With reasons examine the following statements are correct or incorrect: 1. Preparation of financial statements involves judgment by management 2. Evolving an audit programme applicable to all business in all circumstances is not practicable 3. Inquiry alone during audit will not provide needed sufficient audit evidence

With reasons examine the following statements are correct or incorrect: 1. Preparation of financial statements involves judgment by management 2. Evolving an audit programme applicable to all business in all circumstances is not practicable 3. Inquiry alone during audit will not provide needed sufficient audit evidence

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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which of the following application would an auditor apply to determine the probability of a corporation's account balance being in error? A) overinvolvement rations B) probability rules C) bayes theorem D) emprical formula
The standard uniquified audit report Select one: a. is sometimes called a disclaimer report b. can be issued only with an explanatory paragraph c. can be issued if only a balance sheet and income statement are included in the financial statements. d. is sometimes called a clean opinion
If the auditor concludes that management’s use of the going concern basis of accounting is appropriate in the circumstances but a material uncertainty exists, the auditor shall: i) Determine whether financial statements disclose clearly that there is a material uncertainty ii) Determine whether the financial statements adequately disclose the principal conditions that may cast significant doubt on the entity’s ability to continue as a going concern. iii) Determine whether the financial statements adequately disclose management’s plans to deal with these events or conditions. A. i) and ii) B. i) and iii) C. Only i) D. i) , ii) and iii)
3. Does a qualified opinion on management’s assessment of internal controls over the financial reporting system necessitate a qualified opinion on the financial statements? Please explain within 150 words. (To answer this question, please make sure you understand the terms “unqualified opinion” and “qualified opinion” in auditing.
Negative Assurance in Review Reports. One portion of the report on a review services engagement is the following: “Based on my review, I am not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformitywith generally accepted accounting principles [or another framework for financial reporting].”Required:a. Is this paragraph a “negative assurance” given by the accountants?b. Why is negative assurance generally prohibited in audit reports?c. What justification is there for permitting negative assurance in a review services report on unaudited financial statements and on interim financial information?
What is the main purpose of information presented in notes to the financial statements? • To provide disclosures required by generally accepted accounting principles. To correct improper presentation in the financial statements. To provide recognition of amounts not included in the totals of the financial statements. To present management's responses to auditor comments.
Amjad is an auditor discussing the results of analytical procedures with the management, Amjad should not accept management's explanations at face value, and should obtain corroboratory evidence for the explanations offered. This is an example of O a. Professional skepticism O b. Professional ethics Oc. Conduct of an audit accordance to ISAS O d. Professional judgement
Sufficient and appropriate evidence is the focus of the third field work standard. * O True O False When the auditor concludes that there is substantial doubt about an entity's ability to continue as a going concern, the auditor should consider the possible effects on the financial statements and the related disclosures. O True False
Which of the following presumptions does NOT relate to the reliability of evidence? A. the more effective the internal control structure, the more assurance it provides about the accounting data and financial statements. B.an auditor's opinion, to be economically useful, is formed within reasonable time and based on evidence obtained at a reasonable cost. C. evidence obtained from independent sourcesoutside the entity is more persuasive than evidence secured solely within the entity. D. the independent auditor's direct personal knowledge, obtained through observation and inspection, is more persuasive than information obtained indirectly.
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Audit committees have an essential role to play in ensuring the integrity and transparency of corporate reporting. Therefore, It would not be appropriate for the auditor to initiate a discussion with the audit committee concerning: Select one:a. the extent to which change in the company's organisation will influence the scope of the audit.b. Details of potential problems that the auditor believes might cause a modified opinion. c. The extent to which the work of internal auditors will influence the scope of the audit.d. Details of the procedures that the auditor intends to apply.
A review service engagement involving unaudited financial statements involvesa. More work than a compilation and an audit.b. Less work than an audit but more work than a compilation.c. Less work than a compilation but more work than an audit.d. More work than an audit but less work than a compilation.