An audit is an independent examination conducted to ensure that the financial statements are true and fair. Auditing standards are certain defined rules and regulation that provide guidance to the auditors for conducting the audit efficiently and effectively. The auditing standards are followed to fulfill the objective of audit. Professional judgment is the ability to decide for where the auditing standards should be used and where should not be used. The auditor must have a sense of professional judgment. To indicate: The auditor’s action in the given situation.

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Chapter 4, Problem 54RSCQ

To determine

Concept introduction: An audit is an independent examination conducted to ensure that the financial statements are true and fair. Auditing standards are certain defined rules and regulation that provide guidance to the auditors for conducting the audit efficiently and effectively. The auditing standards are followed to fulfill the objective of audit.

Professional judgment is the ability to decide for where the auditing standards should be used and where should not be used. The auditor must have a sense of professional judgment.

To indicate:The auditor’s action in the given situation.

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