AUDITING LL W/ CONNECT <C>
11th Edition
ISBN: 9781307416268
Author: MESSIER
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 21, Problem 21.17MCQ
To determine
Introduction:
Engagements to do agreed upon procedures are special engagements which require the auditor to comment on the factual finding on performance of the agreed procedures on financial information, this kind of engagement uses the auditor’s financial expertise rather than audit expertise and is not a form of
The auditor needs to adhere to standards issued on performance of related services to ensure appropriateness of procedures performed and to ensure quality of work performed.
To select: The correct option.
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Students have asked these similar questions
Which of the following statements is NOT correct about materiality?Select one:
a.
Auditor’s consideration of materiality is influenced by the auditor’s perception of the needs of an informed decision maker who will rely on the financial statements
b.
Materiality is a relative concept
c.
Materiality judgments involve both quantitative and qualitative judgments
d.
At the planning state, the auditor considers materiality at the financial statement level only
Accountants are permitted to express “negative assurance” in which of the following reports?a. Standard unmodified audit report on financial statements.b. Compilation report on unaudited financial statements.c. Review report on unaudited financial statements.d. Adverse opinion report on financial statements.
Noncompliance 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, False
Chapter 21 Solutions
AUDITING LL W/ CONNECT <C>
Ch. 21 - Prob. 21.1RQCh. 21 - Prob. 21.2RQCh. 21 - Prob. 21.3RQCh. 21 - Prob. 21.4RQCh. 21 - Prob. 21.5RQCh. 21 - Prob. 21.6RQCh. 21 - Prob. 21.7RQCh. 21 - Prob. 21.8RQCh. 21 - Prob. 21.9RQCh. 21 - Prob. 21.10RQ
Ch. 21 - Prob. 21.11RQCh. 21 - Prob. 21.12RQCh. 21 - Prob. 21.13RQCh. 21 - Prob. 21.14RQCh. 21 - Prob. 21.15MCQCh. 21 - Prob. 21.16MCQCh. 21 - Prob. 21.17MCQCh. 21 - Prob. 21.18MCQCh. 21 - Prob. 21.19MCQCh. 21 - Prob. 21.20MCQCh. 21 - Prob. 21.21MCQCh. 21 - Prob. 21.22MCQCh. 21 - Prob. 21.23MCQCh. 21 - Prob. 21.24MCQCh. 21 - Prob. 21.25MCQCh. 21 - Prob. 21.26MCQCh. 21 - Prob. 21.27MCQCh. 21 - Prob. 21.28MCQCh. 21 - Prob. 21.29MCQCh. 21 - Prob. 21.30PCh. 21 - Prob. 21.31PCh. 21 - Prob. 21.32PCh. 21 - Prob. 21.33PCh. 21 - Prob. 21.34PCh. 21 - Prob. 21.35P
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Similar questions
- Materiality arises when a misstatement in the financial statements could affect a decision of areasonable user of the statements.Explain the levels of materiality used for determining the type of opinion.arrow_forwardWhich of the following statements about materiality is incorrect? the preliminary assessment of materiality guides audit planning and testing materiality is used to guide the validity of information contained in the financial report materiality is a key auditing concept that is assessed during the planning stage of every audit information is considered material if it has no impact on the decision-making process of financial report usersarrow_forwardWhich item regarding an Emphasis of Matter paragraph is true? a. The auditor will use the E of M to restrict distribution of the audit report. b. The auditor will use the E of M when the client has corrected an error in the previous financial statements. c. An E of M will be used when a material error exists in the current financial statements. d. The E of M paragraph is usually located immediately before the opinion paragraph. e. The E of M paragraph would be used to discuss a client's change in the method to estimate bad debts.arrow_forward
- Before issuing a report on the compilation of financial statements of a non-public entity, the accountant should: a. Apply analytical procedures to selected financial data to discover any material misstatements. b. Corroborate at least a sample of the assertions management has embodied in the financial statements. c. Inquire of the client's personnel whether the financial statements omit substantially all disclosures. d. Read the financial statements to consider whether the financial statements are free from obvious material errors.arrow_forwardWhich of the following best describes how the detailed audit plan of a financial statementauditor compares with the audit client’s comprehensive internal audit plan?a. The comprehensive internal audit plan covers areas that an external auditor would normally not review.b. The comprehensive internal audit plan is more detailed, although it covers fewer areasthan an external audit would normally cover.c. The comprehensive internal audit plan is substantially identical to the audit plan used byan external auditor because both review substantially identical areas.d. The comprehensive internal audit plan is less detailed and covers fewer areas than anexternal auditor would normally reviewarrow_forwardIf in the auditor’s judgment, management’s use of the going concern basis of accounting in the preparation of the financial statements is inappropriate: A. The auditor will give a disclaimed of opinion. B. The auditor shall express an adverse opinion. C. The auditor shall express an unmodified opinion with a separate section. D. The auditor shall express a qualified opinion.arrow_forward
- Audit standards distinguish auditors’ responsibility for planning procedures for detecting noncompliance with laws and regulations havinga direct effect on financial statements versus planning procedures for detecting noncompliance with laws and regulations that do not have a direct effect on financial statements.Required:a. What are the requirements for auditors to plan procedures to detect direct-effect compliance versus indirect-effect compliance?b. For each of the following instances of noncompliance, explain why they are either directeffect (D) or indirect-effect (I) noncompliance:1. A manufacturer inflates expenses on its corporate tax return.2. A retailer pays men more than women for performing the same job. 3. A coal mining company fails to place proper ventilation in its mines.4. A military contractor inflates the overhead applied to a combat vehicle.5. An insurance company fails to maintain required reserves for losses.6. An exporter pays a bribe to a foreign government…arrow_forwardThe conformance of the financial statements with PCACB standards is included in the scope paragraph of the auditor's report. True Falsearrow_forwardJustify the auditor's need to evaluate conformity with applicable rules and regulations. How does this obligation vary for laws and regulations that have a direct impact on financial statements vs those that do not?arrow_forward
- Which statement is incorrect regarding the external auditor's consideration of the work of internal auditing? а. During the course of planning the audit, the external auditor should perform a preliminary assessment of the internal audit function when it appears that internal auditing is relevant to the external audit of the financial statements in specific audit areas. b. The external auditor should consider the activities of internal auditing and their effect, if any, on external audit procedures. C. When the external auditor intends to use specific work of internal auditing, the external auditor need not evaluate and test that work to confirm its adequacy for the external auditor's purposes. d. The external auditor should obtain a sufficient understanding of internal audit activities to assist in planning the audit and developing an effective audit approach.arrow_forwardOther matters to which the auditor may wish to refer in an Other Matter(s) paragraph but which are not required to be presented or disclosed in the financial statements by the applicable financial reporting framework include, for example, the following: Group of answer choices all three other choices Information in a document containing audited financial statements that is materiallyinconsistent with those financial statements. In rare circumstances, other matters that the auditor considers necessary tocommunicate to the user, for example, where the auditor judges it necessary to explain whythe auditor is unable to resign from the engagement even though the possible effect of an inability to obtain sufficient appropriate audit evidence due to a scope limitation imposed by management is pervasive A predecessor auditor’s report on the corresponding figures in the incoming auditor’sreport for the current period where the incoming auditor is permitted to make such areferencearrow_forwardWhat type of opinion is issued by the auditor on the financial statements when there is some limitation on the scope of the audit or when one or more items in the financial statements are not presented in accordance with applicable accounting principles?arrow_forward
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