Auditing & Assurance Services: A Systematic Approach (Irwin Accounting)
10th Edition
ISBN: 9780077732509
Author: William F Messier Jr, Steven M. Glover Associate Professor, Douglas F. Prawitt Associate Professor
Publisher: McGraw-Hill Education
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Question
Chapter 1, Problem 1.13MCQ
To determine
Concept Introduction: Auditing is an independent examination of financial statements. The set of financial statements includes
To choose: The correct option.
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Students have asked these similar questions
An independent audit aids in the communication of economic data because the audit ________.
A. Confirms the exact accuracy of the management's financial representations.
B. Lends credibility to the financial statements.
C. Guarantees that the financial data are fairly presented.
D. Assures the readers of financial statements that any fraudulent activity has been corrected.
In a financial statement audit, the auditor obtains a reasonable level of assurance about whether the financial statements are free of material misstatement in order to express an opinion. In order to obtain reasonable assurance, the auditor must
have prior experience in the industry in which the audit client operates.
examine all documents available that support the financial statements.
obtain sufficient audit evidence.
test controls around significant transaction cycles.
Explain the responsibilities of external auditors in detecting fraud in the financial statements.
Chapter 1 Solutions
Auditing & Assurance Services: A Systematic Approach (Irwin Accounting)
Ch. 1 - Prob. 1.1RQCh. 1 - Prob. 1.2RQCh. 1 - Prob. 1.3RQCh. 1 - Prob. 1.4RQCh. 1 - Prob. 1.5RQCh. 1 - Prob. 1.6RQCh. 1 - Prob. 1.7RQCh. 1 - Prob. 1.8RQCh. 1 - Prob. 1.9RQCh. 1 - Prob. 1.10RQ
Ch. 1 - Prob. 1.11RQCh. 1 - Prob. 1.12RQCh. 1 - Prob. 1.13MCQCh. 1 - Prob. 1.14MCQCh. 1 - Prob. 1.15MCQCh. 1 - Prob. 1.16MCQCh. 1 - Prob. 1.17MCQCh. 1 - Prob. 1.18MCQCh. 1 - Prob. 1.19MCQCh. 1 - Prob. 1.20MCQCh. 1 - Prob. 1.21MCQCh. 1 - Prob. 1.22MCQCh. 1 - Prob. 1.23MCQCh. 1 - Prob. 1.24PCh. 1 - Prob. 1.25PCh. 1 - Prob. 1.26PCh. 1 - Prob. 1.28P
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- Professional guidance indicates that the auditor should consider revenue recognition to be high risk in planning an audit of a company’s financial statements. a. Identify the activities that affect the revenue cycle. b. Identify the financial statement accounts typically associated with the revenue cycle.arrow_forwardWhich of the following is NOT a purpose of an audit of financial statements? a.To express an opinion on the financial statements b. To detect fraud c. To provide assurance to stakeholders d.To improve the company's financial reportingarrow_forwardThe main object of an audit is a. Expression of expert opinion b. Detection and Prevention of fraud and error c. Examination of books of accounts d. Preparation of financial statementsarrow_forward
- Which of the following statements best describes auditors’ responsibility for detecting a client’s noncompliance with a law or regulation?a. The responsibility for detecting noncompliance exactly parallels the responsibility for errors and fraud.b. Auditors must design tests to detect all material noncompliance that indirectly affects the financial statements.c. Auditors must design tests to obtain reasonable assurance that all noncompliance with direct material financial statement effects is detected.d. Auditors must design tests to detect all noncompliance that directly affects the financial statements.arrow_forwardWhich of the following statements is correct with regards to the auditor's responsibility concerning fraud? a.Fraud detection is the objective of an audit. b.It is the auditor's responsibility to prevent fraud. c.The auditor is responsible for obtaining reasonable assurance that the financial statements are free from material statement, whether caused by fraud or error. d.When fraud is discovered by the auditor they must withdraw from the engagement.arrow_forwardAuditors should plan and perform their audits to provide reasonable assurance of detecting material misstatements in financial statements, including those resulting from fraud a.Distinguish between fraudulent financial reporting and misappropriation of assets. b. Describe the three fundamental conditions necessary for the commission of fraud. Provide an illustration of these three conditions for a case of fraudulent financial reporting. c. Describe the three ways in which the auditors may respond to fraud risks in an audit.arrow_forward
- Accounting Which of the following statements is true regarding the identification and assessment of the risks of material misstatements by the auditor? a. As part of brainstorming activities, the auditor should identify possible frauds that could occur. Auditing standards require the auditor to identify and assess the risks of material misstatement due to fraud at the assertion level. Auditing standards require the auditor to identify and assess the risks of material misstatement due to fraud at the financial statement level. d. All of these statements are true.arrow_forwardAuditors provide “reasonable assurance” that the financialstatements are “fairly stated, in all material respects.” Questions are often raised as to theresponsibility of the auditor to detect material misstatements, including misappropriationof assets and fraudulent financial reporting.a. Discuss the concept of “reasonable assurance” and the degree of confidence thatfinancial statement users should have in the financial statements.b. What are the responsibilities of the independent auditor in the audit of financialstatements? Discuss fully, but in this part do not include fraud in the discussion.c. What are the responsibilities of the independent auditor for the detection of fraudinvolving misappropriation of assets and fraudulent financial reporting? Discussfully, including your assessment of whether the auditor’s responsibility for thedetection of fraud is appropriate.arrow_forwardAnalytical procedures used when planning an audit should concentrate ona. Weaknesses in the company’s internal control activities.b. Predictability of account balances based on individual significant transactions.c. Management assertions in financial statements.d. Accounts and relationships that can represent specific potential problems and risks in the financial statements.arrow_forward
- Financial statements that have been audited and verified by an external auditor are considered more reliable in the business marketplace than those that have not. Hence, the role of an external auditor in financial report audit is to: Select one:a. Prevention and detection of unauthorised executive perks. b. Express an opinion whether the client's financial reports are fairly presented. c. Ensure the consistent implementation of policies and procedures. d. Ensure the consistent application of accounting policies.arrow_forwardIndependent auditors perform audits on the financial reports of public companies. This type of auditing can best be described as: Select one: O 1. a discipline that assures financial information presented by management. O 2. an activity whose purpose is to search for irregularities. 3. a regulatory function that prevents the issuance of improper financial information. O 4. a professional activity that measures and communicates financial and business data.arrow_forwardAuditors provide "reasonable assurance" that the financial statements are "fairly stated, in all material respects." Questions are often raised as to the responsibility of the auditor to detect material misstatements, including misappropriation of assets and fraudulent financial reporting. a. Discuss the concept of "reasonable assurance" and the degree of confidence that financial statement users should have in the financial statements. b. What are the responsibilities of the independent auditor in the audit of financial statements? Discuss fully, however, do not include fraud in the discussion. c. What are the responsibilities of the independent auditor for the detection of fraud involving the misappropriation of assets and fraudulent financial reporting? Discuss fully, including your assessment of whether the auditor's responsibility for the detection of fraud is appropriate.arrow_forward
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