FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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.arrow_forwardAn 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.arrow_forwardAfter 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.arrow_forward
- what are business risks associated with an entity that an auditor should consider when performing an audit?arrow_forwardThe auditor should consider audit risk when planning and performing an audit of financial statements. Audit risk should also be considered together in determining the nature, timing, and extent of auditing procedures and in evaluating the results of those procedures. Required: a. Define audit risk. b. Describe the components of audit risk (e.g., inherent risk, control risk, and detection risk). c. Explain how these components are interrelated. (AICPA, adapted)arrow_forwardTests of controls in a GAAS audit are required fora. Obtaining evidence about the financial statement assertions.b. Accomplishing control over the occurrence of recorded transactions.c. Applying analytical procedures to financial statement balances.d. Obtaining evidence about the operating effectiveness of client control activities.arrow_forward
- 1) Name and describe the main tasks, duties or powers of the PCAOB. 2) What is audit risk? 3) What is materiality and how is it used or applied by the auditor.arrow_forwardThe user auditor is required to obtain a sufficient understanding of the nature and significance of the services provided by the service organisation and their effect on the user entities internal control relevant to the audit. From which source(s) might this understanding be obtained? A) the user entity B) a type 1 service auditors report C) a type 2 service auditors report D) all of the above answersarrow_forwardWhich of the following types of audit evidence is the least persuasive? a. Bank statements obtained from the client. O b. O c. Prenumbered purchase order forms. O d. Correspondence from the client's attorney about litigation. Test counts of inventory performed by the auditor.arrow_forward
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