Exam 6: Audit Responsibilities and Objectives

Which of the following statements is True of a public company's financial statements?

Management assertions are

The provisions of many laws and regulations affect the financial statements

When using the cycle approach to segmenting the audit,the reason for treating capital acquisition and repayment separately from the acquisition of goods and services is that

The objective of an audit of the financial statements is an expression of an opinion on

After the auditor has completed all audit procedures,it is necessary to combine the information obtained to reach an overall conclusion as to whether the financial statements are fairly presented.This is a highly subjective process that relies heavily on

Fraudulent financial reporting is most likely to be committed by whom?

Balance-related audit objectives follow from management assertions.

Auditing standards indicate that reasonable assurance is a moderate,but not absolute,level of assurance that the financial statements are free of material misstatement.

In the context of the audit of sales,distinguish between the occurrence and completeness transaction-related audit objectives.State the effect on the sales account (overstatement or understatement)of a violation of each objective.

In describing the cycle approach to segmenting an audit,which of the following statements is not True?

Below are five audit procedures,all of which are tests of balances associated with the audit of accounts receivable.Also below are the eight general balance-related audit objectives and the four management assertions.For each audit procedure,indicate (1)its audit objective,and (2)the management assertion being tested. 1.Obtain an aged listing of accounts receivable.For a sample of individual customers on the listing,agree the customer's name,amount,and other information with the corresponding information in the accounts receivable master file. (1)________ (2)________ 2.Examine details of sales for five days before and five days after year-end to determine whether sales have been recorded in the proper period. (1)________ (2)________ 3.Assess the reasonableness of the balance in the allowance for doubtful accounts. (1)________ (2)________ 4.Inquire as to whether any accounts receivable have been factored or sold during the period. (1)________ (2)________ 5.Inquire as to whether there are any receivables from related parties. (1)________ (2)________

An auditor discovers that the company's bookkeeper unintentionally made an mistake in calculating the amount of the quarterly sales.This is an example of

Relevant assertions have a meaningful bearing on whether the account is fairly stated and are used to assess the risk of material misstatement and the design and performance of audit procedures.

________ deals with potential overstatement and ________ deals with understatements (unrecorded transactions).

When comparing the auditor's responsibility for detecting employee fraud and for detecting errors,the profession has placed the responsibility

Which of the following statements is usually True?

For a private company audit,tests of controls are normally performed only on those internal controls the auditor believes have not been operating effectively during the period under audit.

Why does the auditor divide the financial statements into segments around the financial statement cycles?

The audit objective of posting and summarization is associated with the management assertion of accuracy.