QUESTION 21ABC Electric (ABC) entered into an agreement with AB Audit Firm (AB), for AB to perform external audit services. AB delayed issuing the audit report for three months, violating the terms of the agreement with ABC. ABCsues AB for fraud. The fraud lawsuit by ABC is justified under this circumstance.O TrueO FalseQUESTION 22An external auditor's assessment shows that inherent risk as well as control risk are high. In order to keep the audit risk at an acceptable level, the external auditor has to ensure that professionals with high levels of experienceand skills are assigned to the audit.O TrueO FalseQUESTION 23An identified user is a specific third party named in the audit engagement letter as a user of the audited financial statements.O TrueO FalseQUESTION 24Tizzy Enterprise (Tizzy) is a new audit client. In obtaining an understanding of the operations of Tizzy, the external auditor noted that a prior year investigation report revealed the presence of an incentive to commit fraud, theopportunity to commit fraud and the rationalization to commit fraud. The investigation report was inconclusive. The external auditor concluded that the presence of the fraud factors does not necessarily mean that fraudoccurred. This is an accurate statement.O TrueO FalseQUESTION 25Control activities may be implemented both at the organizational level and at the transaction level.O TrueO False

Audit performing an audit in accordance with the professional standards would be held responsible…

QUESTION 21 ABC Electric (ABC) entered into an agreement with AB Audit Firm (AB), for AB to perform external audit services. AB delayed issuing the audit report for three months, violating the terms of the agreement with ABC. ABC sues AB for fraud. The fraud lawsuit by ABC is justified under this circumstance. O True O False

QUESTION 21 ABC Electric (ABC) entered into an agreement with AB Audit Firm (AB), for AB to perform external audit services. AB delayed issuing the audit report for three months, violating the terms of the agreement with ABC. ABC sues AB for fraud. The fraud lawsuit by ABC is justified under this circumstance. O True O False

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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A5
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