Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Chapter 24, Problem 4RQ
To determine
Explain the procedure which is used by an individual for an extensive investigation of the possibility of
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An auditor has completed the risk assessment process for the firm and is evaluating the results. If an auditor has determined that there is a material misstatement which is potentially due to fraud, what are the steps or actions that the auditor should take at this point?
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Chapter 24 Solutions
Auditing And Assurance Services
Ch. 24 - Prob. 1RQCh. 24 - Explain why an auditor is interested in a clients...Ch. 24 - Prob. 3RQCh. 24 - Prob. 4RQCh. 24 - Prob. 5RQCh. 24 - Prob. 6RQCh. 24 - Prob. 7RQCh. 24 - Prob. 8RQCh. 24 - What major considerations should the auditor take...Ch. 24 - Identify five audit procedures normally done as a...
Ch. 24 - Prob. 11RQCh. 24 - Prob. 12RQCh. 24 - Prob. 13RQCh. 24 - Prob. 14RQCh. 24 - Prob. 15RQCh. 24 - Prob. 16RQCh. 24 - Prob. 17RQCh. 24 - Prob. 18RQCh. 24 - Prob. 19RQCh. 24 - Prob. 20.1MCQCh. 24 - Prob. 20.2MCQCh. 24 - Prob. 20.3MCQCh. 24 - Prob. 21.1MCQCh. 24 - Prob. 21.2MCQCh. 24 - Prob. 21.3MCQCh. 24 - Prob. 22.1MCQCh. 24 - Prob. 22.2MCQCh. 24 - Prob. 22.3MCQCh. 24 - Prob. 23.1MCQCh. 24 - Prob. 23.2MCQCh. 24 - Prob. 23.3MCQCh. 24 - Prob. 24DQPCh. 24 - Prob. 25DQPCh. 24 - Prob. 26DQPCh. 24 - Prob. 28DQPCh. 24 - Prob. 29DQPCh. 24 - Prob. 32DQPCh. 24 - Prob. 33DQP
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- While performing your audit of Williams Paper Company, you discover evidence that indicates that Williams may not have the ability to continue as a going concern. Required: a. Discuss types of information that may indicate substantial doubt about a client’s ability to remain a going concern. b. Explain the auditors’ obligation in such situations.arrow_forwardAn auditor must identify the relevant assertions about each significant financial statement account and disclosure and then gather evidence to conclude whether a material misstatement exists for each assertion. The nature of each financial statement account and disclosure contributes to the likelihood that a material misstatement exists.a. In general, which accounts are most susceptible to overstatement? To understatement?b. Why do you think a company could permit asset accounts to be understated?c. Why do you think a company could permit liability accounts to be overstated?d. Which direction of misstatement is most likely: income overstatement or income understatement?arrow_forwardA company has been making losses on its operations due to many factors such as competition, impairment of some of its non-current assets and losses incurred on derivatives in its hedging activities as well as problems of complying with many laws and regulations governing its operations. RequiredAs the audit manager in charge of the audit of this company, evaluate the areas in the audit of your client where the audit team members need to exercise a high level of professional skepticism.arrow_forward
- Imagine you work for an auditing firm. Your most recent task is to determine whether your firm should bid to perform a public company’s auditing services. Determine the fundamental kind of information you need to make an informed decision about whether to bid on the audit.arrow_forwardExplain what types of audit opinions auditors can issue and what are the possible reasons for issuing these opinions? Furthermore, discuss the circumstances that require auditors to modify the standard report but not the audit opinion. Discuss how important is the risk assessment stage in audit engagements? Explain what audit procedures auditor perform in this stage and how the results of these procedures would affect the other stage of the audit?arrow_forwardDiscuss the concept of professional skepticism and its importance in audit. Why is it sometimes difficult for auditors to exercise appropriate levels of professional skepticism in practice? 3.A company has been making losses on its operations due to many factors such as competition, impairment of some of its non-current assets and losses incurred on derivatives in its hedging activities as well as problems of complying with many laws and regulations governing its operations. RequiredAs the audit manager in charge of the audit of this company, evaluate the areas in the audit of your client where the audit team members need to exercise a high level of professional skepticism.arrow_forward
- Nakamura, CPA, has acceptedan engagment to audit financial statements of Grant Manufacturing Company, a new client. Grant has an adequate control environment and a reasonable segregation of duties. Nakamura is about to set the control risk for the assertions related to Grant’s property and equipment.Required:Describe the key internal controls related to Grant’s property, equipment, and related transactions (additions, transfers, major maintenance and repairs, retirements, and dispositions) that Nakamura may consider in set-ting the control risk.arrow_forwardBased on the Sarbanes Oxley act, what are some of the activities that an auditing firm cannot be involved with in respect to their audit client? Please explain.arrow_forwardWhen planning an audit, which of the following is not a factor that affects auditors’ decisions about the quantity, type, and content of audit documentation?a. The auditors’ need to document compliance with generally accepted auditing standards.b. The auditors’ need to verify the existence of new sales contracts important for the client’sbusiness.c. The auditors’ judgment about their independence with regard to the client.d. The auditors’ judgments about materiality.arrow_forward
- The most reliable types of audit evidence the auditor can obtain are:a. Physical examination by auditorsb. Auditor's calculations from company records.c. Confirmations received directly from third partiesd. External documentsarrow_forwardImagine you work for an auditing firm. Your most recent task is to determine whether your firm should bid to perform a public company's auditing services. Determine the fundamental kind of information you need to make an informed decision about whether to bid on the audit. Provide your rationale.arrow_forwardYour view of what the companies’ auditors would need to consider in the effective audit of its primary revenues. For example, what would you do to audit the revenue streams? How would you verify that they are correctly stated in the financial statements without material error? Identify no more than three audit procedures around revenue recognition for the company you selected.arrow_forward
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