When auditing related party transactions, an auditor places primary emphasis on O A. B. C. D. Verifying the accuracy, valuation, and allocation of the related party transactions. Ascertaining the rights and obligations of the related parties. Assessing the risks of material misstatement of related party transactions. Confirming the existence of the related parties.

When auditing related party transactions, an auditor places primary emphasis on O A. B. C. D. Verifying the accuracy, valuation, and allocation of the related party transactions. Ascertaining the rights and obligations of the related parties. Assessing the risks of material misstatement of related party transactions. Confirming the existence of the related parties.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Why deos the auditor obtain an understanding of the clients business, enviroment and related risk of the organization? 1. Determine audit opinion that will be issued 2. determine the appropriate understanding of internal controls 3. determine the detection of audit procedures in the period under audit. 4. determine weather the auditor has sufficient knowledge to perform audit.
The execution stage of an audit involves: evaluating the results of the detailed testing and forming an opinion on the truth and fairness of the client's financial report the assessment of the audit firm's quality control procedures the performance of detailed tests of controls and substantive testing of transactions and accounts gaining an understanding of the client
An audit program is usually prepared after establishing the audit strategy and developing the audit plan. The procedures specifically outlined in an audit program are primarily designed to: a. Test all material transactions. b. Gather corroborating evidence. c. Serve as protection of the auditor in case of litigation regarding negligence. d. Detect errors or irregularities.
After obtaining an understanding of the client's internal control, the auditor should consider whether A. the evidential matter obtained from the study of the internal control system can provide a reasonable basis for an opinion. B. the projected degree of effectiveness of internal control is justified. C. further testing of internal control procedures is likely to permit further reduction in the assessed level of control risk. D. sufficient knowledge has been obtained about the entity's entire system of internal control.
Outline the sources of audit evidence the auditor can use as part of risk assessment procedures.
After completing and documenting the ADA procedures, the auditor evaluates the audit evidence obtained and develops a conclusion based on the audit evidence. Indicate what the conclusion relates to. a. ADA procedures utilized. b. Relevance and reliability of audit evidence. c. Specific phase of audit where ADA utilized. d. Completeness of audit evidence.
The most important objective of risk assessment procedures performed by auditor is a. To identify and assess financial risk in the activities of the entity b. To identify and assess the risk in achieving the entity objectives c. To detect material misstatements in the financial statements d. To detect errors and fraud occurred in the books of accounts
what are business risks associated with an entity that an auditor should consider when performing an audit?
Audit documentation is the written record of the basis for the auditor's conclusions that provides the support for the auditor's representations, whether those representations are contained in the auditor's report. Required: b. Discuss TWO (2) important factors that affect the form of audit documentation.
Which of the following audit procedures will apply to obtain the reliable audit evidence relating to the existence of tangible assets? O a. Reperformance O b. Confirmation O c. Inspection O d. Recalculation
Audit procedures are the processes, techniques, and methods that auditors perform to obtain audit evidence, and includes: O a. Risk assessment procedures; Test of Controls; Substantive procedures O b. Test of Controls only O c. Substantive procedures & Test of controls O d. Risk assessment procedures only
Select from the following the main object of an audit. a. Expression of expert opinion b. Detection and Prevention of fraud and error c. Preparation of financial statements d. Examination of books of accounts