Identify the way in which the audit files are primarily considered to be.

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Chapter 7, Problem 23.2MCQ

To determine

Identify the way in which the audit files are primarily considered to be.

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During an audit engagement, pertinent data are compiled and included in the auditfiles. The audit files primarily are considered to be(1) a client-owned record of conclusions reached by the auditors who performedthe engagement.(2) evidence supporting financial statements.(3) support for the auditor’s representations as to compliance with auditing standards.(4) a record to be used as a basis for the following year’s engagement

The preparation of audit documentation is an integral part of an auditor’s examination of financial statements. On a recurring engagement, auditors review the audit plans and audit documentation from the prior audit while planning the current audit to determine their usefulness for the current-year work.Required:a. (1) What are the purposes or functions of audit documentation? (2) What records may be included in audit documentation?b. What factors affect the auditors’ judgment of the type and content of the audit documentation for a particular engagement?c. What should be included in audit documentation to support auditors’ compliance with generally accepted auditing standards?d. How can auditors make the most effective use of the prior-year audit plans in a recurring audit?

An audit engagement letter should normally include which of the following matters of agreement between the auditor and the client?a. Schedules and analyses to be prepared by the client’s employees. b. Methods of statistical sampling the auditor will use. c. Specification of litigation in progress against the client. d. Client representations about availability of all minutes of meetings of the board of directors.