International Accounting
5th Edition
ISBN: 9781259747984
Author: Doupnik, Timothy S., Finn, Mark T., Gotti, Giorgio
Publisher: Mcgraw-hill Education,
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Question
Chapter 11, Problem 3EP
To determine
Identify the additional guidelines of the three categories of audit opinions.
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He
Select the necessary words from the list of possibilities to complete the following statements.
Statements
Answer
The purpose of an audit conducted in accordance with generally accepted auditing
standards is to provide financial statement users with an opinion by the auditor on
1.
whether the financial statements are presented fairly, in all material respects, in
accordance with the applicable
The FASB
2.
is the source of authoritative GAAP to be applied by
nongovernmental entities.
3. International auditing standards are issued by the
An attestation engagement includes a report on subject matter, or on an
4.
about subject matter.
CPA firms should establish
assurance that their services adhere to firm and professional standards.
policies and procedures to provide
Audit working papers are an integral part of an examination in accordance with international standards on auditing. These documents are very important and need to be well taken care of in the auditing process. Upon completing an audit process, the auditors should issue an opinion on the client’s financial statements.
REQUIRED:
Explain TWO (2) conditions for the issuance of unqualified opinion on the financial statements.
Describe THREE (3) situations that require the auditor to modify their standard report and still issue an unqualified opinion.
Explain the purpose of key audit matters in the auditor’s report and how it should be described.
Classify each of the following issues according to whether they will be (1) included in written representations in all audits, (2) included in writtenrepresentations in audits of public entities (under PCAOB standards), or (3) not included in written representations:a. Management acknowledgment of its responsibility for the fairness of the financial statements in accordance with U.S. GAAP.b. A list of pending or threatened litigation, claims, or assessments currently outstanding against the client.c. A description of recommendations that allow the client to improve the efficiency and effectiveness of its operations.d. Availability of all financial records and related data.e. Information related to the presentation and disclosure of items within the financial statements.f. Disclosure of all significant deficiencies and material weaknesses in internal control.g. Information concerning fraud involving management and employees who have significant roles in internal control.h. Auditors’…
Chapter 11 Solutions
International Accounting
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Similar questions
- Fundamentally, the auditor report gives an opinion on whether the financial statements O a. Have errors, mistakes, or fraud O b. Present fairly the position and results of an entity Oc. Are in accordance with the national standards O d. Are in accordance with the international standardsarrow_forwardISA 200: Overall Objective of the Independent Auditor, and the Conduct of an Audit in Accordance with International Standards on Auditing states that the overall objective of the independent auditor is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to report on the financial statements in accordance with the auditor’s findings.” REQUIRED: Briefly discuss THREE (3) benefits of a financial statement audit to a company. Discuss FOUR (4) circumstances that could impose threats to the auditor’s independence. State ONE (1) example for each of the circumstances. Auditor’s failure to exercise sufficient care and skill in carrying out their audit might lead to legal action by those who claim to rely on the work of the auditor (Che-Ahmad et. Al., 2018). REQUIRED: Discuss THREE (3) safeguards by auditors that could help minimize the risk of legal liability.arrow_forwardWhich of the following best describes the general contents of the introductory paragraph of the auditors’ report?a. A description of an audit examination, including the fact that the audit was conducted under standards established by the PCAOB.b. The auditors’ conclusion with respect to the fairness of the entity’s financial statements.c. Statements identifying the responsibility of auditors and management in the financial reporting process.d. The auditors’ conclusion with respect to the effectiveness of the entity’s internal control over financial reporting.arrow_forward
- The AICPA has issued several audit and accounting guides for specialized industries. Do auditors have a responsibility to refer to these guidelines when auditing clients to those industries?arrow_forwardThe audit of historical financial statements should be conducted by the CPA professionals in accordance with Group of answer choices -The auditor's judgment -Generally accepted accounting principles -The audit program -Philippine Standards on Auditingarrow_forwardAudit working papers are an integral part of an examination in accordance with international standards on auditing. These documents are very important and need to be well taken care of in the auditing process. Upon completing an audit process, the auditors should issue an opinion on the client’s financial statements. REQUIRED: Describe THREE (3) situations that require the auditor to modify their standard report and still issue an unqualified opinion. Explain the purpose of key audit matters in the auditor’s report and how it should be described.arrow_forward
- Select the necessary words from the list of possibilities to complete the following statements: assertion, codification, financial reporting framework, generally accepted accounting principles, International auditing and assurance standards board, interpretations, professional skepticism, quality control, shareholders, and statements on auditing standards Statements Answer 1. The purpose of an audit conducted in accordance with generally accepted auditing standards is to provide financial statement users with an opinion by the auditor on whether the financial statements are presented fairly, in all material respects, in accordance with the applicable __________. 2. The serially numbered pronouncements issued by the Auditing Standards Board of the AICPA as generally accepted auditing standards are known as __________. 3. Investors need to compare financial statements of different companies. The standards most frequently followed to prepare…arrow_forwardA special purpose auditors’ report is used in connection with the independent audit of the following financial information, EXCEPT A. Financial statements prepared in accordance with a comprehensive basis of accounting B. Compliance with contractual agreements C. Specified accounts . elements of accounts or items in a financial statement D. Financial statements prepared in accordance with PFRSarrow_forwardDistinguish between auditing standards and generally accepted accounting principles, and give two examples of each. Auditing standards: A. represent pronouncements by any of the organizations responsible for setting auditing standards. In the U.S. these standards are set by the PCAOB for public companies and broker dealers, and by the Auditing Standards Board of the AICPA for other entities. B. are ten general guidelines to aid auditors in fulfilling their professional responsibilities and maintain professional skepticism and exercise professional judgment. C. represent the combination of the six principles and four of the Statements on Auditing Standards (SASS) that are codified in the AU-C sections. D. outline specific rules for accounting for transactions occurring in a business enterprise for all private companies in the United States.arrow_forward
- In line with International Standards on Auditing (ISAs), which of the following are the overall objectives of an audit of financial statements? I. To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement in order to express an opinion on them II. To report on the financial statements and communicate as required by ISAs in accordance with the auditor’s findings III. To identify and assess the risks of material misstatement of the financial statements due to fraud IV. To obtain sufficient and appropriate audit evidence regarding management’s use of the going concern assumption 1) I and II 2) I and IV 3) II and III 4) II and IVarrow_forwardWhich of the following engagements is most likely to be considered an operational audit? The auditor determines whether the organization is following provisions of laws and regulations. The auditor examines information presented in an entity’s financial statements to determine whether the financial statements are presented fairly in accordance with the applicable financial reporting framework. The auditor evaluates the organization’s efficiency in processing payments. The auditor assists the client in preparation of financial statements.arrow_forwardAudit working papers are an integral part of an examination in accordance with international standards on auditing. These documents are very important and need to be well taken care of in the auditing process. Upon completing an audit process, the auditors should issue an opinion on the client’s financial statements. REQUIRED: Describe THREE (3) functions of the audit working papers. Distinguish between the permanent working paper file and the current working paper file. State ONE (1) example for each of the file. Explain TWO (2) conditions for the issuance of unqualified opinion on the financial statements. Describe THREE (3) situations that require the auditor to modify their standard report and still issue an unqualified opinion. Explain the purpose of key audit matters in the auditor’s report and how it should be described.arrow_forward
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