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How does the auditor evaluate the objectivity and competence of others who perform work for management?
Describe the steps in obtaining an understanding of ICFR using a top-down, riskbased approach.
Describe what is meant when management remediates a material weakness. If a material weakness is remediated and sufficiently tested before the "as of" date.
Under what circumstances would an auditor give an adverse opinion on the effectiveness of an entity's ICFR?
Distinguish between generalized and custom audit software. List the functions that can be performed by generalized audit software.
The auditor should consider audit risk when planning and performing an audit of financial statements in accordance with generally accepted auditing standards.
LVD is a pharmaceutical company that has three successful drugs. They have recently decided to make a public offering of their stock.
Explain how risk of material misstatement should be assessed and what effect that assessment will have on detection risk.
In developing an understanding of the entity and its environment, the auditor can obtain information from numerous sources.
Industry conditions can be a source of business risks for an entity. Describe how each of the industry conditions can result in business risks.
What are the objectives of the "brainstorming" meeting that is held among the engagement team members?
Prepare a list of business risks that NewSkin likely will face as a start-up biotech firm.
Identify the fraud risk factors for misappropriation of assets that were present at Koss Corporation.
Explain why the auditor divides the financial statements into components or segments in order to test management's assertions.
Define audit evidence. Provide an example of evidence from accounting records and other information.
Why is it necessary to obtain corroborating evidence for inquiry and for observation?
Why does the "audit testing hierarchy" begin with tests of controls and substantive analytical procedures?
Why are indexing and cross-referencing important to the documentation of audit working papers?
Significant differences between the auditor's expectation and the entity's book value require explanation through quantification, corroboration, and evaluation.
Examining large sales invoices for a period of two days before and after year-end to determine if sales are recorded in the proper period.
An auditor's recalculation of depreciation versus examination of raw material requisitions.
Inspection of records and documents relates to the auditor's examination of entity accounting records and other information.
What factors affect the auditor's judgment about the form, content, and extent of audit documentation for a particular engagement?
Compare and contrast management's responsibility for the entity's financial statements with the auditor's responsibilities for detecting errors and fraud .
Why might understanding the characteristics of an entity's business in each of these areas be important for a financial statement auditor?