Auditing And Assurance Services
Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Chapter 6, Problem 22.1MCQ
To determine

Indicate the option which defines fraud in auditing standards.

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An 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.
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 C
Distinguish between the terms errors and fraud. Distinguish between fraudulent financial reporting and misappropriation of assets. Discuss the likely difference between these two types of fraud on the fair presentation of financial statements. Define fraud, and explain the two types of misstatements that are relevant to auditor’s consideration of fraud.
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