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- Which of the following statements best describes auditors’ responsibility for detecting a client’s noncompliance with a law or regulation?a. The responsibility for detecting noncompliance exactly parallels the responsibility for errors and fraud.b. Auditors must design tests to detect all material noncompliance that indirectly affects the financial statements.c. Auditors must design tests to obtain reasonable assurance that all noncompliance with direct material financial statement effects is detected.d. Auditors must design tests to detect all noncompliance that directly affects the financial statements.8. The essence of the audit function is to: Select one:a. Examine individual transactions so that the auditor may certify as to their validityb. Detect fraudc. Determine whether the client’s financial statements are fairly stated.d. Assure the consistent application of correct accounting procedures.When auditors become aware of noncompliance with a law or regulation committed byclient personnel, the primary reason that the auditors should obtain a better understanding ofthe nature of the act is toa. Recommend remedial actions to the audit committee.b. Evaluate the effect of the noncompliance on the financial statements.c. Determine whether to contact law enforcement officials.d. Determine whether other similar acts could have occurred.
- 2. To express an opinion on financial statements, the auditor obtains reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error. Select one:TrueFalseKA In order to form an opinion, the auditor shall conclude as to whether the auditor has obtained reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error. The conclusion should consider and take into account: answer the below in essay form The evaluation of the financial statements as a whole should include what other significant elements and requirements are needed to formulate an auditor's report.a) Explain why auditors’ reports are important to users of financial statements and why it is desirable to have standard wording. b) b) Define the meaning of the term materiality as it is used in accounting and auditing. What is the relationship between materiality and the phrase obtain reasonable assurance used in the auditor’s report? c) c) Distinguish between fraudulent financial reporting and misappropriation of assets. Discuss the likely difference between those two types of fraud on the fair presentation of financial statements. NB: Please provide answers to question A, B and C
- True or False 1. The main source of the auditor's understanding about the status of cases and litigations faced by the entity is the entity's legal counsel 2. Control activities may be applied on either manual system, computerized system, or combination of both 3. Studying the relationship of financial information with another information, whether financial or non-financial, is an example of an analytical procedure 4. To reduce audit risk to an acceptable low level, the auditor should determine overall responses to assessed risks at the assertion level 5. It is necessary for the audit team members to have a collective knowledge needed to carry out the engagement 6. An important responsibility of an auditor is the establishment and maintenance of internal control on an ongoing basis 7. Generally, the more reliable internal controls are, the lesser the substantive test procedures the auditor would need to perform in auditing year-end account balances 8. The industry in which the client…Auditors provide “reasonable assurance” that the financialstatements are “fairly stated, in all material respects.” Questions are often raised as to theresponsibility of the auditor to detect material misstatements, including misappropriationof assets and fraudulent financial reporting.a. Discuss the concept of “reasonable assurance” and the degree of confidence thatfinancial statement users should have in the financial statements.b. What are the responsibilities of the independent auditor in the audit of financialstatements? Discuss fully, but in this part do not include fraud in the discussion.c. What are the responsibilities of the independent auditor for the detection of fraudinvolving misappropriation of assets and fraudulent financial reporting? Discussfully, including your assessment of whether the auditor’s responsibility for thedetection of fraud is appropriate.The primary purpose of accumulating sufficient and appropriate audit evidence is to Group of answer choices a. Support the auditor’s opinion on the financial statements. b. Detect fraud in the financial statements. c. Defend the auditor in case of legal dispute. d. Evaluate the performance of the management of an entity.
- Auditors provide "reasonable assurance" that the financial statements are "fairly stated, in all material respects." Questions are often raised as to the responsibility of the auditor to detect material misstatements, including misappropriation of assets and fraudulent financial reporting. a. Discuss the concept of "reasonable assurance" and the degree of confidence that financial statement users should have in the financial statements. b. What are the responsibilities of the independent auditor in the audit of financial statements? Discuss fully, however, do not include fraud in the discussion. c. What are the responsibilities of the independent auditor for the detection of fraud involving the misappropriation of assets and fraudulent financial reporting? Discuss fully, including your assessment of whether the auditor's responsibility for the detection of fraud is appropriate.Which of the following are the auditor's responsibilities when it comes to the financial stațements? 1. Giving an opinion as to their truth and fairness. 1, 3 and 4 only 1, 2 and 3 only 1 and 2 only 2 and 3 Only 2. Selecting and applying accounting policies. 3. Gathering evidence to support the opinion given. 4. Planning and conducting the audit.