EBK AUDITING & ASSURANCE SERVICES: A SY
11th Edition
ISBN: 9781260687668
Author: Jr
Publisher: MCGRAW-HILL LEARNING SOLN.(CC)
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Question
Chapter 7, Problem 7.29MCQ
To determine
Introduction:
An auditor who is reporting on the financial information of an entity can use the work of another auditor and rely on other auditor’s working after checking other auditor’s report. It is generally found in case of branch audit, division audit, subsidiary audit, etc.
An unqualified report is an independent auditor’s in which auditor gives reasonable assurance that entity’s financial statements represent true and fair view and accounts are in compliance with GAAP.
A qualified opinion is an independent auditor’s opinion that financial statements represent true and fair view except on a certain area for which the auditor does not the responsibility.
Reliance of Auditor on Other Auditor’s work.
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Students have asked these similar questions
If the auditor is auditing a public company in the United States and must report on internal controls over financial reporting (ICFR), the identification of one or more material weaknesses _______.
A.
will result in the auditor issuing an adverse opinion on the financial statements and the CFO/CEO will probably go to jail
B.
will result in an adverse opinion on ICFR
C.
will result in an unmodified opinion on ICFR
D.
will result in the auditor issuing a disclaimer of opinion on the financial statements and the CFO/CEO will probably go to jail
The following relates to the Menendez–Halliburton situation described in the text.(a) How would you characterize Halliburton’s accounting for revenue from ethical and professional perspectives?(b) Once KPMG learned that Menendez had provided a complaint to Halliburton’s audit committee highlighting questionable accounting and auditing practices, the KPMG audit partner instructed the audit team members to avoid communications with Menendez. How would you characterize those actions ethically and professionally?
Which of the following statements is/are correct?
O a. The ban on simultaneously offering consulting and auditing services to economically relevant companies within the framework of the FISG results from the bad experiences that BaFin
had with corresponding offers in the context of the Wirecard scandal.
O b. Violations of the so-called "blacklist" lead to significant fines being paid by the auditing company.
Oc. According to the Financial Market Integrity Strengthening Act, companies are obliged to set up an audit committee to monitor the quality of the audit.
O d. The external rotation of auditing firms requires more frequent tendering processes for auditing services.
Chapter 7 Solutions
EBK AUDITING & ASSURANCE SERVICES: A SY
Ch. 7 - Prob. 7.1RQCh. 7 - Prob. 7.2RQCh. 7 - Prob. 7.3RQCh. 7 - Prob. 7.4RQCh. 7 - Prob. 7.5RQCh. 7 - Prob. 7.6RQCh. 7 - Prob. 7.7RQCh. 7 - Prob. 7.8RQCh. 7 - Prob. 7.9RQCh. 7 - Prob. 7.10RQ
Ch. 7 - Prob. 7.11RQCh. 7 - Prob. 7.12RQCh. 7 - Prob. 7.13RQCh. 7 - Prob. 7.14RQCh. 7 - Prob. 7.15RQCh. 7 - Prob. 7.16RQCh. 7 - Prob. 7.17RQCh. 7 - Prob. 7.18RQCh. 7 - Prob. 7.19MCQCh. 7 - Prob. 7.20MCQCh. 7 - Prob. 7.21MCQCh. 7 - Prob. 7.22MCQCh. 7 - Prob. 7.23MCQCh. 7 - Prob. 7.24MCQCh. 7 - Prob. 7.25MCQCh. 7 - Prob. 7.26MCQCh. 7 - Prob. 7.27MCQCh. 7 - Prob. 7.28MCQCh. 7 - Prob. 7.29MCQCh. 7 - Prob. 7.30MCQCh. 7 - Prob. 7.31MCQCh. 7 - Prob. 7.32MCQCh. 7 - Prob. 7.33MCQCh. 7 - Prob. 7.34PCh. 7 - Prob. 7.35PCh. 7 - Prob. 7.36PCh. 7 - Prob. 7.37PCh. 7 - Prob. 7.38PCh. 7 - Prob. 7.39PCh. 7 - Prob. 7.40PCh. 7 - Prob. 7.41PCh. 7 - Prob. 7.42PCh. 7 - Prob. 7.43PCh. 7 - Prob. 7.44PCh. 7 - Prob. 7.45P
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Similar questions
- For each of the situations described below, identify the category of threat to the fundamental principles of the SAICA Code of Professional Conduct. Additionally, specify at least one fundamental principle that is compromised in each situation. a) An auditor has shares in a company which is an audit client of theirs. b) An accountant has compiled the financial statements for a client and was requested to also audit the statements. c) The financial director of Baboo Ltd is very aggressive and dismissive of the audit function and audit team. d) A chartered accountant values a client's shares and then leads the negotiations on the sale of the client's company. e) The chartered accountant fails to report a fraud at a client because the perpetrator is a close friend and he is sympathetic to the interest of his friendarrow_forwardIndependence is compromised in which of the following situations? The auditor withdraws himself from the engagement team who will audit the business of his brother. The auditor is currently auditing a company where his brother is the Managing Director. The auditor obtained a loan from his friend’s bank. The bank is not a client of the auditor’s firm The auditor received payment for past due billings from the company who is no longer his client.arrow_forwardWhich action is not considered an act discreditable to the accounting profession? a) Being finally determined by a court of competent jurisdiction to have violated any of the federal antidiscrimination laws. b) Having a bank collect notes received from a client in payment of fees. c) Failing to follow standards and procedures established by governmental agencies in audits of grants by those agencies. d) Negligently permitting another to sign a document containing materially false and misleading information.arrow_forward
- Suppose that you are the auditor of Sky Travel Ltd, a reputed travel agent that also manages all your audit firm’s travel arrangements on normal commercial rates. The chief executive officer of Sky Travel Ltd has requested if you could help them overcome financial difficulties by recommending their services to your other audit clients. What type of threat to your independence does this request? Select one: a. Self-interest. b.Self-review threat c.Advocacy threat. d.Intimidation threaarrow_forwardWhich of the following is an example of a self-interest threat to the fundamental principles? The fee quoted is so low that it may be difficult to perform the audit The auditor provides legal consultancy services to the company None of these Auditor prepared the accounts for the companyarrow_forwardFor each situation below identify and explain the threat and one fundamental principle that is comprised.- An accountant has compiled the financial statements for a client and was requested to also audit the statements.- The financial director of Baboo Ltd is very aggressive and dismissive of the audit function and audit team- A chartered accountant values a client’s shares and then leads the negotiations on the sale of the client’s company- The chartered accountant fails to report a fraud of a client because the perpetrator is a close friend and he issympathetic to the interest of his friend.arrow_forward
- Both Siemens and their accountant KPMG and Walmart and their accountant EY failed to resolve the conflict between the integrity and independence of the external auditors and the business interests of the accounting firms. Instead, the two accounting firms put self-interest before the public interest and shareholder interest of their respective clients when their clients sought to maximize company profits by: a. Bribery of foreign government officials b. Customer Identity theft c. Aggressive Inventory method of accounting d. Aggressive Revenue Recognition inconstant with GAAP e. Failing to book interest income from special purpose entities.arrow_forwardSuppose at the end of the year before any adjusting entries, a company has a balance in Allowance for Uncollectible Accounts of $5,000 (debit). During the year, the company reported the following amounts: Credit sales to customers = $550,000 Cash collections from customers = $540,000 Actual bad debts = $20,000 What was the balance of Allowance for Uncollectible Accounts at the beginning of the year?arrow_forwardWhy is it important for auditors to consider the possibility of fraud by employees or management on every audit engagement? Why must they consider the possibility that the client has not complied with laws.arrow_forward
- Which statement about the SEC independence rules on bookkeeping services is not accurate? a) Bookkeeping services are prohibited even if the client approves the books and records as the services are performed. b) Bookkeeping services are permitted if the individuals performing these services perform no other services. c) Bookkeeping services are prohibited in most circumstances under the SEC's independence rules. d) Bookkeeping services are prohibited even if the fees from these services are less than the audit fee.arrow_forwardDiscuss how each of the following could affect independence of mind and independence in appearance, and evaluate the social consequence of prohibiting auditors from doing each one: Owning stock in a client company. Having bookkeeping services for an audit client performed by the same person who does the audit. Having a spouse who is the chief financial officer of a client company.arrow_forwardJones, CPA, is planning the audit of Rhonda’s Company. Rhonda verbally asserts to Jones that all expenses for the year have been recorded in the accounts. Rhonda’s representation in this regarda. Is sufficient evidence for Jones to conclude that the completeness assertion is supported for expenses.b. Can enable Jones to minimize the work on the gathering of evidence to support Rhonda’s completeness assertion.c. Should be disregarded because it is not in writing.d. Is not considered a sufficient basis for Jones to conclude that all expenses have been recorded.arrow_forward
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