Independent auditors of financial statements perform audits that reduce and control a. Business risk faced by investors b. Information risk faced by investors c. Complexity of financial statements d. Timeliness of financial statements

Independent auditors of financial statements
perform audits that reduce and control
a. Business risk faced by investors
b. Information risk faced by investors
c. Complexity of financial statements
d. Timeliness of financial statements
by

1 Answer

Answer :

Information risk faced by investors
by

Related questions

The need for independent audits of financial statements can be attributed to all of the following conditions except: a. Validity b. Remoteness c. Consequence d. Complexity of subject matter

Description : The need for independent audits of financial statements can be attributed to all of the following conditions except: a. Validity b. Remoteness c. Consequence d. Complexity of subject matter

Last Answer : Validity

Audits of financial statements include an expression of a conclusion about which of the following financial statement characteristics? a. Governance. b. Reliability. c. Relevance. d. Timeliness

Description : Audits of financial statements include an expression of a conclusion about which of the following financial statement characteristics? a. Governance. b. Reliability. c. Relevance. d. Timeliness

Last Answer : Reliability

Generally accepted auditing standards do not require auditors of financial statements to a. Assess the risk of occurrence of errors and fraud b. Design audits to provide reasonable assurance of detecting errors and frauds c. Report all the findings of errors and fraud to police authoritied. Understand the nature or errors and frauds

Description : Generally accepted auditing standards do not require auditors of financial statements to a. Assess the risk of occurrence of errors and fraud b. Design audits to provide reasonable assurance of detecting ... of errors and fraud to police authorities d. Understand the nature or errors and fraud

Last Answer : Report all the findings of errors and fraud to police authorities

Operational audits generally have been conducted by internal and COA auditors, but may be performed by certified public accountants. A primary purpose of an operational audit is to provide: a. A measure of management performance in meeting organizational goalsb. The results of internal examinations of financial and accounting matters to a company's top-level management. c. Aid to the independent-auditor, who is conducting the examination of the financial statements. d. A means of assurance that internal accounting controls are functioning as planned.

Description : Operational audits generally have been conducted by internal and COA auditors, but may be performed by certified public accountants. A primary purpose of an operational audit is to provide: ... statements. d. A means of assurance that internal accounting controls are functioning as planned

Last Answer : A measure of management performance in meeting organizational goals

Which of the following statements is true? a. An independent auditor must be a CPA. b. Compliance audits are conducted to determine adherence to rules and regulations set by the auditor. c. An audit, if properly conducted, ensures that fraud is prevented. d. After conducting an audit and release of the auditor’s report, the primary responsibility on the fairness of the financial statements is shifted to the auditor

Description : Which of the following statements is true? a. An independent auditor must be a CPA. b. Compliance audits are conducted to determine adherence to rules and regulations set by the auditor. c. ... s report, the primary responsibility on the fairness of the financial statements is shifted to the auditor

Last Answer : An independent auditor must be a CPA.

Financial statements audits: a. Reduce the cost of capital b. Report on compliance with laws and regulations c. Assess management's efficiency d. Overlook information risk

Description : Financial statements audits: a. Reduce the cost of capital b. Report on compliance with laws and regulations c. Assess management's efficiency d. Overlook information risk

Last Answer : Reduce the cost of capital

Which of the following factors most likely would influence an auditor’s determination of the auditability of an entity’s financial statements? a. The complexity of the accounting system. b. The existence of related-party transactions. c. The adequacy of the accounting records. d. The operating effectiveness of control procedures.

Description : Which of the following factors most likely would influence an auditor's determination of the auditability of an entity's financial statements? a. The complexity of the accounting system. b. The ... c. The adequacy of the accounting records. d. The operating effectiveness of control procedures.

Last Answer : The adequacy of the accounting records.

If requested to perform a review engagement for a nonpublic entity in which an accountant has an immaterial direct financial interest, the accountant is a. Independent because the financial interest is immaterial and, therefore, may issue a review report. b. Not independent and, therefore, may not issue a review report. c. Not independent and, therefore, may not be associated with the financial statements. d. Not independent and, therefore, may issue a review report, but may not issue an auditor's opinion.

Description : If requested to perform a review engagement for a nonpublic entity in which an accountant has an immaterial direct financial interest, the accountant is a. Independent because the financial interest is immaterial ... and, therefore, may issue a review report, but may not issue an auditor's opinion.

Last Answer : Not independent and, therefore, may not issue a review report.

Which of the following statements about independent financial statement audit is incorrect? a. The term "scope of the audit" refers to audit procedures deemed necessary ithe circumstances to achieve the objective of the audit. b. The auditor's opinion enhances the credibility of the financial statements. c. The phrase used to express the auditor's opinion is "present fairly, in all material respects". d. The risk that the auditor will fail to uncover material misstatement is eliminated when the auditor conducts the audit in accordance with PSAs.n

Description : Which of the following statements about independent financial statement audit is incorrect? a. The term "scope of the audit" refers to audit procedures deemed necessary in the circumstances ... uncover material misstatement is eliminated when the auditor conducts the audit in accordance with PSAs.

Last Answer : The risk that the auditor will fail to uncover material misstatement is eliminated when the auditor conducts the audit in accordance with PSAs.

Information risk refers to the risk that a. The client may not be able to remain in business. b. Errors and frauds would not be detected by the auditor's procedures. c. The auditor may express an unqualified opinion on financial statements that arematerial misstated.d. The client's financial statementsmay be materially false andmisleading

Description : Information risk refers to the risk that a. The client may not be able to remain in business. b. Errors and frauds would not be detected by the auditor's procedures. c. ... financial statements that arematerial misstated. d. The client's financial statements may be materially false and misleading

Last Answer : The client's financial statements may be materially false and misleading

An engagement quality control review is required to be performed: a. Immediately after the re-assessment of control risk. b. At engagement completion after the report is issued. c. For all audits of financial statements of listed entitiesd. For all types of audits, regardless of the subject matter of the engagement..

Description : An engagement quality control review is required to be performed: a. Immediately after the re-assessment of control risk. b. At engagement completion after the report is issued. c. For all audits of ... listed entities. d. For all types of audits, regardless of the subject matter of the engagement.

Last Answer : For all audits of financial statements of listed entities

A CPA is conducting the first audit of a client’s financial statements. The CPA hopes to reduce the audit work by consulting with the predecessor auditor and reviewing the predecessor's working papers. This procedure is a. Acceptable if the CPA refers in the audit report to reliance upon the predecessor auditor's work. b. Required if the CPA is to render an unqualified opinion. c. Unacceptable because the CPA should bring an independent viewpoint to a new engagement. d. Acceptable if the client and the predecessor auditor agree to it.

Description : A CPA is conducting the first audit of a client's financial statements. The CPA hopes to reduce the audit work by consulting with the predecessor auditor and reviewing the predecessor's working papers. ... to a new engagement. d. Acceptable if the client and the predecessor auditor agree to it.

Last Answer : Acceptable if the client and the predecessor auditor agree to it.

The internal auditing profession has advanced primarily as a result of a. Increased interest by Bachelor of Science in Accountancy (BSA) graduates and experienced auditors. b. The limitation of financial statement audit scope. c. Job qualification specifications that include added emphasis on background knowledge and skills. d. Increased complexity and sophistication of business operations.

Description : The internal auditing profession has advanced primarily as a result of a. Increased interest by Bachelor of Science in Accountancy (BSA) graduates and experienced auditors. b. The ... emphasis on background knowledge and skills. d. Increased complexity and sophistication of business operations.

Last Answer : Increased complexity and sophistication of business operations.

Which one of the following is not a reason why the users of financial statements desire for an independent assessment of the financial statement presentation? a. Complexity of transactions affecting the financial statements b. Lack of criteria on which to base information c. Remoteness of the user from the organization d. All of them are potential reasons

Description : Which one of the following is not a reason why the users of financial statements desire for an independent assessment of the financial statement presentation? a. Complexity of transactions affecting the ... c. Remoteness of the user from the organization d. All of them are potential reasons

Last Answer : Lack of criteria on which to base information

Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of the auditor's report. b. Study and evaluate the system of internal administrative control. c. Tour the client's facilities and review the general records. d. Consult with and review the work of the predecessor auditor prior to discussing the engagement with the client management

Description : Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of ... and review the work of the predecessor auditor prior to discussing the engagement with the client management

Last Answer : Tour the client's facilities and review the general records

Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of the auditor's report. b. Study and evaluate the system of internal administrative control. c. Tour the client's facilities and review the general records. d. Consult with and review the work of the predecessor auditor prior to discussing the engagement with the client management

Description : Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of ... and review the work of the predecessor auditor prior to discussing the engagement with the client management

Last Answer : Tour the client's facilities and review the general records

Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of the auditor's report. b. Study and evaluate the system of internal administrative control. c. Tour the client's facilities and review the general records. d. Consult with and review the work of the predecessor auditor prior to discussing the engagement with the client management

Description : Which of the following is the most likely first step an auditor would perform at the beginning of an initial audit engagement? a. Prepare a rough draft of the financial statements and of ... and review the work of the predecessor auditor prior to discussing the engagement with the client management

Last Answer : Tour the client's facilities and review the general records

Philippine Standards on Auditing require auditors to assess the risk of material misstatements due to fraud a. For first-time audits. b. Sufficient to find any frauds which may exist. c. For every audit. d. Whenever it would be appropriate

Description : Philippine Standards on Auditing require auditors to assess the risk of material misstatements due to fraud a. For first-time audits. b. Sufficient to find any frauds which may exist. c. For every audit. d. Whenever it would be appropriate

Last Answer : For every audit

Which one of the following is an example of management expectations from the independent auditors? a. An expert providing a written communication as the product of the engagement. b. Individuals who perform day-to-day accounting functions on behalf of the company. C. AN active participant in management decision-making. d. An internal source of expertise on financial and other matters

Description : Which one of the following is an example of management expectations from the independent auditors? a. An expert providing a written communication as the product of the engagement. b. Individuals who ... in management decision-making. d. An internal source of expertise on financial and other matters

Last Answer : An expert providing a written communication as the product of the engagement

If requested to perform a review engagement for a nonpublic entity in which an accountant has an immaterial direct financial interest, the accountant is a. Independent because the financial interest is immaterial and, therefore, mayissue a review report.b. Not independent and, therefore, may notbe associated with the financialstatements.c. Not independent and, therefore,may not issue a review report.d. Not independent and, therefore, mayissue a review report, but may not issuean auditor's opinion.

Description : If requested to perform a review engagement for a nonpublic entity in which an accountant has an immaterial direct financial interest, the accountant is a. Independent because the financial interest is immaterial ... and, therefore, may issue a review report, but may not issue an auditor's opinion.

Last Answer : Not independent and, therefore, may not issue a review report.

The risk that the auditor's own work will lead to the decision that material misstatements do not exist in the financial statements, when in fact such misstatements do exist, is a. Control risk b. Detection risk c. Inherent risk d. Audit risk

Description : The risk that the auditor's own work will lead to the decision that material misstatements do not exist in the financial statements, when in fact such misstatements do exist, is a. Control risk b. Detection risk c. Inherent risk d. Audit risk

Last Answer : Audit risk

Whenever a CPA professional is engaged to perform an audit of financial statements according to Philippine Standards on Auditing, he required to comply with those standards in order to a. Eliminate audit risk. b. Eliminate the professional judgment in resolving audit issues. c. Have a measure of the quality of audit performance. d. To reduce the audit program to be prepared by the auditor.

Description : Whenever a CPA professional is engaged to perform an audit of financial statements according to Philippine Standards on Auditing, he required to comply with those standards in order to a. Eliminate audit risk ... of audit performance. d. To reduce the audit program to be prepared by the auditor.

Last Answer : Have a measure of the quality of audit performance.

Why does a company choose to have an independent auditor report on its financial statements? a. Independent auditors will always detect management fraud. b. Independent auditors guarantee the accuracy of the financial statements. c. The company preparing the statements may have a vested interest in reporting certain results. d. An independent audit is designed to search for deficiencies in the company's internal control

Description : Why does a company choose to have an independent auditor report on its financial statements? a. Independent auditors will always detect management fraud. b. Independent auditors guarantee the accuracy ... . An independent audit is designed to search for deficiencies in the company's internal control

Last Answer : The company preparing the statements may have a vested interest in reporting certain results.

Most of the independent auditor's work in formulating an opinion on financial statements consists of a. Studying and evaluating internal control b. Obtaining and examining evidential matter c. Examining cash transactions d. Comparing recorded accountability with assets

Description : Most of the independent auditor's work in formulating an opinion on financial statements consists of a. Studying and evaluating internal control b. Obtaining and examining evidential matter c. Examining cash transactions d. Comparing recorded accountability with assets

Last Answer : Obtaining and examining evidential matter

For which of the following services is a CPA professional not required to be independent? a. Tax returns preparation b. Audits of historical financial statements c. Review engagement d. Examination of a forecast

Description : For which of the following services is a CPA professional not required to be independent? a. Tax returns preparation b. Audits of historical financial statements c. Review engagement d. Examination of a forecast

Last Answer : Tax returns preparation

For which of the following services is a CPA professional required to be independent? a. Audits of historical financial statements b. Review services c. Examination of prospective financial statements d. All of the above

Description : For which of the following services is a CPA professional required to be independent? a. Audits of historical financial statements b. Review services c. Examination of prospective financial statements d. All of the above

Last Answer : All of the above

For which of the following services is a CPA professional not required to be independent? a. Tax returns preparation b. Audits of historical financial statements c. Review engagement d. Examination of a forecast

Description : For which of the following services is a CPA professional not required to be independent? a. Tax returns preparation b. Audits of historical financial statements c. Review engagement d. Examination of a forecast

Last Answer : Tax returns preparation

For which of the following services is a CPA professional required to be independent? a. Audits of historical financial statements b. Review services c. Examination of prospective financial statements d. All of the above

Description : For which of the following services is a CPA professional required to be independent? a. Audits of historical financial statements b. Review services c. Examination of prospective financial statements d. All of the above

Last Answer : All of the above

When management refuses to disclose in the financial statements noncompliance to laws and regulations which are identified by the independent auditor, the CPA may be charged with unethical conduct for a. Withdrawing from the engagement. b. Issuing a disclaimer of opinionc. Failure to uncover the noncompliance to laws and regulations during the prior audits. d. Reporting these activities to the audit committee..

Description : When management refuses to disclose in the financial statements noncompliance to laws and regulations which are identified by the independent auditor, the CPA may be charged with unethical conduct for ... and regulations during the prior audits. d. Reporting these activities to the audit committee.

Last Answer : Issuing a disclaimer of opinion

There are four conditions that give rise to the need for independent audits of financial statements. One of these conditions is consequence. In this context, consequence means that the: a. Users of the statements may not fully understand the consequences of their actions. b. Auditor must anticipate all possible consequences of the report issued. c. Impact of using different accounting methods may not be fully understood by the users of the statements. d. Financial statements are used for important decisions

Description : There are four conditions that give rise to the need for independent audits of financial statements. One of these conditions is consequence. In this context, consequence means that the: a. ... fully understood by the users of the statements. d. Financial statements are used for important decisions

Last Answer : Financial statements are used for important decisions

While assessing the risk of material misstatement, the auditors identity risks, relate risk to what could go wrong, consider the magnitude of risks and: a. Assess the risk of misstatements due to noncompliance to laws and regulations. b. Consider the complexity of the transactions involved. c. Consider the likelihood that the risks could result in material misstatements. d. Determine materiality level.

Description : While assessing the risk of material misstatement, the auditors identity risks, relate risk to what could go wrong, consider the magnitude of risks and: a. Assess the risk of ... Consider the likelihood that the risks could result in material misstatements. d. Determine materiality level.

Last Answer : Consider the likelihood that the risks could result in material misstatements

Auditors would perform the following steps in which order? a. Determine audit risk; assess control risk; determine detection risk; set materiality. b. Set materiality; assess control risk; determine detection risk; determine audit risk. c. Set materiality; determine audit risk; assess control risk; determine detection risk. d. Determine audit risk; set materiality; assess control risk; determine detection risk.

Description : Auditors would perform the following steps in which order? a. Determine audit risk; assess control risk; determine detection risk; set materiality. b. Set materiality; assess control risk; determine ... risk. d. Determine audit risk; set materiality; assess control risk; determine detection risk.

Last Answer : Set materiality; determine audit risk; assess control risk; determine detection risk

Internal auditing can affect the scope of the external auditor's audit of financial statements by a. Decreasing the external auditor's need to perform detailed testsb. Eliminating the need to observe thephysical inventory taking.c. Allowing the external auditor to limithis/her audit to the performance ofsubstantive test procedures.d. Limiting direct testing by the externalauditor to management assertions notdirectly tested by internal auditing.

Description : Internal auditing can affect the scope of the external auditor's audit of financial statements by a. Decreasing the external auditor's need to perform detailed tests b. Eliminating the need ... direct testing by the external auditor to management assertions not directly tested by internal auditing.

Last Answer : Decreasing the external auditor's need to perform detailed tests

Auditors perform analytical procedures in the planning stage of an audit for the purpose of: a. Determining which of the financial statement assertions are the most important for the client's financial statements. b. Determining the nature, timing, and extent of audit procedures for auditing the inventory. c. Deciding the matters to cover in an engagement. d. Identifying unusual conditions that deserve more auditing effort

Description : Auditors perform analytical procedures in the planning stage of an audit for the purpose of: a. Determining which of the financial statement assertions are the most important for the client's ... matters to cover in an engagement. d. Identifying unusual conditions that deserve more auditing effort

Last Answer : Identifying unusual conditions that deserve more auditing effort

Which of the following characteristics most likely would heighten an auditor’s concern about the risk of intentional manipulation of financial statements? a. Turnover of senior accounting personnel is low. b. Insiders recently purchased additional shares of the entity’s stock. c. Management places substantial emphasis on meeting earnings projections. d. The rate of change in the entity’s industry is slow.

Description : Which of the following characteristics most likely would heighten an auditor's concern about the risk of intentional manipulation of financial statements? a. Turnover of senior accounting personnel is low. b ... meeting earnings projections. d. The rate of change in the entity's industry is slow.

Last Answer : Management places substantial emphasis on meeting earnings projections.

The Philippine Standards on Auditing issued by AASC a. Need to be applied on all audit related. b. Require that in no circumstances would an auditor may judge it necessary to depart from a PSA, even though such a departure may result to more effective achievement of the objective of an audit. c. Apply to independent examination of financial statements of any entity when such an examination is conducted for the purpose of expressing an opinion. d. Must not apply to other related activities of auditors

Description : The Philippine Standards on Auditing issued by AASC a. Need to be applied on all audit related. b. Require that in no circumstances would an auditor may judge it necessary to depart from a PSA, ... for the purpose of expressing an opinion. d. Must not apply to other related activities of auditors

Last Answer : Apply to independent examination of financial statements of any entity when such an examination is conducted for the purpose of expressing an opinion.

Which of the following statements is not a distinction between independent auditing and internal auditing? a. Independent auditors represent third party users external to the auditee entity, whereas internal auditors report directly to management. b. Internal auditors are employees of the auditee, whereas independent auditors are independent contractors. c. The internal auditor's span of coverage goes beyond financial auditing to encompass operational and performance auditing. d. Although independent auditors strive for both validity and relevance of evidence, internal auditors are concerned almost exclusively with validity.

Description : Which of the following statements is not a distinction between independent auditing and internal auditing? a. Independent auditors represent third party users external to the auditee entity, ... validity and relevance of evidence, internal auditors are concerned almost exclusively with validity.

Last Answer : Although independent auditors strive for both validity and relevance of evidence, internal auditors are concerned almost exclusively with validity.

Independent auditors cannot be totally independent a. Because they don’t audit financial statements b. Since they do not possess the CPA license c. As long as employer-employee relationship exists d. Unless their immediate supervisor is a CPA

Description : Independent auditors cannot be totally independent a. Because they don’t audit financial statements b. Since they do not possess the CPA license c. As long as employer-employee relationship exists d. Unless their immediate supervisor is a CPA

Last Answer : As long as employer-employee relationship exists

The independent auditor lends credibility to client financial statements by a. Stating in the auditor’s management letter that the examination was made in accordance with PSAs b. Attaching an auditor’s opinion to the client’s financial statements. c. Testifying under oath about client financial statements. d. Maintaining clear-cut distinctions between management representations and auditor’s representations.

Description : The independent auditor lends credibility to client financial statements by a. Stating in the auditor's management letter that the examination was made in accordance with PSAs b. ... statements. d. Maintaining clear-cut distinctions between management representations and auditor's representations.

Last Answer : Attaching an auditor’s opinion to the client’s financial statements.

Which of the following statements about independent financial statement audit is correct? a. The audit of financial statements relieves management of its responsibilities for die financial statements. b. An audit is designed to provide limited assurance that the financial statements taken as a whole are free from material misstatement. c. The auditor's opinion is not an assurance as to the future viability of the entity as well as the effectiveness and efficiency withwhich management has conductedthe affairs of the entity.d. The procedures required to conduct anaudit in accordance with PSAs shouldbe determined by the client whoengaged the services of the auditor

Description : Which of the following statements about independent financial statement audit is correct? a. The audit of financial statements relieves management of its responsibilities for die financial statements. b. An ... with PSAs should be determined by the client who engaged the services of the auditor

Last Answer : The auditor's opinion is not an assurance as to the future viability of the entity as well as the effectiveness and efficiency withwhich management has conducted the affairs of the entity.

The Philippine Standards on Auditing issued by AASC: a. Apply to independent examination of financial statements of any entity when such an examination is conducted for the purpose of expressing an opinion. b. Need to be applied on all audit related. c. Must not apply to other related activities of auditors. d. Require that in no circumstances would an auditor may judge it necessary to depart from a PSA, even though such a departure may result to more effective achievement of the objective of an audit

Description : The Philippine Standards on Auditing issued by AASC: a. Apply to independent examination of financial statements of any entity when such an examination is conducted for the purpose of expressing an ... though such a departure may result to more effective achievement of the objective of an audit

Last Answer : Apply to independent examination of financial statements of any entity when such an examination is conducted for the purpose of expressing an opinion

Which of the following is considered a primary reason for creating an internal audit department? a. To safeguard resources entrusted to the organization. b. To evaluate and improve the effectiveness of control processes. c. To ensure the accuracy, reliability, and timeliness of financial and operating data used in management's decision making. d. To relieve management of the responsibility for establishing effective controls

Description : Which of the following is considered a primary reason for creating an internal audit department? a. To safeguard resources entrusted to the organization. b. To evaluate and improve the ... 's decision making. d. To relieve management of the responsibility for establishing effective controls

Last Answer : To evaluate and improve the effectiveness of control processes.

Which of the following is incorrect about responsibility for financial statements? a. Management is responsible for fair presentation of the financial statements. b. Auditor is responsible for expressing an opinion on the financial statements. c. Audit of financial statements does not reduce management's responsibility. d. Fair presentation of financial statements is an implicit part of the auditor's responsibility

Description : Which of the following is incorrect about responsibility for financial statements? a. Management is responsible for fair presentation of the financial statements. b. Auditor is responsible for ... . Fair presentation of financial statements is an implicit part of the auditor's responsibility

Last Answer : Fair presentation of financial statements is an implicit part of the auditor's responsibility

Which of the following is the broadest and most inclusive concept? a. Audits of financial statements. b. Internal control audit. c. Assurance services. d. Compilation services

Description : Which of the following is the broadest and most inclusive concept? a. Audits of financial statements. b. Internal control audit. c. Assurance services. d. Compilation services

Last Answer : Assurance services

Which of the following types of audits are most similar? a. Operational audits and compliance audit. b. Internal audits and independent financial statement audits. c. Independent financial statement audits and operational audits. d. Compliance audits and independent financial statement audits

Description : Which of the following types of audits are most similar? a. Operational audits and compliance audit. b. Internal audits and independent financial statement audits. c. Independent financial statement audits and operational audits. d. Compliance audits and independent financial statement audits

Last Answer : Compliance audits and independent financial statement audits

Which of the following methods is most commonly used to reduce information risk? a. Allow all users to prepare the statements. b. Allow users to verify information. c. Have the financial statements audited. d. Users share information risk with management.

Description : Which of the following methods is most commonly used to reduce information risk? a. Allow all users to prepare the statements. b. Allow users to verify information. c. Have the financial statements audited. d. Users share information risk with management.

Last Answer : Have the financial statements audited

Which of the following is most likely to be a response to the auditor's assessment that the risk of material misstatement due to fraud for the existence of inventory is high? a. Observe test counts of inventory at certain locations on an unannounced basis. b. Perform analytical procedures rather than taking test counts. c. Request that inventories be counted prior to year end. d. Request that inventory counts at the various locations be counted on different dates so as to allow the same auditor to be present at every count

Description : Which of the following is most likely to be a response to the auditor's assessment that the risk of material misstatement due to fraud for the existence of inventory is high? a. Observe test counts ... be counted on different dates so as to allow the same auditor to be present at every count

Last Answer : Observe test counts of inventory at certain locations on an unannounced basis.

When a CPA is approached to perform an audit for the first time, the CPA should make inquiries of the predecessor auditor. This is a necessary procedure because the predecessor may be able to provide the successor with information that will assist the successor in determining a. Whether, in the predecessor's opinion, internal control of the company has been satisfactory. b. Whether the engagement should be accepted. c. Whether the predecessor's work should be utilized. d. Whether the company follows the policy of rotating its auditors.

Description : When a CPA is approached to perform an audit for the first time, the CPA should make inquiries of the predecessor auditor. This is a necessary procedure because the predecessor may be able to provide ... 's work should be utilized. d. Whether the company follows the policy of rotating its auditors.

Last Answer : Whether the engagement should be accepted.

To be independent, the auditor: a. Must be impartial when dealing with the client. b. Cannot place any reliance on the client's verbal and written assertions. c. Is responsible only to third-party users of the financial statements. d. Cannot perform any consulting servicesfor an audit client.

Description : To be independent, the auditor: a. Must be impartial when dealing with the client. b. Cannot place any reliance on the client's verbal and written assertions. c. Is responsible only to third-party users of the financial statements. d. Cannot perform any consulting servicesfor an audit client.

Last Answer : Must be impartial when dealing with the client