Auditing: A Risk Based-Approach to Conducting a Quality Audit
10th Edition
ISBN: 9781305080577
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: South-Western College Pub
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Question
Chapter 7, Problem 1TFQ
To determine
Introduction: The concept ofmateriality is where small transaction or amount matters that can change the decision of the users. Materiality misstatement concept includes omissions that are considered as material. They effect the financial decisions of the users.
To Select: State whether the given condition is true or false.
Expert Solution & Answer
Answer to Problem 1TFQ
The given statement isfalse.
Explanation of Solution
The given statement states that the auditor bases materiality solely on quantitative factors but this is not true as auditor focuses onboth the factors for materiality such as quantitative and qualitative. Identification and material misstatements assess the standard that is requiredby the auditor in the financial statements through understanding the client’s environment, related areas, and internal control.
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Why determination of Materiality is a matter of Auditor Judgment? Explain both Qualitative and quantitative materiality assessments.
a) Explain why determination of materiality is a matter of auditor judgment. Refer to both qualitative and quantitative materiality assessments.
b) impacts on the auditor's assessment of preliminary materiality
Understand auditors’ responsibility forsubsequent events and subsequentlydiscovered facts
Chapter 7 Solutions
Auditing: A Risk Based-Approach to Conducting a Quality Audit
Ch. 7 - Prob. 1TFQCh. 7 - Prob. 2TFQCh. 7 - Prob. 3TFQCh. 7 - Prob. 4TFQCh. 7 - Prob. 5TFQCh. 7 - Prob. 6TFQCh. 7 - Prob. 7TFQCh. 7 - Prob. 8TFQCh. 7 - Prob. 9TFQCh. 7 - Prob. 10TFQ
Ch. 7 - Prob. 11TFQCh. 7 - Prob. 12TFQCh. 7 - Prob. 13TFQCh. 7 - In terms of the timing of the risk response, the...Ch. 7 - Prob. 15MCQCh. 7 - Prob. 16MCQCh. 7 - Prob. 17MCQCh. 7 - Prob. 18MCQCh. 7 - Prob. 19MCQCh. 7 - Prob. 20MCQCh. 7 - Prob. 21MCQCh. 7 - Prob. 22MCQCh. 7 - Prob. 23MCQCh. 7 - Prob. 24MCQCh. 7 - Prob. 25MCQCh. 7 - Prob. 26MCQCh. 7 - Prob. 27MCQCh. 7 - Prob. 28MCQCh. 7 - Prob. 29RSCQCh. 7 - Prob. 30RSCQCh. 7 - Define the following terms: (a) performance...Ch. 7 - Prob. 32RSCQCh. 7 - Prob. 34RSCQCh. 7 - Prob. 35RSCQCh. 7 - Prob. 36RSCQCh. 7 - How does inherent risk relate to internal...Ch. 7 - Prob. 38RSCQCh. 7 - Prob. 39RSCQCh. 7 - Prob. 40RSCQCh. 7 - Prob. 43RSCQCh. 7 - Prob. 45RSCQCh. 7 - Prob. 46RSCQCh. 7 - Prob. 47RSCQCh. 7 - Prob. 48RSCQCh. 7 - Prob. 49RSCQCh. 7 - Prob. 52RSCQCh. 7 - Prob. 53RSCQCh. 7 - Prob. 54RSCQCh. 7 - Prob. 55RSCQCh. 7 - Prob. 56RSCQCh. 7 - Prob. 57RSCQCh. 7 - Prob. 58FF
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- The ultimate responsibility for the financial statements lies with the auditors. True or False?arrow_forwardDefine risk of material misstatement. At what level of the financial statements do auditors measure RMM? Describe how auditors assess the RMM. What role does RMM play in substantive testing?arrow_forwardWhen the CUER exceeds the TER, what courses of action areavailable to the auditor? Under what circumstances should each of these be followed?arrow_forward
- How does the concept of materiality influence the auditors’ report?arrow_forwardIn auditing liabilities and expenses, the auditor is generally more concerned about the management’s assertion on A. Existence and occurrence B. Completeness C. Valuation D. Rights and Obligationsarrow_forwardAssumptions of "going concern" are within the purview of the auditor.arrow_forward
- Inherent risk and control risk differ from detection risk in which of the following ways? A. Inherent risk and control risk are calculated by the client B. inherent risk and control risk exist independently of the audit. C. Inherent risk and control risk are controled by the auditor. D. Inherent risk and control risk exist as a result of the auditor's judgement about materiality.arrow_forwardRegarding special-purpose frameworks, (a) why do they exist, and (b) can financial statementsprepared using special-purpose frameworks be audited?arrow_forwardGenerally, which of the following audit procedures is the least expensive to perform? A. Analytical procedures B. Tests of details of balance C. Substantive tests of transactions D. Tests of controls E. Risk assessment procedurearrow_forward
- Generally, which of the following audit procedures is the least expensive to perform? A. Analytical procedures B. Tests of details of balance C. Substantive tests of transactions D. Tests of controls E. Risk assessment proceduresarrow_forwardIn the context of financial reporting, define the idea of materiality. What is the difference between the auditor's use of materiality during the audit's planning stage and during the audit's final review stage?arrow_forwardAuditing is based on the assumption that financial data and statements are A. Verifiable B. Consistently applied C. Presented fairly D. In conformity with appropriate criteriaarrow_forward
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