AUDITING+ASSURANCE SERVICES (LL)
11th Edition
ISBN: 9781266448119
Author: MESSIER
Publisher: MCG
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Chapter 17, Problem 17.18MCQ
To determine
Concept Introduction:
Going concern is one of the assumptions of the financial statement. According to this assumption, the entity is expected to run its business for the foreseeable future. Hence the financial statements are prepared assuming that the business will run at least for the next financial statement.
To choose: The procedure that can help the auditor to check the going concern assumption.
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Which of the following outcomes is NOT a desired outcome of a financial audit?
Test internal controls
Examine completeness of financial records
Assess legality of transactions
Evaluate public opinion of the budget
If events or conditions have been identified that may cast significant doubt on the entity’s ability to continue as a going concern, the auditor shall:
i) Obtain sufficient appropriate audit evidence to determine whether or not a material uncertainty exists
ii) Request management to make its assessment of the material uncertainty
iii) Evaluate management’s plans for future actions in relation to its going concern assessment, whether management’s plans are feasible
iv) Evaluate the reliability of the underlying cash flow data
v) Request written representations from management regarding their plans
A.
i) ii) and iv)
B.
iii) iv) and v)
C.
ii) iii) and iv)
D.
i) ii) iii) iv) and v)
Which of the following best describes the role of analytical procedures near the end of theaudit engagement?a. To identify possible deficiencies in the client’s internal control over financial reporting.b. To identify accounts that appear to be misstated with the intention of planning thenature, timing, and extent of other substantive procedures.c. To gather evidence to support one or more assertion(s) related to the account balance orclass of transactions.d. To provide an overall review of the financial information and assessment of the adequacy of evidence gathered during the audit engagement.
Chapter 17 Solutions
AUDITING+ASSURANCE SERVICES (LL)
Ch. 17 - Prob. 17.1RQCh. 17 - Prob. 17.2RQCh. 17 - Prob. 17.3RQCh. 17 - Prob. 17.4RQCh. 17 - Prob. 17.5RQCh. 17 - Prob. 17.6RQCh. 17 - Prob. 17.7RQCh. 17 - Prob. 17.8RQCh. 17 - Prob. 17.9RQCh. 17 - Prob. 17.10RQ
Ch. 17 - Prob. 17.11RQCh. 17 - Prob. 17.12RQCh. 17 - Prob. 17.13MCQCh. 17 - Prob. 17.14MCQCh. 17 - Prob. 17.15MCQCh. 17 - Prob. 17.16MCQCh. 17 - Prob. 17.17MCQCh. 17 - Prob. 17.18MCQCh. 17 - Prob. 17.19MCQCh. 17 - Prob. 17.20MCQCh. 17 - Prob. 17.21MCQCh. 17 - Prob. 17.22PCh. 17 - Prob. 17.23PCh. 17 - Prob. 17.24PCh. 17 - Prob. 17.25PCh. 17 - Prob. 17.26PCh. 17 - Prob. 17.27PCh. 17 - Prob. 17.28P
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- 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_forwardPrepare a broad audit plan:1. What material types of transactions and transaction cycles are involved?2. What are the high-risk areas?3. What are the low-risk areas?4. If management faced tremendous pressure regarding the entity’s financial performance, what opportunities might exist for them to engage in fraudulent financial reporting?5. To what extent do you believe it will be appropriate to reduce assessed control risk?6. How will audit effort be allocated among geographical areas?7. What form of auditors’ report do you expect will be issued; what does it mean?8. Indicate as an appendix to the report how the project team was organized and how it functioned on the project and submit appendix with Team Project.arrow_forwardThe most important objective of risk assessment procedures performed by auditor is a. To identify and assess financial risk in the activities of the entity b. To identify and assess the risk in achieving the entity objectives c. To detect material misstatements in the financial statements d. To detect errors and fraud occurred in the books of accountsarrow_forward
- Which of the following audit procedures is least appropriate for addressing the assertion of valuation of liabilities? a. Confirm with creditors b. Test for unrecorded liabilities. c. Perform analytical procedures. d. Verify accounts payable trial balancearrow_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_forwardWhen auditing account balances of liabilities, auditors are most concerned with management’s assertion abouta. Existence.b. Rights and obligations.c. Completeness.d. Valuation and allocation.arrow_forward
- For which of the following purpose can the analytical procedure be used i) Better understanding of the client’s industry and business ii) Assess the client’s ability to continue as going concern iii) To understand the revenue growth, new investments, loans taken etc iv) To understand, if any, abnormal fluctuation in figures in Financial statements v) To reduce the need for detailed audit vi) To understand new changes in internal control environment Only i) , ii) , iii) and iv) Only i) , ii) , iv) and v) Only i) , ii) , iii) , iv) and v) All i) , ii) , iii) , iv) ,v) and vi)arrow_forwardIn accounting, which term describes deficiencies or flaws in the design or operation of internal controls that could increase the risk of errors, fraud, or misstatements in financial reporting? a) External audit b) Compliance review c) Internal control weaknesses d) Financial statement analysisarrow_forwardWhich of the following best describes why an independent auditor is asked to expressan opinion on the fair presentation of financial statements?(1) It is difficult to prepare financial statements that fairly present a company’s financialposition, operations, and cash flows without the expertise of an independent auditor.(2) It is management’s responsibility to seek available independent aid in theappraisal of the financial information shown in its financial statementsarrow_forward
- The auditor's responsibility in relation to the assessment of going concern basis of accounting is to: a.Conclude on whether a material uncertainty exists about the entity's ability to continue as a going concern b.All of the choices are correct c.Obtain sufficient appropriate audit evidence regarding appropriateness of use of going concern basis of accounting in the preparation of the financial statements d.Conclude on the appropriateness of management's use of the going concern basis of accounting in the preparation of the financial statements, based on the evidence obtainedarrow_forwardDogarrow_forwardWhat is the problem with an auditor overrelying on management’s representations on the financial statements?arrow_forward
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