choices would most likely represent a prudent course of action by the auditor? The auditor is most likely to simply disclaim an opinion on the client's inventory and any related accounts, as this area represents higher audit risk. ● The auditor may decide to audit the inventory accounts closer to the balance sheet date, and extend the extent of procedures performed on these accounts. O The auditor is likely to adopt a reliance on controls strategy, and perform less substantive procedures accordingly. O The auditor is likely to perform procedures on these accounts closer to the beginning of the audit, to allow more time to fix any problems uncovered.

choices would most likely represent a prudent course of action by the auditor? The auditor is most likely to simply disclaim an opinion on the client's inventory and any related accounts, as this area represents higher audit risk. ● The auditor may decide to audit the inventory accounts closer to the balance sheet date, and extend the extent of procedures performed on these accounts. O The auditor is likely to adopt a reliance on controls strategy, and perform less substantive procedures accordingly. O The auditor is likely to perform procedures on these accounts closer to the beginning of the audit, to allow more time to fix any problems uncovered.

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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Similar questions

Why is the risk that the auditor might make a mistake in expressing a modified opinion on financial statements, which are in reality, free from material misstatements and are fairly presented considered a business risk?
Describe the audit opinion that should be given and explain why. a)When the client is not a going concern, in order to give a true and fair view, management may prepare financial statements on a basis other than going concern basis. The client which is no longer a going concern has still prepared the financial statements on the going concern basis. The client is unwilling to change their basis of preparation.
Inquiries of clients and reperformance normally have a low cost to perform. True False When analytical procedures reveal no unusual fluctuations in an account balance, the auditor will probably perform fewer test of details of balance for that account. True False When analytical procedures reveal no unusual fluctuations in an account balance, the auditor will probably perform fewer test of controls for that account. True False Analytical procedures can be used to provide reliable evidence for all balance-related general audit objectives. True False One advantage of using statical techniques when performing analytical procedures is that they eliminate the need for auditor judgement. True False The type of audit evidence known as documentation involves the auditor’s examination of tangible assets with results of the examination being recorded, or “documented,” in the auditor’s work papers. True False If a company’s cash ratio is greater than 1.0, the company is…
What type of situation would require an auditor to give an unmodified opinion without a standard report. Why would their opinion have to be modified?
A major objective of written representations is toa. Shift responsibility for financial statements from the management to auditors.b. Provide a substitute source of audit evidence for substantive procedures that auditors would otherwise perform.c. Provide management an opportunity to make assertions about the quantity and valuation of the physical inventory.d. Impress on management its ultimate responsibility for the financial statements and disclosures.
What steps do you believe auditors should take if the client is not pleased with the type of audit report issued by the auditors, based on the evidence they collected?
Auditors must use their professional judgment_ O to distinguish if a misstatement or scope limitation is just material or pervasively material O to distinguish if a misstatement or scope limitation is just immaterial or pervasively material O to determine if the firm has the ability to pay the auditor for services rendered O in selecting the client's audit committee
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
Management of an entity sometimes makes estimates where the actual amounts are not available. The role of auditor with respect to such management's estimates is to: a. accept the management's estimation O b. reject the management's estimation O c. evaluate the management's judgment d. withdraw from the audit
The requirement for an attitude of scepticism means that the auditor should A) perform additional tests of controls to increase the probability of discovering fraud or errors. B) plan and conduct the audit with an attitude of distrust in management. C) not be blind to evidence that suggests the documents, books, or records have been altered or are incorrect. D) not consider management's explanation as evidence on any subject
If the auditor determines that an internal control deficiency is either a significant deficiency or a control deficiency, the auditor will issue a/an _______ on internal controls over financial reporting (ICFR) A. adverse opinion B. unmodified opinion C. unqualified opinion D. modified opinion
Which of the following is correct about audit opinion? a. It does not assure the future viability of the entity b. It does not assure about the audit procedures c. It does assure the future viability of the entity d. It does assure the efficiency of the management