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 1, Problem 18MCQ
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.
To choose:The option that correctly explains the responsibilities of the external auditor in auditing the financial statements.
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Students have asked these similar questions
Which of the following internal audit assessments belong to specific governance processes?
a. Whistleblower process.
b. Risk management audit process
c. Internal control over financial reporting.
d. Fraud risks.
The ultimate responsibility for the financial statements lies with the auditors. True or False?
2. An auditor is required to obtain sufficient understanding of each component of an entity’s internal control system to plan the audit of the entity’s financial statements and to assess control risk for the associated assertions in the account balance, transaction class, and disclosure components of the financial statements.
a. Define Internal Control
b. For what purpose should an auditor’s understanding of the internal control components be used in planning an audit?
c. What are an auditor’s documentation requirements concerning an entity’s internal control system and the assessed level of control risk
Chapter 1 Solutions
Auditing: A Risk Based-Approach to Conducting a Quality Audit
Ch. 1 - Prob. 1TFQCh. 1 - Prob. 2TFQCh. 1 - Prob. 3TFQCh. 1 - Prob. 4TFQCh. 1 - Prob. 5TFQCh. 1 - Prob. 6TFQCh. 1 - Prob. 7TFQCh. 1 - Prob. 8TFQCh. 1 - Prob. 9TFQCh. 1 - Prob. 10TFQ
Ch. 1 - Prob. 11TFQCh. 1 - Prob. 12TFQCh. 1 - Prob. 13TFQCh. 1 - Prob. 14TFQCh. 1 - Prob. 15MCQCh. 1 - Prob. 16MCQCh. 1 - Prob. 17MCQCh. 1 - Prob. 18MCQCh. 1 - Prob. 19MCQCh. 1 - Prob. 20MCQCh. 1 - Prob. 21MCQCh. 1 - Prob. 22MCQCh. 1 - Prob. 23MCQCh. 1 - Prob. 24MCQCh. 1 - Prob. 25MCQCh. 1 - Prob. 26MCQCh. 1 - Prob. 27MCQCh. 1 - Which of the following factors is an example of a...Ch. 1 - Prob. 29RSCQCh. 1 - Prob. 30RSCQCh. 1 - Prob. 31RSCQCh. 1 - Prob. 32RSCQCh. 1 - Prob. 33RSCQCh. 1 - Prob. 34RSCQCh. 1 - Prob. 35RSCQCh. 1 - Prob. 36RSCQCh. 1 - Prob. 37RSCQCh. 1 - Prob. 38RSCQCh. 1 - Prob. 39RSCQCh. 1 - Prob. 40RSCQCh. 1 - Prob. 41RSCQCh. 1 - Prob. 42RSCQCh. 1 - Prob. 43RSCQCh. 1 - Prob. 44RSCQCh. 1 - Prob. 45RSCQCh. 1 - Prob. 46RSCQCh. 1 - Prob. 47RSCQCh. 1 - Prob. 48RSCQCh. 1 - Prob. 49RSCQCh. 1 - Prob. 50RSCQCh. 1 - Prob. 51RSCQCh. 1 - Prob. 52RSCQCh. 1 - Prob. 53RSCQCh. 1 - Prob. 54FFCh. 1 - Prob. 55FFCh. 1 - Enron and Arthur Andersen UP Enron was an energy...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Which is not a Risk Assessment Procedure? a. Ratio Analysis b. Observation of Activities c. Account Receivable confirmations d. Inspection of Documents e. Inquiry of Internal Auditorsarrow_forwardWhich of the following statements relating to accounting and auditing is incorrect? i) Accounting covers all transactions, records and statements ii) Auditing reports are first submitted to the management of the organization iii) Auditing is generally carried out by an external person or independent agency iv) Auditing is necessary for all organizations in their day-to-day operations. a. i and iii b. ii and iii c. i and ii d. ii and ivarrow_forwardWhich of the following is required documentation in an audit in accordance with generally acceptedauditing standards? Group of answer choices a. A flowchart or narrative of the accounting system describing the recording and classification of transactions for financial reporting. b. All major stakeholder groups. c. An internal control questionnaire identifying controls that assure specific objectives will be achieved. d. The overall audit strategy and audit plan.arrow_forward
- Audit standards distinguish auditors’ responsibility for planning procedures for detecting noncompliance with laws and regulations havinga direct effect on financial statements versus planning procedures for detecting noncompliance with laws and regulations that do not have a direct effect on financial statements.Required:a. What are the requirements for auditors to plan procedures to detect direct-effect compliance versus indirect-effect compliance?b. For each of the following instances of noncompliance, explain why they are either directeffect (D) or indirect-effect (I) noncompliance:1. A manufacturer inflates expenses on its corporate tax return.2. A retailer pays men more than women for performing the same job. 3. A coal mining company fails to place proper ventilation in its mines.4. A military contractor inflates the overhead applied to a combat vehicle.5. An insurance company fails to maintain required reserves for losses.6. An exporter pays a bribe to a foreign government…arrow_forwardWhich of the following is the most important responsibility of the external auditor? a. To ensure that financial statements comply with applicable financial reporting framework b. To ensure compliance with laws and regulations applicable to the entity c. To design, implement and maintain a system of internal control d. To express an opinion on a true and fair view of the financial statementsarrow_forwardThree common types of attestation services are Select one: O a. audits of historical financial information, verifications of historical financial information, and attestations regarding internal controls. b. reviews of historical financial information, verifications of future financial information, and attestations regarding internal controls. audits of historical financial statements, reviews of historical financial statements, and audits of internal control over financial reporting. O d. audits of historical financial information, reviews of controls related to investments, and verifications of historical financial information.arrow_forward
- 3. Which of the following is NOT part of the control activities applicable to Financial Statement Audit? a. Segregation of duties to prevent opportunities to commit fraud , conceal errors and other irregularities b. Performance Review like comparison of actual performance with budget, forecasts and previous year's performance c. Compliance to reportorial requirements to regulatory bodies. d. Physical controls, ensuring adequate safeguards over access to assets and records.arrow_forward8. What is the definition of analytical procedures? What is timing of analytical procedures in a financial statement audit?arrow_forwardWhich may not be shown in an auditor's report of a non listed entity? A. Auditor's address B. Management responsibility paragraph C. Key audit matters paragraph D. Auditor's responsibility paragrapharrow_forward
- When auditing the accounts payable balance on the balance sheet, an auditor’s procedures most likely would focus primarily on management’s assertion of Select one: a. Rights and obligations b. Completeness. c. Existence d. Presentation and disclosurearrow_forwardExplain the objective ofconducting an audit of financialstatements and an audit ofinternal controls.arrow_forwardThe following questions deal with assessing controlrisk in a financial statement audit. Choose the best response.a. When obtaining an understanding of an entity’s internal control procedures, anauditor should concentrate on the substance of procedures rather than their formbecause:(1) the procedures may be operating effectively but may not be documented.(2) management may establish appropriate procedures but not enforce compliancewith them.(3) the procedures may be so inappropriate that no reliance is contemplated by theauditor.(4) management may implement procedures whose costs exceeds their benefitsarrow_forward
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