EBK AUDITING+ASSURANCE SERVICES
17th Edition
ISBN: 9780135171219
Author: ARENS
Publisher: PEARSON CO
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Question
Chapter 6, Problem 26DQP
a.
To determine
Discuss the purpose of the two parts of the report of management.
b.
To determine
Discuss the responsibility of the auditor related to the report of management.
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The following are selected portions of the report ofmanagement from a published annual report.REPORT OF MANAGEMENTManagement’s Report on Internal Control over Financial ReportingThe Company’s management is responsible for establishing and maintaining adequateinternal control over financial reporting. The Company’s internal control over financialreporting is a process designed under the supervision of its President and ChiefExecutive Officer and Chief Financial Officer to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of the Company’s financialstatements for external reporting in accordance with accounting principles generallyaccepted in the United States of America. Management evaluates the effectiveness ofthe Company’s internal control over financial reporting using the criteria set forth bythe Committee of Sponsoring Organizations of the Treadway Commission (COSO)in Internal Control–Integrated Framework. Management, under the…
The internal control system provides reasonable assurance that the company’s objectives are being met in all of the following areas EXCEPT which one?
effectiveness and efficiency of the company’s operations
reliability of financial reporting
consolidation of departments within the accounting function
compliance with applicable laws and regulations
In addition to the preparation of
financial statements, it is also the
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Identify the financial reporting
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Establish and maintain internal
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Selecting and applying appropriate
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All of the above.
Chapter 6 Solutions
EBK AUDITING+ASSURANCE SERVICES
Ch. 6 - Prob. 1RQCh. 6 - Prob. 2RQCh. 6 - Prob. 3RQCh. 6 - Prob. 4RQCh. 6 - Prob. 5RQCh. 6 - Prob. 6RQCh. 6 - Prob. 7RQCh. 6 - What are the six elements of professional...Ch. 6 - What are the five elements of an effective...Ch. 6 - Describe two of the more common judgment traps and...
Ch. 6 - Identify the cycle to which each of the following...Ch. 6 - Why are sales, sales returns and allowances, bad...Ch. 6 - Prob. 13RQCh. 6 - Prob. 14RQCh. 6 - Prob. 15RQCh. 6 - Prob. 16RQCh. 6 - Prob. 17RQCh. 6 - Prob. 18RQCh. 6 - Prob. 19RQCh. 6 - Prob. 20RQCh. 6 - Prob. 21.1MCQCh. 6 - Prob. 21.2MCQCh. 6 - Prob. 21.3MCQCh. 6 - Prob. 22.1MCQCh. 6 - Prob. 22.2MCQCh. 6 - Prob. 22.3MCQCh. 6 - Prob. 23.1MCQCh. 6 - Prob. 23.2MCQCh. 6 - Prob. 23.3MCQCh. 6 - Prob. 24.1MCQCh. 6 - Prob. 24.2MCQCh. 6 - Prob. 24.3MCQCh. 6 - Prob. 25DQPCh. 6 - Prob. 26DQPCh. 6 - Prob. 27DQPCh. 6 - Prob. 28DQPCh. 6 - Prob. 29DQPCh. 6 - Prob. 30DQPCh. 6 - Prob. 31DQPCh. 6 - Prob. 32DQPCh. 6 - Prob. 33DQPCh. 6 - Prob. 34DQP
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Similar questions
- 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_forwardWhich one of the following components of internal control over financial reporting sets the tone for the organization? a. Risk assessment. b. Control environment. c. Information and communication. d. Monitoring.arrow_forwardIdentify the following as True or False: Managerial accounting reports must comply with the rules set in place by the FASB. Financial accounting reports are typically general-purpose reports. Financial accounting reports pertain to the entity as a whole, whereas managerial accounting focuses more on subunits of the organization. The main users of the financial accounting information are the internal users. Managerial reports are prepared on an as-needed basis. Financial accounting reports often must be audited at least annually by an independent auditor.arrow_forward
- Indicate whether each statement describes financial accounting or managerial accounting. The information is directed at external users who are making decisions pertaining to investing, extending credit, and other decisions. The principal users are the organizations managers. The key focus is on the entity as a whole. The rules and principles are very flexible. The information gathered is usually available after an independent audit has been completed.arrow_forwardList the major components of the auditors’ report on internal control over financial reporting.arrow_forwardInternal control system comprises the company's policies, practices and procedures which are employed in order to: safeguard its assets, ensure the accuracy and reliability of accounting records and information, promote efficiency in its operations, measure management's compliance with prescribed policies and procedures and ensure the issuance of an unqualified opinion on its financial statements by its external auditors. true or false?arrow_forward
- What is meant by internal control based on the professional standards of a public accountant is:a. A process carried out by the Board of Directors and the Board of Commissioners which is designed to provide adequate assurance about the reliability of financial reporting, effectiveness and efficiency of operations and compliance with applicable laws.b. A process carried out by the Board of Commissioners, management and other personnel of the entity that is designed to provide reasonable assurance about the reliability of financial reporting, effectiveness and efficiency of operations and compliance with applicable laws.c. A process carried out by all members of the internal audit department of a company to detect errors in the processes run by the companyd. B and C are correcte. All wrongarrow_forwardWhich of the following statement is not related to role of audit committee? Approve remuneration and terms of engagement of the external auditor Monitor and review the effectiveness of the company’s internal control Monitor the integrity of the company’s financial statements To prepare the financial statement of the company in timearrow_forwardAn auditor issues an audit report that expresses three opinions. Which of the following is not one of those opinions? Question 23 options: a) whether management’s assessment of the company’s internal control over its financial reporting is appropriate b) whether management’s assessment that the financial statements are based upon the proper use of GAAP c) whether the company maintained effective internal control over its financial reporting d) whether the company’s financial statements present fairly the results of operations and cash flows in conformity with GAAParrow_forward
- Which of the following information would be included in the introductory paragraph of the auditors’ report on internal control over financial reporting if the report is presented separately from the auditors’ report on the entity’s financial statements?a. The fact that the auditors conducted an audit of the entity’s financial statements.b. The definition of a material weakness in internal control over financial reporting.c. Statements identifying the responsibility of the auditors and management for internal control over financial reporting.d. A reference to the auditors’ report and opinion on the entity’s financial statements.arrow_forwardPolicies and procedures that client management has established to meet its objectives for financial reporting include all of the following EXCEPT: Examine adequate segregation of duties in the accounting and finance department Ensure that the employees of the company's in the accounting and finance department are satisfied with their job Verify the adequacy of documents and records in the accounting and finance department Check for the proper authorization of transactions and activities 直 。 iul lis TOSHIBAarrow_forwardInternal controls are crucial to ensuring that financial transactions are authorized and company records are maintained properly. Please explain some of the internal control procedures that accounting departments utilize to achieve the aforementioned goals. How do these internal controls help accounting departments achieve their objectives?arrow_forward
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