of our accounting podcast is Auditing Standard AU-C 320, which discusses Materiality. We’ll answer such questions as, What is materiality? How is it determined? What has to be documented?

To provide some context to our conversation, we’ll relate the discussion to AU-C 200, which discusses the overall objectives and conduct of an audit, and we’ll discuss how materiality relates to audit risk.

View the text of clarified auditing standard AU-C 320.

Auditing Standard AU-C 315: Understanding the Entity and Risks

Today the topic of our podcast is Auditing Standard AU-C 315, which discusses the requirement that the auditor understand the entity being audited and its internal control and requires that the auditor identify risks at the financial statement level and at the relevant assertion level. We’ll answer such questions as, What should we understand about the entity? How should we perform our risk assessment? What has to be documented?

To provide background to our conversation, we’ll relate the discussion to our previous two podcast episodes which discussed the overall objectives and conduct of an audit as well as the requirements related to planning an audit.

View the text of clarified auditing standard AU-C 315.

Auditing Standard AU-C 300: Planning an Audit

Today the topic of our podcast is Auditing Standard AU-C 300, which discusses Audit Planning. We’ll answer such questions as, Who is involved in planning an audit? What are they doing? What has to be documented?

To provide background to our conversation, we’ll relate the discussion to AU-C 200, which discusses the objectives and conduct of an audit.

View the text of clarified auditing standard AU-C 300.