Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Question
Chapter 19, Problem 1RQ
To determine
Evaluate the given statement about the audit of companies on an annual basis.
Expert Solution & Answer
Explanation of Solution
Auditing:
Auditing is a process of examination of the financial statements of the company to check the fair and accurate representation of the financial data. Auditing includes the collection of evidence from all possible sources for the process of auditing. As it includes all possible sources, then it has the least risk of material misstatement.
All companies should be audited annually:
This is not the correct statement. The annual audit cannot be conducted by every entity. The small companies might face the expenses if the audit is made on an annual basis. The audit can be done annually only if the expense incurred for getting the financial statements audited equals the benefits arrived out of it. The small entities opt to get their financial statements prepared and reviewed by the Certified Public Accountants. Thus, it cannot be said that all companies have to be audited annually. The large companies can adjust to get their financial statements audited.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Find more about the audit requirements in Oman, including which companies/organizations are required to have yearly audits and which are not.
Which of the following BEST (select one) describes why auditing can be viewed as a continuous cyclical process?
a) The audit plan is used to develop the audit schedule.
b) Many audit departments review the same areas each year as part of the audit plan.
c) Historical and current information from audits should be incorporated into the risk assessment.
d) Businesses go through economic cycles, so audit plans must go through cycles.
Should auditors give assurance on the MD&A or other information in annual reports such as Non-GAAP, performance indicators, or sustainability disclosures?
Chapter 19 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 19 - Prob. 1RQCh. 19 - Prob. 2RQCh. 19 - Prob. 3RQCh. 19 - Prob. 4RQCh. 19 - Prob. 5RQCh. 19 - Prob. 6RQCh. 19 - Prob. 7RQCh. 19 - Prob. 8RQCh. 19 - Prob. 9RQCh. 19 - Prob. 10RQ
Ch. 19 - Prob. 11RQCh. 19 - Prob. 12RQCh. 19 - Prob. 13RQCh. 19 - What are the types of procedures performed during...Ch. 19 - Prob. 15RQCh. 19 - Prob. 16RQCh. 19 - Prob. 17RQCh. 19 - What procedures are required when a CPA performs a...Ch. 19 - Prob. 19RQCh. 19 - What should the accountants do if they discover...Ch. 19 - Prob. 21RQCh. 19 - Prob. 22RQCh. 19 - Prob. 23QRACh. 19 - Prob. 24QRACh. 19 - Prob. 25QRACh. 19 - Prob. 26QRACh. 19 - In connection with a public offering of...Ch. 19 - Prob. 28QRACh. 19 - Prob. 29AOQCh. 19 - Prob. 29BOQCh. 19 - Prob. 29COQCh. 19 - Prob. 29DOQCh. 19 - Prob. 29EOQCh. 19 - Prob. 29FOQCh. 19 - Prob. 29GOQCh. 19 - Prob. 29HOQCh. 19 - Prob. 29IOQCh. 19 - Prob. 29JOQCh. 19 - Prob. 29KOQCh. 19 - Prob. 29LOQCh. 19 - Prob. 30OQCh. 19 - Prob. 31OQCh. 19 - Prob. 32OQCh. 19 - Prob. 33OQCh. 19 - Prob. 34OQCh. 19 - Jiffy Clerical Services is a company that...Ch. 19 - Prob. 36PCh. 19 - Prob. 37AITCCh. 19 - Prob. 37BITCCh. 19 - Prob. 37CITCCh. 19 - Prob. 37DITCCh. 19 - Prob. 38RDC
Knowledge Booster
Similar questions
- Which of the following is a requirement of the Sarbanes–Oxley Act of 2002?a. Registration of all auditing firms with the Public Company Accounting Oversight Board.b. Annual inspection of all auditing firms registered with the Public Company Accounting Oversight Board.c. A monetary fee assessed on organizations issuing securities.d. Overall assessment of the work of the SEC each year.arrow_forwardShould auditors provide some level of assurance on the MD&A or other information in annual reports like Non-GAAP, performance indicators or sustainability disclosures?arrow_forwardImportance of annual audit of financial statements in a companyarrow_forward
- The annual report to the shareholders and the 10-K to the SEC should provide an accurate reflection of an entity’s operations and performance. How does the management team adequately and ethically balance presenting the financial information in a way that is accurate but also reflects favorably on company performance?arrow_forwardThe audit firm shall communicate the results of the monitoring of its system of quality control to engagement partners and other appropriate individuals within the firm: A. Quak Quarterly B. Occasionnally C. Every month D. At least annuallyarrow_forwardChoose the correct.Which of the following is a requirement of the Sarbanes–Oxley Act of 2002?a. Registration of all auditing firms with the Public Company Accounting Oversight Board.b. Annual inspection of all auditing firms registered with the Public Company Accounting Over-sight Board.c. A monetary fee assessed on organizations issuing securities.d. Overall assessment of the work of the SEC each year.arrow_forward
- Develop audit procedures for the use of analytical procedures as a substantive procedure in the testing of the reasonableness of monthly payroll costs for the year Develop audit procedures for the use of analytical procedures in the planning phase to identify significant changes in operating and financial activities of the firm over previous years Identify benefits of using analytical procedures in the audit process May I get some assistance with these questions pleasearrow_forwardYou are an audit senior of Aidit & Co and are in the process of preparing the audit programmes for the final audit of CariClean Ltd. for the year ending 31 December 2019. The company develops and manufactures specialist cleaning products and has been a client of your firm for several years. The audit manager has attended a planning meeting with the finance director and has provided you with the following notes of the meeting: Aidit & Co calculates a large number of ratios and trends for comparison with industry averages and prior year calculations. For most engagements, the client’s business was significantly different from the industry data and the client would automatically explain away any discrepancies by attributing them to the unique nature of its operations. Aidit is concerned about the usefulness of ratio and trend analysis. However, the analysis is done at the completion of every audit and Aidit believes the calculations provide him with an overview of the client’s…arrow_forwardThe annual report is a regular activity of public firms and is sent to current owners (shareholders) and the SEC, and is also made available to prospective owners, financial analysts, and others interested in a company’s performance. Name four of the major sections contained. Please discuss the benefits and limitations of the information provided in this report.arrow_forward
- how many critical audit matters were discusses in target's audit report in 2020?arrow_forwardReview the following independent auditors’ report: To the Board of Directors and Shareholders Company XYZ"We have audited the accompanying balance sheets of XYZ Company as of December 31, 2020, 2019 and 2018, and the related statements of income, retained earnings, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the Caribbean. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.An audit includes examining, on test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the…arrow_forwardReview the following independent auditors’ report: To the Board of Directors and Shareholders Company XYZ "We have audited the accompanying balance sheets of XYZ Company as of December 31,2020, 2019 and 2018, and the related statements of income, retained earnings, and cash flowsfor the years then ended. These financial statements are the responsibility of the Company’smanagement. Our responsibility is to express an opinion on these financial statements basedon our audits. We conducted our audits in accordance with auditing standards generallyaccepted in the Caribbean. Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free of materialmisstatement.An audit includes examining, on test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principles usedand significant estimates made by management, as well as evaluating the overall…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub