Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Question
Chapter 3, Problem 8RQ
To determine
Explain the rationale for the PCAOB’s requirements included in the critical audit matters in the audit report and provide two examples of areas that might be considered critical audit matters in the audit of public company.
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What types of companies are required to obtain an independent audit and what is the purpose of the Audit Report?
Prior to accepting a new audit engagement, a public accounting firm shoulda. Attempt to contact the predecessor auditors.b. Evaluate the integrity of management.c. Assess the firm’s resources to ensure that they are sufficient to permit the firm to accept the engagement.d. All of the above.
Explain why auditors today need to provide “key audit matters” in their audit report ofthe company.
Chapter 3 Solutions
Auditing And Assurance Services
Ch. 3 - Prob. 1RQCh. 3 - Prob. 2RQCh. 3 - Prob. 3RQCh. 3 - Prob. 4RQCh. 3 - Prob. 5RQCh. 3 - Prob. 6RQCh. 3 - Prob. 7RQCh. 3 - Prob. 8RQCh. 3 - Prob. 9RQCh. 3 - Prob. 10RQ
Ch. 3 - Prob. 11RQCh. 3 - Prob. 12RQCh. 3 - Prob. 13RQCh. 3 - Prob. 14RQCh. 3 - Distinguish between a report qualified due to a...Ch. 3 - Prob. 16RQCh. 3 - Prob. 17RQCh. 3 - Prob. 18RQCh. 3 - Prob. 19RQCh. 3 - Prob. 20.1MCQCh. 3 - Prob. 20.2MCQCh. 3 - Prob. 20.3MCQCh. 3 - Prob. 21.1MCQCh. 3 - Prob. 21.2MCQCh. 3 - Prob. 21.3MCQCh. 3 - Prob. 22.1MCQCh. 3 - Prob. 22.2MCQCh. 3 - Prob. 22.3MCQCh. 3 - Prob. 23DQPCh. 3 - Prob. 24DQPCh. 3 - Prob. 25DQPCh. 3 - Prob. 26DQPCh. 3 - Prob. 28DQPCh. 3 - Prob. 29DQP
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- Professional guidance indicates that the auditor should consider revenue recognition to be high risk in planning an audit of a company’s financial statements. a. Identify the activities that affect the revenue cycle. b. Identify the financial statement accounts typically associated with the revenue cycle.arrow_forwardAn audit includes a number of letters between the auditors and the company such as the report to those charged with governance and the letter of representation. Explain the purpose of these letters and illustrate your answer with examples of matters to be included in each.arrow_forwardWhat is the role of audit planning in an audit? In an audit, how do you convey your understanding of the company's operations?arrow_forward
- Which of the following engagements is most likely to be considered an operational audit? The auditor determines whether the organization is following provisions of laws and regulations. The auditor examines information presented in an entity’s financial statements to determine whether the financial statements are presented fairly in accordance with the applicable financial reporting framework. The auditor evaluates the organization’s efficiency in processing payments. The auditor assists the client in preparation of financial statements.arrow_forwardCritically appraise the Internal Audit function of the company. Add information about the internal audit team and suggestions given by the internal audit unit to enhance the internal control system of the company.arrow_forwardWhen conducting an audit, business risk must be considered.a) Define business risk in the context of an audit and outline various potential sources of risk.b) What is the relationship between business risk and the audit's preliminary analytical procedures?c) When preparing an audit engagement, there are four key areas to consider, each with its own set of sub-areas. Please indicate the four primary regions as well as the relevant sub-parts.arrow_forward
- Explain the factors to be considered in planning of an audit in a company.arrow_forwardIf the audit firm is performing an integrated audit for a public company. there is an expectation that the auditor will test controls in order to support an opinion on Internal Control over Financial Reporting (ICFR) the auditor should request the assistance of the prior auditor O the audit should be conducted in conjunction with the internal auditors O there is an expectation that the auditor will audit the financial statements only in order to support an opinion on ICFRarrow_forwardCommunicating Key Audit Matters in the audit report is : A. Additional communication to provide transparency in the auditor’s professional judgment, B. An assistance for financial statement users to better understand the entity and areas of significant management juudgments C. A substitute for disclosures in the financial statements that the applicable financial reporting framework requires management to make D. A separate additional opinion on individual matters Seçimimi temizlearrow_forward
- Which section of the regulations require a CPA to comply with Generally Accepted Accounting Principles and Generally Accepted Auditing Standards? If compliance is required by other organizations (PCAOB, AICPA, etc.) why do you think this requirement is also included in the regulations?arrow_forwardAssertions are expressed or implied representations by management that are reflected in the financial statement components. The auditor performs audit procedures to gather evidence to test those assertions. Required: Your client is All's Fair Appliance Company, an appliance wholesaler. Select the most appropriate audit procedure from the following list and enter the number in the appropriate place on the grid. (An audit procedure may be selected once, more than once, or not at all.) Audit Procedure: 1. Review of bank confirmations and loan agreements. 2. Review of drafts of the financial statements. 3. Select a sample of shipping documents, match them with related sales invoices, and determine that they have been included in the sales journal and accounts receivable subsidiary ledger. 4. Select a sample of shipping documents for a few days before and after year-end. 5. Confirmation of accounts receivable. 6. Review of aging of accounts receivable with the credit manager. Assertion a.…arrow_forward1. Johnson & Johnson CPAs, is considering accepting an engagement to perform an audit for a new client, whose prior period financial statements had been audited by another CPA. Johnson & Johnson would like to make certain that they understand the auditor's objective in conducting an initial audit engagement. Which title of Professional Standards addresses this issue , and, will be helpful in understanding the auditor's objectives in conducting an initial audit engagement? Enter the exact section and paragraph with helpful information.arrow_forward
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