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assess the reasonableness of opening balances

assess the reasonableness of opening balances

FINANCIAL ACCOUNTING
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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Megan is performing an initial audit of a financial service institution. One of her first steps is to assess the reasonableness of opening balances. How should she proceed? a. Opening balances do not become easier to determine as experience is gained with a client, so Megan's procedures will be the same as for a continuing client. b. If the account balance turns over at least once an accounting period, Megan must perform extensive audit procedures. c. Megan can place reliance on the report submitted by the predecessor auditor, but that decision should be made by audit area. d. Because this is an initial audit, over auditing is not a concern; Megan must perform all possible procedures.
Transcribed Image Text:Megan is performing an initial audit of a financial service institution. One of her first steps is to assess the reasonableness of opening balances. How should she proceed? a. Opening balances do not become easier to determine as experience is gained with a client, so Megan's procedures will be the same as for a continuing client. b. If the account balance turns over at least once an accounting period, Megan must perform extensive audit procedures. c. Megan can place reliance on the report submitted by the predecessor auditor, but that decision should be made by audit area. d. Because this is an initial audit, over auditing is not a concern; Megan must perform all possible procedures.
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