Answered: Do you think the concept of materiality…

Do you think the concept of materiality is incompatible with ethical behavior? Consider in your answer how materiality judgments affect risk assessment in an audit of financial statements.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Explain the concept of "independence" in auditing and its significance. How does the principle of…

A: Auditing principles form the foundation of a systematic and objective examination of financial…

Q: Before expressing an audit opinion on financial statements, an auditor should obtain what level of…

A: Assurance is the type of opinion which is given by the auditor at the conclusion of audit about the…

Q: Define risk of material misstatement. At what level of the financial statements do auditors measure…

A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: Professional skepticism is a. Necessary to gain more profit. b. An attitude that includes a…

A: Professional skepticism refers to an attitude that includes an inquisitive mind and a critical…

Q: During financial statement audit, auditors seek to restrict which type of risk? Control risk,…

A: Discovery hazard is the opportunity that an inspector will neglect to discover material misquotes…

Q: What are analytical procedures? Substantive tests designed to assess control risk Substantive tests…

A: Analytical procedures are used in proper evaluations of financial information by having an analysis…

Q: Describe how the "culmination" of the audit process looks like. 2. In the final stage of a…

A: Describe how the "culmination" of the audit process looks like. The culmination of the audit…

Q: oo high, o

A: Since auditors can and often do not seek to review all activities, audit risk is essential to the…

Q: What are the five types of tests auditors use to determine whether financial statements are fairly…

A: The auditor needs to test the financial statement for collecting sufficient and appropriate audit…

Q: Accounting & Finance - Auditing Question 5: Discuss the audit expectation gap. Your answer should…

A: The expectation gap is the dissimilarity among the actual and real roles and responsibilities of…

Q: Economic distress and mismanagement are events, identify the types of risk each of them entails and…

A: Systematic risk-This type of risk is undiversifiable risk because systematic risk is inherent to the…

Q: For what does an auditor use professional skepticism?

A: Professional skepticism can be explained as the confirmation of information through inquiry, the…

Q: Which of the following is not correct about professional judgment? a. Professional judgement is…

A: professional judgment - professional judgment is an application of knowledge and experience of an…

Q: Explain why professional skepticism would be critical in assessing and responding to the risk of…

A: Professional skepticism is a fundamental mindset that auditors and other professionals must adopt…

Q: The risk that a client's financial statements are susceptible to material misstatements is a.…

A: SOLUTION- INHERENT RISK IS THE RISK POSED BY AN ERROR OR OMISSION IN A FINANCIAL STATEMENT DUE TO A…

Q: 1: What problems do you see when an auditor relies extensively on management’s representations on…

A: Disclaimer: “Since you have asked multiple questions, we will solve the first question for you. If…

Q: Discuss the attitude professional skepticism as required to be possessed by a professional…

A: A Professional skepticism is an attitude that includes a questioning mind, being alert to conditions…

Q: What rules or policies should be developed to avoid ethical fraud issues?

A: Accounting Fraud: Intentional manipulation of financial statement to create false financial heath…

Q: Why are auditors more concerned with the risk of incorrect acceptance than the risk of incorrect…

A: Definition:

Q: Evidence that will be needed by a practitioner which will assist in forming an opinion with regards…

A: Audit -An organization's financial accounts, documentation, physical inventory, operations, and…

Q: Why is professional judgment in auditing and accounting important?

A: Professional judgment is defined as the application of accumulated knowledge and experience gained…

Q: Describe a situation that would require an auditor to give an unmodified opinion without a standard…

A: Introduction: Unmodified opinion generally gives when the financial statements showing as fairly. It…

Q: Inherent risk Select one: a. All of the others are correct. b. Involves auditors attaining…

A: An inaccuracy or omission in a financial statement that is not caused by a breakdown in internal…

Q: What steps has the external auditing profession taken to minimize potential bias toward independent…

A: The auditors are appointed to provide their opinion on the financial reports examined. The auditor…

Q: The audit risk model is the foundation of audit practice. True False

A: Auditing refers to the independent examination of financial statements and other financial…

Q: Which statement is false

A: Meaning of Internal control The process designed, implemented and maintained by those charge with…

Q: Why do auditors use the words "present fairly

A: Present Fairly Present fairly is a term used inside the text of an audit report back to indicate…

Q: What factors should the auditor take into consideration before concluding that a financial statement…

A: Financial statements should give crucial information to any interested user of financial data so…

Q: e been misleading

A: Generally Accepted Accounting Principles refer to a systematic set of laws and policies used in…

Q: Because of the risk of managers acting in their own self-interest rather than the company's best…

A: Ans. While conducting audit, the auditor is required to follow certain code of conduct,such as…

Q: A company must decide between scrapping or reworking units that do not pass inspection. The company…

A: Step 1: Calculation of incremental income.Scrap income = $52,800Rework income = Revenue - Cost=…

Q: Provide the key factor auditors will have to review when deciding on the inherent risk within the…

A: Answer:- Inherent risk meaning:- The risk created by a financial statement inaccuracy or omission…

Q: The external auditor: Group of answer choices Tests the underlying transactions that form the basis…

A: Definition of Audit - The audit is an independent examination of the financial information of an…

Q: Whether the act of overstating in revenue is considered and classified to be a significant risk.…

A: Revenue: Revenue is income earned by a firm selling its goods and services to other parties. The…

Q: potential bias in management's ncerns,

A: Option 1 is wrong because the management' bias in estimation calculations is to be considered to…

Q: What type of opinion is issued by the auditorr if he or she is unable to determine the overall…

A: Introduction: The act of examining, confirming, and analyzing all financial information and papers…

Q: What are the differences between business failure, auditor failure, and audit risk? Is it fair to…

A: Audit risk is the risk which arises due to the probability or the chance of reporting the financial…

Q: Which of the following about materiality is NOT true? A. Information is material if, in determining…

A: materiality is a concepts that applies in a variety of context including accounting, reporting,…

Q: What is meant by a “colorable claim”? Do you believe auditors should be liable for investor losses…

A: Legitimate claim of a person is known as Colorable claim. It can be asserted based on the current…

Q: Explain

A: Audit is the process of examining and analyzing the financial documents relating to the company’s…

Q: ypes of evidence would you normally look during the performance of your Financial Statement audit?

A: Definition Audit evidence is information or data that auditors use or collect as part of their audit…

Q: Why do you think that inherent and control risk is responsible for the audited company(client) and…

A: Audit means checking, verifying and examining all the financial records and information to ensure…

Question

Do you think the concept of materiality is incompatible with ethical behavior? Consider in your answer how materiality judgments affect risk assessment in an audit of financial statements.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Why is it desirable to design tests of details of balances beforeperforming tests of controls and substantive tests of transactions? State the assumptionsthat the auditor must make in doing so. What does the auditor do if the assumptions arewrong?
Which of the following statements about materiality is incorrect? the preliminary assessment of materiality guides audit planning and testing materiality is used to guide the validity of information contained in the financial report materiality is a key auditing concept that is assessed during the planning stage of every audit information is considered material if it has no impact on the decision-making process of financial report users
would you say that material mistakes found in a financial statement could lead to the auditors being held liable?
An assurance service is defined as a service thata. Provides auditing services to nonfinancial information.b. Reviews unaudited financial information.c. Improves the quality of information for decision makers.d. Reduces the risk in management decision making.
The risk that an auditor issues a clean opinion when the financial statements are materially misstated is called O inherent risk. control risk. audit risk. O detection risk.
Why is it so important to choose auditors at the proper moment for a financial statement audit to be successful?
Which of the following is not related to ethical requirements of auditors?a. Due care.b. Independence in appearance.c. Independence in fact.d. Professional judgment.
Discuss the importance of ethical behavior in accounting and the consequences of unethical behavior.
discuss the type of opinion is issued by the auditorr if he or she is unable to determine the overall fairness of the financial statements?
Which of the following factors do NOT impact the auditor's decision on the mix of substantive procedures to be performed? O overall risk assessment for the client O nature of the account balance O management's opinion on the risk of the account balance O risk assessment for the specific account balance
Define materiality risk. How do auditors quantify RMM in financial statements? Describe the RMM audit process. So, what is RMM's function in real-world
Why does an auditor not have responsibility to identify or assess all business risks?