Question 6Where the auditor has assessed the risk of materialmisstatement of trade creditors as low, the auditormay rightly decide:Select one:Not to perform any substantive testing at allprovided he has persuasive evidence thatcontrols had operated effectively for the periodunder audit.Perform analytical procedures provided hehas persuasive evidence that the controls hadoperated effectively for the period under audit.Not to perform any “further" or “other"procedures.Not to perform any substantive testing at all.

Auditing is a procedure under which an auditor is appointed to check the accuracy of the financial…

Answered: Where the auditor has assessed the risk…

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter5: Professional Auditing Standards And The Audit Opinion Formulation Process

Section: Chapter Questions

Problem 44MCQ

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19. An auditor conducting an audit in accordance with ______________is responsible for obtaining reasonable assurance that the financial statements taken as a whole are free from material misstatement, whether caused by fraud or error. a. ISAs b. None of the options c. IFRS d. IAS
THlled AlSaadi Which one of the following statements is most appropriate to Control risk? When an auditor concludes that there is a significant doubt on the entity's ability to continue as a going concern for a period, the auditor is responsible to: Withdraw the audit engagement. Report to the company's shareholder. Express a qualified or adverse opinion, depending upon materiality. Adequate disclosure of the nature and implication of the uncertainty. Which one of the following best describes the auditor's responsibilities in evaluating the appropriateness of the going concern assumptions? Auditing and Cont. EN
Which one of the following is other indicator or events or conditions that may cast significant doubt on the entity's ability to continue as a going concern? t of Labour strikes and unrest. estion Noncompliance with terms in loan agreement Non-Compliance with statutory requirements Loss of major market of suppliers 9: If the auditor found misstatements in financial statements resulting from fraud, the auditor encounters exceptional circumstances that bring into question his ability to continue performing the audit. the auditor shall : at of estion Auditing and Cont.pdf A EN 10:37e
Question 30 If the auditor plans to assess control risk at less than the maximum and rely on internal controls , and the nature, timing, and extent of further audit procedures are based on the lower assessment the auditor must: Obtain evidence that the controls selected for testing are designed effectively and operating effectively during the period under audit. Assess control risk less than the maximum for all relevant assertions. Perform only substantive procedures Provide additional examples of responses to assessed fraud risks relating to fraudulent financial reporting.
23 Choose the circumstances in which financial statements are not true and fair. a. When the auditor assures outsiders that the financial statements are reliable b. When the auditor assures that sufficient and appropriate audit evidence are obtained in support of financial statements c. When the auditor is unable to assure outsiders that the financial statements are proper d. When the auditor assures outsiders that the financial statements free from manipulation
Question 23 Which of the following statements is correct regarding accounts payable and the auditor's procedures? Group of answer choices Because it is generally more difficult to discover a transaction that has not been recorded than to discover one that has been recorded incorrectly, the audit objective of completeness drives many of the substantive procedures applied to these balances. A judgment whether an unrecorded payable should be recorded before the financial statements are prepared depends entirely upon the source of the payable. The confirmation of accounts payable selected from the year-end trial balance of such accounts is most effective in discovering unrecorded liabilities. Unrecorded payables are often discovered through examining vouchers payable entered into the voucher register prior to the balance sheet date.
Question 2 If the auditors encounter a significant scope limitation in evaluating a public company's internal control over financial reporting, which of the following types of opinions on the effectiveness of the comapny's internal control would be appropriate?: Unqualified Qualified disclaimer Adverse
Q. According to ISA 200, Which of the following statement is true with respect of inherent limitation of audit? a- The auditor cannot reduce the audit risk to zero but can obtain absolute guarantee that the financial statements are free from material misstatements. b- The auditor can reduce the audit risk to zero but cannot obtain absolute guarantee that the financial statements are free from material misstatements. c- The auditor cannot reduce the audit risk to zero but cannot obtain absolute guarantee that the financial statements are not free from material misstatements. d- The auditor cannot reduce the audit risk to zero but cannot obtain absolute guarantee that the financial statements are free from material misstatements.
Statement 1: If management fails to list an unasserted claim in the letter of inquiry to a lawyer, the lawyer is not required to inform the auditors of the omission. Statement 2: Normally, general risk contingencies need not be disclosed in the financial statements. Statement 3: If not adjusted, a situation in which the total likely misstatement in the financial statements exceeds a material amount is likely to lead to an audit report modification. A. only one statement is true B. only two statements are true C. All are true D. All are false
Question 4 If the auditor obtains sufficient evidence on a client's accounts receivable balance through alternative procedures because it is impractical to confirm accounts receivables, the auditor's opinion should be unqualified and could expect to: disclose the fact that alternative procedures were used due to client imposed restrictions. Avoid mentioning the alternative procedures disclose in the audit opinion that confirmation of accounts receivables was impracticable include a paragraph that discloses the performance of the alternative procedures
Question 4 Respond to each of the following independent situations involving auditorreports. For each scenario (1) identify the reporting issue involved; (2) explain the type of opinion that should be- issued; (3) identify any requiredmodifications of the standard auditor'sreport. The auditor determines that a material uncertainty existsregarding the ability of the audit client to remain in business for the foreseeable future. However, the auditor believesthat the use of normal GAAP reporting is still appropriate. Management has adequately disclosed the material uncertainty in the footnotes to the financial- 7.4 statements. The client has a significant going concern problem, and the auditor believes that going concern accounting is no longer appropriate. However, management disagrees and has insisted on issuing normal GAAP (going concern) financial statements. 8.
Question 4 Respond to each of the following independent situations involving auditor reports. For each scenario (1)identify the reporting issue involved; (2) explain the type of opinion that should be issued; (3) identify any requiredmodifications of the standard auditor'sreport. The auditor has a disagreem ent with a client overthe adequacy of the recorded bad debt expense and allowance for doubtful accounts. The auditor is convinced that the expense and allowance are understatedby amaterial (but not highly material) amount, but the client has refused to adjust the accounts. 1.4 The auditor has issued a report on a client's financial statem ents prepared on a regulatory basis of accounting. The auditor is also preparing to issue a separate report- on the same client's GAAP financial statements, which will be issued to the public. The auditor feels that the issuance of the report on the regulatory basis statements should be disclosed in the report on the GAAP statements. The auditor…

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