The following questions concern information accompanying basic financial statements. Choose the best response. a. The Form 10-K filed by management of a public company includes a section on management’s discussion and analysis (MD&A) in addition to the annual financial statements. Which of the following best describes the auditor’s responsibility for the MD&A information? (1) The […]
Identify and describe the transaction-related and balance-related presentation audit objectives. Explain how many of the procedures to test presentation objectives are integrated with tests performed in earlier stages of the audit. 24-2 (OBJECTIVE 24-2) Explain why an auditor is interested in a client’s future commitments to purchase raw materials at a fixed price. 24-3 (OBJECTIVE […]
The audit firm of Waggoner and Allen, LLP, recently received a request to submit a proposal to audit the financial statements of the Williamson County Public School System. The system is funded mostly through property tax assessments of county residents, but it also receives over $15 million in federal financial funding in addition to private […]
This problem requires the use of ACL software, which can be accessed through the textbook website. Information about downloading and using ACL and the commands used in this problem can also be found on the textbook website. You should read all of the reference material, especially the material on sampling, to answer questions a. through […]
The following are concepts discussed in Chapter 8 and this chapter: 1. Preliminary judgment about materiality 7. Estimated total misstatement in a segment 2. Control risk 8. Planned detection risk 3. Risk of fraud 9. Estimate of the combined misstatement 4. Inherent risk 10. Significant risk 5. Risk of material misstatements 11. Acceptable audit risk […]
RELATIONSHIP OF RISK AND MATERIALITY TO AUDIT EVIDENCE Discuss how materiality and risk are related and integrated into the audit process.
Define risk in auditing. Distinguish the different types of risk assessment procedures. Understand important auditor considerations related to the risk of material misstatement due to fraud. Describe the auditor’s responsibility to identify significant risks. Describe the audit risk model and its components. Assess acceptable audit risk. Consider the impact of several factors on the assessment […]
Ling, an audit manager, is planning the audit of Modern Technologies, Inc. (MT, Inc.), a manufacturer of electronic components. This is the first year that Ling’s audit firm has performed the audit for MT, Inc. Ling set the preliminary judgment about materiality for the financial statements as a whole at $66,000 and is now in […]
You are evaluating audit results for assets in the audit of Roberts Manufacturing. You set the preliminary judgment about materiality at $50,000. The ac- count balances, performance materiality, and estimated overstatements in the accounts are shown next. Account Account Balance Performance Materiality Estimate of Total Overstatements Cash $ 50,000 $ 5,000 $ 1,000 Accounts receivable […]
The following questions deal with materiality. Choose the best response. a. Which one of the following statements is correct concerning the concept of materiality? (1) Materiality is determined by reference to guidelines established by the AICPA. (2) Materiality depends only on the dollar amount of an item relative to other items in the financial statements. […]
