Auditing and Assurance Services, Student Value Edition (16th Edition)
Auditing and Assurance Services, Student Value Edition (16th Edition)
16th Edition
ISBN: 9780134075754
Author: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan
Publisher: PEARSON
Question
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Chapter 24, Problem 1RQ
To determine

Identify and describe the four presentation and disclosure audit objectives. Explain the number of the procedures to test presentation and disclosure audit objectives are integrated with tests performed in earlier stages of the audit

Expert Solution & Answer
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Explanation of Solution

The four presentations and disclosure audit objectives are as follows:

Presentation and disclosure-related audit objectivesDescription
Incidence and rights and obligationsAccount-related information is like explained in the footnotes exists and represents the rights and obligations of the company.
CompletenessAll necessary disclosures are incorporated in the financial statement footnotes.
Accuracy and valuationFootnote disclosures are precise and valued correctly.
Classification and understandabilityAccount balances are properly categorized and related financial statement disclosures are understandable.

Table (1)

The auditor carries out numerous procedures to address presentation and disclosure-related audit objectives in combination with other tests. For instance, information that has to be disclosed associated with fixed assets, like assets class, estimated useful lives of the assets, and the method of depreciation is attained throughout tests of balances for fixed assets.

Auditor uses the financial statement disclosure checklist to sum up all disclosure requirements enclosed in accounting standards. Auditors use the checklist to find out that all necessary disclosures are fully reported and disclosed in the financial statements and supplementary footnotes. It helps the auditor get adequate and appropriate audit evidence regarding the completeness objective for the presentation and disclosure-related audit objective.

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