EBK PRINCIPLES OF AUDITING & OTHER ASSU
21st Edition
ISBN: 9781260299434
Author: WHITTINGTON
Publisher: YUZU
expand_more
expand_more
format_list_bulleted
Question
Chapter 17, Problem 24QRA
a.
To determine
Describe the types of information indicating substantial doubt about the client’s ability to remain a going concern.
b.
To determine
Explain the obligation of the auditor in such situation.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
While performing your audit of Williams Paper Company, you discover evidence that indicates that Williams may not have the ability to continue as a going concern.
Required:
a. Discuss types of information that may indicate substantial doubt about a client’s ability to remain a going concern.
b. Explain the auditors’ obligation in such situations.
Auditors must use their professional judgment_
O to distinguish if a misstatement or scope limitation is just material or pervasively material
O to distinguish if a misstatement or scope limitation is just immaterial or pervasively material
O to determine if the firm has the ability to pay the auditor for services rendered
O in selecting the client's audit committee
Describe a situation that would require an auditor to give an unmodified opinion without a standard report. Describe a situation that would cause an auditor to modify their opinion.
Analyze possible actions an auditor might take if a client’s financial statements depart from GAAP. Do you think the demand for assurance services will increase or decrease in the future? Explain.
Chapter 17 Solutions
EBK PRINCIPLES OF AUDITING & OTHER ASSU
Ch. 17 - Prob. 1RQCh. 17 - What is the function of notes to financial...Ch. 17 - Prob. 3RQCh. 17 - Prob. 4RQCh. 17 - Prob. 5RQCh. 17 - Prob. 6RQCh. 17 - Prob. 7RQCh. 17 - Prob. 8RQCh. 17 - Prob. 9RQCh. 17 - Prob. 10RQ
Ch. 17 - Prob. 11RQCh. 17 - Prob. 12RQCh. 17 - Prob. 13RQCh. 17 - Prob. 14RQCh. 17 - Prob. 15RQCh. 17 - Prob. 16RQCh. 17 - Prob. 17RQCh. 17 - Prob. 18RQCh. 17 - Prob. 19RQCh. 17 - Prob. 20RQCh. 17 - Prob. 21QRACh. 17 - Prob. 22QRACh. 17 - Prob. 23QRACh. 17 - Prob. 24QRACh. 17 - Prob. 25AOQCh. 17 - Prob. 25BOQCh. 17 - Prob. 25COQCh. 17 - Prob. 25DOQCh. 17 - Prob. 25EOQCh. 17 - Prob. 25FOQCh. 17 - Prob. 25GOQCh. 17 - Prob. 25HOQCh. 17 - Prob. 25IOQCh. 17 - Prob. 25JOQCh. 17 - Prob. 25KOQCh. 17 - Prob. 25LOQCh. 17 - Prob. 26OQCh. 17 - Prob. 27OQCh. 17 - Prob. 28OQCh. 17 - Prob. 29OQCh. 17 - Prob. 30OQCh. 17 - Prob. 31OQCh. 17 - Prob. 32OQCh. 17 - Prob. 33PCh. 17 - Prob. 34PCh. 17 - Sturdy Corporation (a nonpublic company) owns and...Ch. 17 - Prob. 36PCh. 17 - Prob. 37PCh. 17 - Prob. 38ITCCh. 17 - Prob. 39ITCCh. 17 - Prob. 40RDC
Knowledge Booster
Similar questions
- The auditor prepares the financial statements for DecoPaints SAOG while also serving as the auditor for DecoPaints SAOG Company. By having the auditor review his or her own work, the auditor cannot be expected to form an unbiased opinion on the financial statements. Which threat may occur when a previous judgment needs to be re-evaluated by the professional accountant responsible for that judgment? Intimidation threats Advocacy threats Self-review threats Self-interest threatsarrow_forwardWhat steps do you believe auditors should take if the client is not pleased with the type of audit report issued by the auditors, based on the evidence they collected?arrow_forwardWhich one of the following is other indicator or events or conditions that may cast significant doubt continue as a going concern? the entity's ability If the auditor found misstatements in financial statements resulting from fraud, the auditor encounters exceptional circumstances that bring into question his ability to continue performing the audit. the auditor shall : Ask the management for his withdrawal. Determine the professional and legal responsibilities applicable in the circumstances. Withdraw from the engagement immediately. Report to audit team regarding withdrawal. If the auditor identify and assess the risk of material misstatement due to fraud or error relating entity's related activities auditor shall: 1. Inquiry with management and others within the entity. Auditing ENarrow_forward
- A moral or legal obligation to ensure the safety or well-being of others Could be defined as duty of care. An auditor's duty of care to a client would most likely be breached if the auditor failed to: Select one: a.comply with the Cooperation Act 2001 & all relevant auditing standards. b. Resolve their staffing issues. c. conduct the audit for the cheapest price. d.Prevent & detect earnings of management.arrow_forwardWhich of the following is an accurate statement about professional skepticism? Select one: a. Professional skepticism involves a critical assessment of the evidence. Professional skepticism involves a critical assessment of the evidence. b. Professional skepticism is only necessary for the audits of public companies c. It is easy for auditors to understand that their clients may try to deceive them throughout the audit process d. Professional skepticism is easy to implement in practice.arrow_forwardLawsuits against CPA firms are most likely to allege that the auditors were negligent in not detecting which of the following? (a) overstatement of liabilities and earnings, (b) understatement of assets and earnings, or overstatement of owners' equity. Explain the reasoning underlying your choice. Please also respond to one of your peers. Discussion Board Requirements: Discussion boards for the relevant auditing topics covered will be created online on Blackboard. (the undi ing inquoc: furthermore each student must respond to the professional analyses of atarrow_forward
- Describe the audit opinion that should be given and explain why. a)When the client is not a going concern, in order to give a true and fair view, management may prepare financial statements on a basis other than going concern basis. The client which is no longer a going concern has still prepared the financial statements on the going concern basis. The client is unwilling to change their basis of preparation.arrow_forwardWhen planning an audit, which of the following is not a factor that affects auditors’ decisions about the quantity, type, and content of audit documentation?a. The auditors’ need to document compliance with generally accepted auditing standards.b. The auditors’ need to verify the existence of new sales contracts important for the client’sbusiness.c. The auditors’ judgment about their independence with regard to the client.d. The auditors’ judgments about materiality.arrow_forwardNoncompliance includes transactions entered by the entity’s employees and management in their personal capacity. The preliminary judgment or estimate about materiality represents the maximum amount by which a set of financial statements could be misstated and still not cause the auditor to believe that the decisions of reasonable users would be affected. Group of answer choices False, True True, False True, True False, Falsearrow_forward
- An auditor has concluded that substantial doubt exists and that the client will not be able to meet its obligations as they become due for a reasonable period of time. Financial statement and footnote disclosures are adequate, detailing the conditions, events, and management's plans to alleviate the doubt. However, the CPA believes that substantial doubt remains. The CPA must add a Going Concern section to the audit report, discussing the Substantial Doubt. How should the audit opinion be modified? a. No modification. b. A qualified opinion. c. An adverse opinion. d. A disclaimer of opinion.arrow_forwardWhich of the following statements is correct regarding auditor independence in fact and in appearance? The auditor should be independent both in fact and in appearance. The auditor should be independent in fact but not in appearance. O The auditor should be independent in appearance but not in fact. When the auditor does not challenge an inappropriate journal entry made by the client in order to keep the client for future audits, this is an example of loss of independence in appearance.arrow_forwardWhich of the following statements is not a correct statement regarding audit evidence? Select one: a. External evidence, such as communications from banks, is generally regarded as more reliable than answers obtained from inquiries of the client b. Documents that originate outside the company are considered more reliable than those that originate within the client's organization. c. Evidence obtained from an independent source outside the client organization is more reliable than that obtained from within. d. Documentary evidence is more reliable when it is received by the auditor indirectly rather than directly.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub- Business/Professional Ethics Directors/Executives...AccountingISBN:9781337485913Author:BROOKSPublisher:Cengage
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub
Business/Professional Ethics Directors/Executives...
Accounting
ISBN:9781337485913
Author:BROOKS
Publisher:Cengage