Why is the risk that the auditor might make a mistake in expressing a modified opinion on financial statements, which are in reality, free from material misstatements and are fairly presented considered a business risk?

Q: The auditor prepares the financial statements for DecoPaints SAOG while also serving as the auditor…

A: Audit is the review and examination of books of account and financial information of the business in…

Q: Accountants are permitted to express “negative assurance” in which of the following reports?a.…

A: Auditing is the examination or inspection of the books of accounts or the financial statements by an…

Q: Which of the following is not true a. Inherent risk and control risk are assessed by the auditor…

A: The question is multiple choice question  Required  Choose the Correct Option.

Q: b. A reply from a receivable confirmation letter received from the customer through the client is…

A: Confirmation letters are part of audit procedure and are sent to outside parties to confirm certain…

Q: The auditor is not expected to, and cannot, reduce audit risk to zero and cannot therefore obtain…

A: Auditing is described as the on-site verification activity of a process or quality systems, such as…

Q: Why do auditors use a business risk approach ?

A: The factors that prevent or hinder the organization to achieve its goal or objectives, are termed as…

Q: Thinking further of the Going Concern and the Disclosure principles, discuss how management should…

A: Going concern: Going concern is one of the principles of accounting. It states that a company goes…

Q: The risk that a client's financial statements are susceptible to material misstatements is a.…

A: SOLUTION- INHERENT RISK IS THE RISK POSED BY AN ERROR OR OMISSION IN A FINANCIAL STATEMENT DUE TO A…

Q: Examples of unmodified opinions which contain modified wording (without adding anemphasis-of-matter…

A: Answer:   Option D.

Q: Given the economic and time constraints in which auditors can collect evidence about management…

A: Financial statements are the statements that are prepared at the end of the period in order to…

Q: What factors should the auditor take into consideration before concluding that a financial statement…

A: Financial statements should give crucial information to any interested user of financial data so…

Q: The auditor only obtains understanding of internal control related to significant risks identified…

A: Internal control process is related with effective and efficient use of available resources and it…

Q: Explain why the auditor can be persuaded only with a reasonable level of assurance, rather than…

A: Auditor refers to the person who analyzes a company's financial statements by using evidence…

Q: Detection risk is the risk that O a client's system of internal controls will not prevent or detect…

A: Auditing means the independent checking of company operation by outsider. Auditor is  qualified and…

Q: An auditor would issue an adverse opinion if: * The audit was begun by other O independent auditors…

A: An audit opinion refers to the statement given by the auditors on the financial statements of an…

Q: What steps should auditors take if during a compilation engagement they become aware that the…

A: Auditing:   Auditing is a gathering of information and evaluation of evidence as to report on the…

Q: External auditors cannot delegate responsibility for audit decisions to the internal auditors. *…

A: External auditors are not supposed to delegate authority to the internal auditors in respect of…

Q: Risk of incorrect acceptance is defined as _______.     the risk that the auditor concludes that a…

A: Risk of incorrect acceptance may be defined as situation where audit sample supports a conclusion…

Q: An independent auditor’s report is a guarantee that the financial statements are free from fraud or…

A: Auditor primary objectives is to give opinion on the financial statements and to give true and fair…

Q: Auditors are not responsible to detect all errors in the financial statements. Discuss the concepts…

A: Professional skepticism is recognizing the possibility that a material misstatement due to fraud…

Q: concept of reliability

A: Which of the following situations violates the concept of reliability? Correct Answer is :-  1,2 and…

Q: When evaluating whether accounting estimates made by management are reasonable, auditors would be…

A: Definition: Auditing: Auditing is the process by which assertions made by management about financial…

Q: An auditor must identify the relevant assertions about each significant financial statement account…

A: a.

Q: The risk that the auditors’ own testing procedures will lead to the decision that…

A:

Q: In a financial statement audit, inherent risk represents a. The risk that misstatements could occur…

A: In financial and managerial accounting, Inherent risk is that the risk expose by a slip-up or…

Q: Generally, audit evidence cannot be obtained entirely through substantive procedures   True or…

A: Substantive procedures are the method or audit tests designed by an auditor to evaluate the…

Q: With respect to fraudulent financial reporting, which one of the following statements is not…

A: Auditor can obtain reasonable assurance only, not an absolute assurance.

Q: tch the type of risk with the related definition. A. Detection risk B. Control risk C. Inherent risk…

A: Solution:- 1. The probability that an auditor will give an inappropriate opinion on financial…

Q: The auditors who find that the client has committed an illegal act would be most likely to withdraw…

A: Auditors are the professionals who are involved in the scrutiny of the financial reports and…

Q: Which of the following best describes the reason why an independent auditorreports on financial…

A: Auditing is a systematic process of analyzing, verifying, and quantifying any given information. It…

Q: The auditor faces a risk that the examination will not detect material misstatements in the…

A: Introduction: An auditor verifies the accuracy of videoed commercial transactions. Auditors must…

Q: Why should auditors act as though there is always a potential conflict of interest between the…

A: Holding is a belief that any sort of potential conflict of interest exists between the auditor and…

Q: materiality

A: Ans. Materiality concept states that an accounting standard can be ignored if the net impact of…

Q: Which of the following is least likely to be considered an appropriate response relating to risks…

A: assessing risks at financial statements level - - evaluation of period-end financial statements…

Q: Which one of the following statements is most appropriate to Control risk? Susceptibility of account…

A: Auditing means the independent checking of company operation by outsider. Auditor is  qualified and…

Q: . To express an opinion on financial statements, the auditor obtains reasonable assurance about…

A: Opinion of the auditor: To express an opinion on financial statements, the auditor obtains…

Q: What is risk of incorrect acceptance?     A. The risk that the auditor concludes that a material…

A: The risk of incorrect acceptance is referred to a situation in which the results of an audit sample…

Q: Why does an auditor not have responsibility to identify or assess all business risks?

A: Audit definition -  The audit is an independent examination of the financial Information of an…

Q: When an event impacts a financial statement element, it should be recognized in the accounting…

A: The financial statements of a company are prepared at the end of an accounting year which shows the…

Q: Some auditors claim that increased exposure under creates a litigation environment that is unfairly…

A:

Q: Define the danger of substantial misrepresentation. RMM is measured by auditors at what level of the…

A: Introduction : Because you posed a question with numerous subparts, we will solve the first three…

Q: When financial statements are affected by a material departure from generally accepted accounting…

A: Generally Accepted Accounting principles: GAAP is  issued by the Financial Accounting Standards…

Q: Which of the provisions of Sarbanes Oxley Act of 2002 (SOX) increased the chances that the financial…

A: Sarbanes Oxley Act of 2002 impose strict penalties in case of violation or fraudulent reporting. Any…

Q: Which of the following is NOT among the conditions that give rise to a demand by external users for…

A: The conditions that give rise to a demand by external users for independent audits of financial…