Contemporary Auditing
11th Edition
ISBN: 9781337650380
Author: KNAPP
Publisher: Cengage
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Audit situations 1 through 10 present various independent factual situations an auditor might encounter in conducting an audit. List A represents the types of opinions the auditor ordinarily would issue, and List B represents the report modifications (if any) that would be necessary. For each situation, select one response from List A and one from List B. Select, as the best answer for each item, the action the auditor normally would take. Items from either list may be selected once, more than once, or not at all.
Assume the following:
The auditor is independent
The auditor previously expressed an unqualified opinion on the prior-year financial statements unless otherwise noted
Only single-year (not comparative) statements are presented for the current year (unless otherwise stated)
The conditions for an unqualified opinion exist unless contradicted in the factual scenario
The conditions stated in the factual scenario are material
No report modifications are to be made except in…
Match five of the items (a-i) with the definitions provided below (1-5):
Audit programs
Audit procedures
Audit objectives
Analytical procedures
Budgets
Competence of evidence
Relevance if evidence
Persuasiveness of evidence
Sufficiency of evidence
_______1. The pertinence of the evidence to the audit objective being tested
_______2 Detailed instructions for the collection of a type of audit evidence.
_______3. Written records of the client’s expectations for the period.
_______4. Detailed instructions for the entire collection of evidence.
_______5. The degree to which the auditor is convinced that the evidence supports the audit opinion
Assume that items 1–8 are situations that Blas, CPA, has encountered during his audit of GELAY, Inc., a private company.
List A represents the types of opinions the auditor ordinarily would issue, and List B represents a portion of the needed report modifications — whether an additional paragraph will be included. For each situation, select one response from List A and one (1) from List B. Select the best answers for each item the action the auditor would normally take. The types of opinions in List A and the report modifications in List B may be selected once, more than once, or not at all.
Assume the following:
The auditor is
The auditor previously expressed an unmodified opinion on the prior year’s financial
Only single-year (not comparative) statements are presented for the current
The conditions for an unmodified opinion exist unless contradicted by the
The conditions stated in the items to be answered are material, unless otherwise
Each item to be answered is independent of the…
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Similar questions
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- If recommendations are made to the audit report noted problems and weaknesses, written responses detailing the following are requested from the audit client: a. A corrective action plan to resolve the problem and its root cause. b. The person responsible for implementing the corrective action. c. An expected implementation date. d. All of the optionsarrow_forwardWith regard to corrective action on audit results, which of the following is not theinternal auditor’s responsibility?(1) Soliciting auditees’ suggestions for corrective actions.(2) Recommending possible alternative corrective actions.(3) Directing the corrective actions.(4) Determining that the corrective actions are responsive to the audit results.(5) Evaluating new policy statements to determine whether they address the unsatisfactory conditions disclosed in the audit results.arrow_forwardAssume that items 1–8 are situations that Blas, CPA, has encountered during his audit of GELAY, Inc., a private company. List A represents the types of opinions the auditor ordinarily would issue, and List B represents a portion of the needed report modifications — whether an additional paragraph will be included. For each situation, select one response from List A and one (1) from List B. Select the best answers for each item the action the auditor would normally The types of opinions in List A and the report modifications in List B may be selected once, more than once, or not at all. Assume the following: The auditor is independent The auditor previously expressed an unmodified opinion on the prior year’s financial Only single-year (not comparative) statements are presented for the current The conditions for an unmodified opinion exist unless contradicted by the The conditions stated in the items to be answered are material, unless otherwise Each item to be answered is…arrow_forward
- Classify each of the following issues according to whether they will be (1) included in written representations in all audits, (2) included in writtenrepresentations in audits of public entities (under PCAOB standards), or (3) not included in written representations:a. Management acknowledgment of its responsibility for the fairness of the financial statements in accordance with U.S. GAAP.b. A list of pending or threatened litigation, claims, or assessments currently outstanding against the client.c. A description of recommendations that allow the client to improve the efficiency and effectiveness of its operations.d. Availability of all financial records and related data.e. Information related to the presentation and disclosure of items within the financial statements.f. Disclosure of all significant deficiencies and material weaknesses in internal control.g. Information concerning fraud involving management and employees who have significant roles in internal control.h. Auditors’…arrow_forward7. Each of the following steps should be performed prior to accepting an audit engagement except: Select one:a. Identifying special circumstances and unusual risks.b. Evaluating the integrity of management.c. Evaluating independence.d. Making preliminary judgments about materiality levels.arrow_forwardExplain the difference between the overall audit strategy and the audit plan and state the key contents of the overall strategy document. ISA 230 Audit Documentation requires auditors to document their work. Briefly explain the reasons for auditors documenting their work. ISA 580 Written representations explains the purpose and use of written representations as audit evidence. State six items that could be included in a written representation letter. ISA500 Audit Evidence requires auditors to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base their audit opinion. Discuss the different sources of evidence available to auditors and assess their relative appropriateness. What factors should the auditor take into consideration before concluding that a financial statement DO NOT show a True and Fair View?arrow_forward
- After the audit report release date, auditors determine that an important auditing procedure was omitted. Which of the following initial courses of action is most appropriate?a. Perform the omitted procedure or an alternative procedure.b. Notify the board of directors and regulatory agencies that are currently relying on auditor’s reports.c. Determine whether the omitted procedure is important in supporting the auditor’s opinion on the entity’s financial statements.d. Engage another public accounting firm to conduct a quality assurance review.arrow_forwardWhich two of the following statements regarding the use of analytical procedures of the audit are correct? i. Analytical procedures are used to test the effectiveness of the design of policies. ii. Analytical procedures involves inquiries and observation of routines to obtain evidences. iii. Analytical procedures help to identify unusual fluctuations for investigation. iv. Analytical procedures can assist the auditor in planning other audit procedures. a. iii and iv b. i and ii c. ii and iv d. ii and iiiarrow_forwardThe AASC is an independent organization responsible for the creation and integration of the 10 Generally Accepted Auditing Standards (GAAS) A. True B. False Intended misstatement of amounts and disclosures on financial reports/statement A. Error B. Management Fraudarrow_forward
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