AUDITING LL W/ CONNECT <C>
11th Edition
ISBN: 9781307416268
Author: MESSIER
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 18, Problem 18.7RQ
To determine
Concept Introduction:
Audit report includes the opinion of the auditor on the financial statements. Auditors provide their opinions based on the audit evidences obtained during the
To indicate:The auditor’saction if the management refuses to correct other information in the annual report.
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2. A client has departed from GAAP for what you, the auditor, considers to be justifiable. The financial statements
would have been misleading if the client had not departed from GAAP.
Circumstance:
Type of Opinion:
Urgent
Why is the risk that the auditor might make a mistake in expressing a modified opinion on financial statements, which are in reality, free from material misstatements and are fairly presented considered a business risk?
Chapter 18 Solutions
AUDITING LL W/ CONNECT <C>
Ch. 18 - Prob. 18.1RQCh. 18 - Prob. 18.2RQCh. 18 - Prob. 18.3RQCh. 18 - Prob. 18.4RQCh. 18 - Prob. 18.5RQCh. 18 - Prob. 18.6RQCh. 18 - Prob. 18.7RQCh. 18 - Prob. 18.8RQCh. 18 - Prob. 18.9RQCh. 18 - Prob. 18.10MCQ
Ch. 18 - Prob. 18.11MCQCh. 18 - Prob. 18.12MCQCh. 18 - Prob. 18.13MCQCh. 18 - Prob. 18.14MCQCh. 18 - Prob. 18.15MCQCh. 18 - Prob. 18.16MCQCh. 18 - Prob. 18.17MCQCh. 18 - Prob. 18.18MCQCh. 18 - Prob. 18.19MCQCh. 18 - Prob. 18.20MCQCh. 18 - Prob. 18.21MCQCh. 18 - Prob. 18.22PCh. 18 - Prob. 18.23PCh. 18 - Prob. 18.24PCh. 18 - Prob. 18.25PCh. 18 - Prob. 18.26PCh. 18 - Prob. 18.27PCh. 18 - Prob. 18.28P
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Similar questions
- Some auditors claim that increased exposure under creates a litigation environment that is unfairly risky for auditors. Do you think that the inability of auditors to detect a financial statement misstatement due to gross deficiencies in internal controls over financial reporting should expose auditors to litigation? Why or why not? Include reference to appropriate ethical standards in your response.arrow_forwardWhich of the following statements about materiality is considered true? a. Materiality is judged by the auditor using his professional knowledge and experience since materiality of an item varies with circumstances. b. Materiality could never influence the economic decisions of users taken on the basis of the financial information. c. The auditor should consider materiality but not its relationship with audit risk when conducting an audit. d. The size and nature of the item will not determine its materiality.arrow_forwardAudit evidence obtained directly by the auditor will not be reliable if Select one: a. it is provided by the client's attorney b. the auditor lacks the competence to evaluate the evidence c. it is impossible for the auditor to obtain additional corroboratory evidence d. the client denies its veracityarrow_forward
- Why is it important for auditors to consider the possibility of fraud by employees or management on every audit engagement? Why must they consider the possibility that the client has not complied with laws.arrow_forwardDescribe what an auditor should do if an attorney refuses to give information that is within the attorney's authority and might have a direct impact on the financial statements' fair presentation.arrow_forwardWhat is the appropriate nature of opinion when the auditor is unable to obtain sufficient appropriate audit evidence on which to base the opinion, but the auditor concludes that the possible effects on the financial statements of undetected misstatements, if any, could be material but not pervasive? a. Unmodified opinion. b. Disclaimer of opinion. c. Qualified opinion. d. Adverse opinion.arrow_forward
- Describe the action that an auditor should take if an attorney refuses to give information that is within the attorney's authority and may have a direct impact on the financial statements' fair presentation.arrow_forwardWhat factors should the auditor take into consideration before concluding that a financial statement do not show a True and Fair View?arrow_forwardThe auditor’s report in the U.S. does not provide the user with details on the level of materiality that the auditor used during the audit. Do you think that the audit report should disclose materiality levels? Why might the user find such information useful? Why might auditors hesitate to publicly reveal the level of misstatement that they will accept as “immaterial”? Would management have a preference regarding the public disclosure of materiality?arrow_forward
- Which of the following statements are not true about auditors responsibilities? a) The financial statements are auditors responsibility b) The auditor's responsibility for the audited financial statements is confined to the expression of his or her opinion on them c) To identify and assess the risks of material mis-statement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain sufficient appropriate audit evidence to provide a basis for the auditor’s opinion d) To obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances and for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Only a) and c) All a) , b) , c) and d) Only a) and d) Only a)arrow_forwardDefine the danger of substantial misrepresentation. RMM is measured by auditors at what level of the financial statements? Explain how auditors evaluate the RMM. What part of substantive testing does RMM play?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
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