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: South-Western College Pub
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Question
Chapter 4, Problem 8TFQ
To determine
Concept introduction: An audit is an independent examination conducted to ensure that the financial statements are true and fair. Auditing standards are certain defined rules and regulation that provide guidance to the auditors for conducting the audit efficiently and effectively. The auditing standards are followed to fulfill the objective of audit.
Professional skepticism is one of the qualities of an auditor. An auditor needs to be inquisitive and alert to the situations indicating possible misstatement or fraud.
To indicate:Whether the given statement is true or false.
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Students have asked these similar questions
What is in the nature of work of an auditor that puts his or her safety at risk? Answer in your own words
Which of the following is an accurate statement about professional skepticism?
Select one:
a.
Professional skepticism involves a critical assessment of the evidence.
Professional skepticism involves a critical assessment of the evidence.
b. Professional skepticism is only necessary for the audits of public companies
c. It is easy for auditors to understand that their clients may try to deceive them throughout the audit process
d.
Professional skepticism is easy to implement in practice.
Do you think the concept of materiality is incompatible with ethical behavior? Consider in your answer how materiality judgments affect risk assessment in an audit of financial statements.
Chapter 4 Solutions
Auditing: A Risk Based-Approach to Conducting a Quality Audit
Ch. 4 - Prob. 1TFQCh. 4 - Prob. 2TFQCh. 4 - Prob. 3TFQCh. 4 - Prob. 4TFQCh. 4 - Prob. 5TFQCh. 4 - Prob. 6TFQCh. 4 - Prob. 7TFQCh. 4 - Prob. 8TFQCh. 4 - Utilitarian theory holds that what is ethical is...Ch. 4 - Prob. 10TFQ
Ch. 4 - Prob. 11TFQCh. 4 - Prob. 12TFQCh. 4 - Prob. 13MCQCh. 4 - Prob. 14MCQCh. 4 - Prob. 15MCQCh. 4 - Prob. 16MCQCh. 4 - Prob. 17MCQCh. 4 - Prob. 18MCQCh. 4 - Prob. 19MCQCh. 4 - Prob. 20MCQCh. 4 - Prob. 21MCQCh. 4 - Prob. 22MCQCh. 4 - Prob. 23MCQCh. 4 - Prob. 24MCQCh. 4 - Prob. 25RSCQCh. 4 - Prob. 26RSCQCh. 4 - Prob. 27RSCQCh. 4 - Prob. 28RSCQCh. 4 - Prob. 29RSCQCh. 4 - Prob. 30RSCQCh. 4 - Refer to the Focus on Fraud feature “Moss Adams...Ch. 4 - Prob. 32RSCQCh. 4 - Prob. 33RSCQCh. 4 - Prob. 34RSCQCh. 4 - Prob. 35RSCQCh. 4 - Prob. 36RSCQCh. 4 - Prob. 37RSCQCh. 4 - Prob. 38RSCQCh. 4 - Prob. 39RSCQCh. 4 - Prob. 40RSCQCh. 4 - Prob. 41RSCQCh. 4 - Prob. 42RSCQCh. 4 - Prob. 43RSCQCh. 4 - Prob. 44RSCQCh. 4 - Prob. 45RSCQCh. 4 - Prob. 46RSCQCh. 4 - Prob. 47RSCQCh. 4 - Prob. 48RSCQCh. 4 - Prob. 49RSCQCh. 4 - Prob. 50RSCQCh. 4 - Prob. 51RSCQCh. 4 - Refer to Exhibit 4.4. Briefly explain the seven...Ch. 4 - Prob. 53RSCQCh. 4 - Prob. 54RSCQCh. 4 - Prob. 55RSCQCh. 4 - Prob. 56RSCQCh. 4 - Prob. 57RSCQCh. 4 - Prob. 58RSCQCh. 4 - Prob. 59RSCQCh. 4 - Prob. 60RSCQCh. 4 - Prob. 61RSCQCh. 4 - Prob. 62RSCQCh. 4 - Prob. 63RSCQCh. 4 - Prob. 64RSCQCh. 4 - KPMG (LO 1, 2, 3) KPMG LLP served as the external...Ch. 4 - Prob. 66FF
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Similar questions
- For what does an auditor use professional skepticism?arrow_forwardThe auditor needs to assess management integrity as a potential indicator of inherent risk, particularly as it relates to the potential of fraud. Although the assessment of management integrity takes place on every audit engagement, it is a difficult and subjective task. It requires professional skepticism on the part of the auditor because it is human nature to trust people whom we know and interact with. For each of the following management scenarios, (1) indicate whether you believe the scenario reflects negatively on management integrity, and explain why; and (2) indicate how the assessment would affect the auditor’s planning of the audit Management Scenarios: The owner/manager of a privately held company owns three other companies. The entities could be run as one entity but they engage extensively in related-party transactions to minimize the overall tax burden for the owner/manager. The president of a publicly held company has a reputation for being stubborn with a violent…arrow_forwardExplain professional skepticism and why it is important for all auditors.arrow_forward
- Which of the following BEST (select one) describes why auditors must maintain independence? a) The value of the audit report is higher if the report is free of bias. b) The value of the audit report is lower if the report is free of bias. c) The value of the audit report is generally not impacted by the independence of the auditor. d) The value of the audit report depends on the due professional care of the auditor performing the work.arrow_forwardHow can an auditor reduce a client’s inherent risk?arrow_forwardWhich of the following statements are correct? Select which option is correct. Select one or more: A. The level of professional skepticism can be reduced where the auditor has past experience with the entity indicating the honesty and integrity of management. B. Professional skepticism implies an expectation of fraud or error, so is a biased viewpoint. C. The level of professional skepticism needs to be maintained throughout the whole engagement. D. Professional skepticism is not important in considering management's explanations for unusual trendsarrow_forward
- What are the main threats to auditor's ethics?arrow_forwardIs it necessary for an auditor to understand the client's internal control if the auditor does not plan to depend on it throughout the audit? Explain.arrow_forwardWhy would a staff auditor want to be “part of the client’s team” and consent to questionable practices rather than being an “independent watchdog” and contest such practices?arrow_forward
- The auditor is required to maintain professional skepticism throughout the audit. Which of the following statements concerning professional skepticism is false? a. A belief that management and those charged with governance are honest and have integrity relieves the auditor of the need to maintain professional skepticism b. Maintaining professional skepticism throughout the audit reduces the risk of using inappropriate assumptions in determining the nature, timing and extent of the audit procedures and evaluating the results thereof c. Professional skepticism is necessary to the critical assessment of audit evidence d. Professional skepticism is an attitude that includes questioning contradictory audit evidence obtainedarrow_forwardIf an auditor does not intend to rely on internal controls in the audit, does the auditor needto obtain an understanding of the client’s internal control? Explain.arrow_forwardExplain why professional skepticism would be critical in assessing and responding to the risk of fraud.arrow_forward
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