AUDITING LL W/ CONNECT <C>
11th Edition
ISBN: 9781307416268
Author: MESSIER
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 20, Problem 20.15MCQ
To determine
Concept Introduction:
The best way is to check that financial statements are audited accurately is the GAAP. Auditing standards are prescribed for doing the audit. If an auditor follows generally accepted auditing standards while performing the audit, the audit quality will be improved. GAAP is also known as standard on care.
To choose: The correct statement which best describes that CPA met the requirements of standard on care.
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Which of the following statements best describes auditors’ responsibility for detecting a client’s noncompliance with a law or regulation?a. The responsibility for detecting noncompliance exactly parallels the responsibility for errors and fraud.b. Auditors must design tests to detect all material noncompliance that indirectly affects the financial statements.c. Auditors must design tests to obtain reasonable assurance that all noncompliance with direct material financial statement effects is detected.d. Auditors must design tests to detect all noncompliance that directly affects the financial statements.
Which of the following statements is correct with regards to the auditor's responsibility concerning fraud?
a.Fraud detection is the objective of an audit.
b.It is the auditor's responsibility to prevent fraud.
c.The auditor is responsible for obtaining reasonable assurance that the financial statements are free from material statement, whether caused by fraud or error.
d.When fraud is discovered by the auditor they must withdraw from the engagement.
Auditors provide “reasonable assurance” that the financialstatements are “fairly stated, in all material respects.” Questions are often raised as to theresponsibility of the auditor to detect material misstatements, including misappropriationof assets and fraudulent financial reporting.a. Discuss the concept of “reasonable assurance” and the degree of confidence thatfinancial statement users should have in the financial statements.b. What are the responsibilities of the independent auditor in the audit of financialstatements? Discuss fully, but in this part do not include fraud in the discussion.c. What are the responsibilities of the independent auditor for the detection of fraudinvolving misappropriation of assets and fraudulent financial reporting? Discussfully, including your assessment of whether the auditor’s responsibility for thedetection of fraud is appropriate.
Chapter 20 Solutions
AUDITING LL W/ CONNECT <C>
Ch. 20 - Prob. 20.1RQCh. 20 - Prob. 20.2RQCh. 20 - Prob. 20.3RQCh. 20 - Prob. 20.4RQCh. 20 - Prob. 20.5RQCh. 20 - Prob. 20.6RQCh. 20 - Prob. 20.7RQCh. 20 - Prob. 20.8RQCh. 20 - Prob. 20.9RQCh. 20 - Prob. 20.10RQ
Ch. 20 - Prob. 20.11RQCh. 20 - Prob. 20.12RQCh. 20 - Prob. 20.13RQCh. 20 - Prob. 20.14MCQCh. 20 - Prob. 20.15MCQCh. 20 - Prob. 20.16MCQCh. 20 - Prob. 20.17MCQCh. 20 - Prob. 20.18MCQCh. 20 - Prob. 20.19MCQCh. 20 - Prob. 20.20MCQCh. 20 - Prob. 20.21MCQCh. 20 - Prob. 20.22MCQCh. 20 - Prob. 20.23MCQCh. 20 - Prob. 20.24MCQCh. 20 - Prob. 20.25MCQCh. 20 - Prob. 20.26PCh. 20 - Prob. 20.27PCh. 20 - Prob. 20.28PCh. 20 - Prob. 20.29P
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- Auditors provide "reasonable assurance" that the financial statements are "fairly stated, in all material respects." Questions are often raised as to the responsibility of the auditor to detect material misstatements, including misappropriation of assets and fraudulent financial reporting. a. Discuss the concept of "reasonable assurance" and the degree of confidence that financial statement users should have in the financial statements. b. What are the responsibilities of the independent auditor in the audit of financial statements? Discuss fully, however, do not include fraud in the discussion. c. What are the responsibilities of the independent auditor for the detection of fraud involving the misappropriation of assets and fraudulent financial reporting? Discuss fully, including your assessment of whether the auditor's responsibility for the detection of fraud is appropriate.arrow_forwardAuditors should plan and perform their audits to provide reasonable assurance of detecting material misstatements in financial statements, including those resulting from fraud a.Distinguish between fraudulent financial reporting and misappropriation of assets. b. Describe the three fundamental conditions necessary for the commission of fraud. Provide an illustration of these three conditions for a case of fraudulent financial reporting. c. Describe the three ways in which the auditors may respond to fraud risks in an audit.arrow_forwardaction which can be taken by SAICA against the external auditor if he/she applied negligence in auditing the financial statements of the companyarrow_forward
- a) Explain why auditors’ reports are important to users of financial statements and why it is desirable to have standard wording. b) b) Define the meaning of the term materiality as it is used in accounting and auditing. What is the relationship between materiality and the phrase obtain reasonable assurance used in the auditor’s report? c) c) Distinguish between fraudulent financial reporting and misappropriation of assets. Discuss the likely difference between those two types of fraud on the fair presentation of financial statements. NB: Please provide answers to question A, B and Carrow_forwardIf the auditor believes that a misstatement is or might be intentional and the effect on the financial statements could be material or cannot be readily determined, the auditor should do which of the following?a. Inquire of management as to the possibility of fraud.b. Discuss with the audit committee what should be done to prevent possible future misstatements.c. Perform procedures to obtain additional audit evidence to determine whether fraud has occurred or is likely to have occurred.d. Both a and b are correct.e. None of these is correct.arrow_forwardConcerning litigation, claims, and assessments, which of the following is an audit procedure that an auditor Concerning litigation, claims, most likely would perform ? Select one: a. Confirm directly with the client’s lawyer that all litigation, claims, and assessments have been recorded or disclosed in the financial statements. b. Discuss with management its policies and procedures adopted for evaluating and accounting for litigation, claims, and assessments. c. Request the client’s lawyer to evaluate whether the client’s pending litigation, claims, and assessments indicate a going concern problem. d. Examine the legal documents in the client’s lawyer’s possession concerning litigation, claims, and assessments to which the lawyer has devoted substantive attention.arrow_forward
- Which of the following statements are true a) The auditor has a responsibility to plan and perform the audit to obtain absolute assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud. b) The auditor has no responsibility to plan and perform the audit to obtain reasonable assurance that misstatement, whether caused by errors or fraud, that are not material to the financial statements are detected. c) The auditor has responsibility to plan and perform the audit to obtain reasonable assurance that misstatement, whether caused by errors or fraud, that are not material to the financial statements are detected. Only b) Only a) and c) Only a) Only a) and b)arrow_forwardWhen performing an audit, which of the following is a primary objective of obtaining an understanding of the entity and its environment, including its internal ce To assess the overall financial performance and profitability of the entity. O To gather evidence regarding the entity's compliance with legal and regulatory requirements. To identify all instances of potential fraud within the organization. O To determine the nature, timing, and extent of the audit procedures that will be performed.arrow_forwardWhich 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_forward
- Under preconditions of an audit, the management shall provide the auditor with the following, except: Group of answer choices b. Additional information that the auditor may request from management for the purpose of the audit d. All the above are concerns that management need to provide c. Unrestricted access to persons within the entity from whom the auditor determines it necessary to obtain audit evidence. a. Access to all information of which management is aware that is relevant to the preparation of the financial statements such as records, documentation and other matters;arrow_forwardAn independent auditor has the responsibility to design the audit to providereasonable assurance of detecting errors and fraud that might have a material effecton the financial statements. Which of the following, if material, is a fraud as definedin auditing standards?(1) Misappropriation of an asset or groups of assets.(2) Clerical mistakes in the accounting data underlying the financial statements.(3) Mistakes in the application of accounting principles.(4) Misinterpretation of facts that existed when the financial statements were prepared.arrow_forwardall of the following are the responsibilities of the auditor except : Select one: a. adopting sound accounting policies, maintaining adequate internal control, and making fair representations in the financial statements b. making certain that all the assertions in the financial statement are correct c. report on the financial statements, and communicate as required by auditing standards, in accordance with the auditor’s findings d. obtain reasonable assurance about whether the financial statements as a whole are free from material misstatementarrow_forward
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