Exam 6: Audit Responsibilities and Objectives

Management's disclosure of the amount of unfunded pension obligations and the assumptions underlying these amounts is an example of the ________ assertion.

The auditor's audit objectives follow and are closely related to management assertions.

Discuss the differences in the auditor's responsibilities for discovering (1)material errors,(2)material fraud (3)illegal acts having a direct effect on the financial statements,and (4)illegal acts that do not have a direct effect on the financial statements.

Because they operate the business on a daily basis,a company's management knows more about the company's transactions and related assets,liabilities,and equity than the auditors.

Below are five audit procedures,all of which are tests of transactions associated with the audit of the acquisition and payment cycle.Also below are the six general transaction-related audit objectives and the five management assertions.For each audit procedure,indicate (1)its audit objective,and (2)the management assertion being tested. 1.Foot the purchases journal and trace the totals to the related general ledger accounts. (1)________ (2)________ 2.Recompute the cash discounts taken by the client. (1)________ (2)________ 3.Compare dates on cancelled checks with the bank cancellation date. (1)________ (2)________ 4.Trace from a sample of cancelled checks to the cash disbursements journal. (1)________ (2)________ 5.Examine supporting documentation for a sample of transactions for authorized payee and amount and to determine services or goods were received. (1)________ (2)________

A questioning mindset

Under the cycle approach to segmenting an audit,transactions recorded in different journals should never be combined with the general ledger balances that result from those transactions.

The auditor has no responsibility to plan and perform the audit to obtain reasonable assurance that misstatements that are not ________ are detected.

With increases in the complexity of transactions and the need for expanded disclosures about these transactions,assertions about the ________ have increased in importance.

Another term for misappropriation of assets is

When performing the review and completing the documentation and rationale for the conclusion step of the professional judgment process,auditors will

If the auditor believes that the financial statements are not fairly stated or is unable to reach a conclusion because of insufficient evidence,the auditor

If management insists on financial statement disclosures that the auditor finds unacceptable,the auditor can withdraw from the engagement or

Which of the following is not one of the steps used to develop audit objectives?

The classification balance-related audit objective

Which of the following is an accurate statement concerning the auditor's responsibility to consider laws and regulations?

An audit generally provides no assurance that illegal acts that do not have a direct effect on the financial statements will be detected.

The posting and summarization audit objective is the auditor's counterpart to management's assertion of

Briefly explain each management assertion related to presentation and disclosure.

Auditors accumulate evidence to