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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Textbook Question
Chapter 17, Problem 64RSCQ
Is it unethical for a company to provide a sustainability report, but provide no assurance on the reliability of the information Contained therein?
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In unethical for a company to provide a sustainability report, but provide no assurance on the reliability of the information contained therein?
Why does an auditor not have responsibility to identify or assess all business risks?
Do you think the concept of materiality is incompatible with ethical behavior? Consider in your answer how materiality judgments affect risk assessment in an audit of financial statements.
Chapter 17 Solutions
Auditing: A Risk Based-Approach to Conducting a Quality Audit
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- Which of the following proposes actions would clearly present an ethical dilemma to the company and violate the IMA Standards of Ethical Conduct?arrow_forwardDescribe an adverse selection problem a company is facing. What is the source of the asymmetric information? Who is the less informed party? What transactions are not being consummated as a result of the information? Could you (or do you) use signaling or screening to consummate these transactions? Offer your company some sound advice, complete with computations of the attendant profit consequences.arrow_forwardGive one reason why performing advisory services could enhance audit quality. Give one reason why performing advisory services could weaken audit quality. Do you think performing advisory services for audit clients should be restricted? Why or why not?arrow_forward
- Under what circumstances would an auditor choose to confirminformation such as the right of return or special sales terms in addition to the customerbalance?arrow_forwardWhich is not an organization's response to risks? *a. An organization may accept the risk if it is prepared to absorb or mitigate the impact of the risk.b. An organization may take the risk but tries to lower the impact and possibility of occurrence of the risk.c. An organization may take the risk but not the returns that come with it.d. An organization may opt not to take the risk by avoiding the activity with associated risk.arrow_forwardWhat are the challenges and risks associated with implementing control procedures in accounting, and how can they be mitigated?arrow_forward
- Why does scope creep create risk in independence? Select all that apply It can create an unfair advantage in the marketplace. It can decrease costs. It can lead to unintentionally providing a prohibited service to a restricted entity. It can cause non-compliance with KPMG policies on independence.arrow_forwardHow might financial incentives in the form of client services unconsciously introduce auditor bias into the independent audit function? Are there any solutions to the conflict?arrow_forwardWhich of the following does NOT describe inherent risk? O tends to be driven by the nature of the business or account O risk a misstatement occurs irrespective of any controls determined by the effectiveness of internal controls O auditor cannot influence inherent riskarrow_forward
- Two factors that typically lead to ethical violations are relevance and timeliness of accounting information. Group of answer choices True Falsearrow_forwardWhat are the benefits to a company of maintaining and encouraging high ethicalstandards?arrow_forwardExplain the problems of adverse selection and moral hazard caused by asymmetricinformation. How can financial intermediaries alleviate those problems?arrow_forward
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