Chapter 1, Problem 55FF

a.

To determine

Introduction: An organized and independent examination of financial services to express an opinion on financial statements whether such statements as a whole are free from material misstatement and giving a true and fair view of the state of the entity is known as auditing.

To explain: The objective of external auditing and failure of Person F to achieve the objective.

B.

To determine

Introduction: Auditor’s independence ensures that auditor conducts an audit in a fair manner and as per the established standards and rules without any bias or managerial influence that may affect the work performed.

To explain: The requirement of independent audit in financial statements.

C.

To determine

Introduction: The financial statements indicate the financial performance of a company. It discloses the profits earned and losses occurred by the company during the period and the position of its assets and liabilities at the end of the year.

To state: The users of Company A’s financial statements and its adverse affect on Person F’s action.

D.

To determine

Introduction: Audit quality is maintained when audit is performed as per the generally accepted auditing standards and gives a reasonable declaration that the financial statements and related disclosures are free from material misstatements and are presented as per the generally acceptable accounting principles.

To state: The skill and knowledge required for quality audit of Company F’s financial statements and failure of individual who actually performed the audit work.

E.

To determine

Introduction: Audit quality is maintained when audit is performed in accordance with the generally accepted auditing standards and provides a reasonable assurance that the financial statements and related disclosures are free from material misstatements and are presented in accordance with generally acceptable accounting principles.

To explain: The facts in this case related to each of the driver of audit quality.

F.

To determine

Introduction: An organized and independent examination of financial services to express an on opinion on financial statements whether such statements as a whole are free from material misstatement and gives a true and fair view of the state of the entity is known as auditing.

To state: The Person F & B agreed to conduct the audit in first place.