Misstatements Archives

Which of the following is not a required item to be communicated by the auditor to the audit committee or others charged with governance?

Posted on February 23, 2023 by Assessments

The following questions concern communications between management, those charged with governance, and the auditor. Choose the best response. a. Which of the following is not a required item to be communicated by the auditor to the audit committee or others charged with governance? (1) Information about the auditor’s responsibility in an audit of financial statements […]

Evaluate the results of the nonstatistical sample. Consider both the direct implications of the misstatements found and the effect of using a sample.

Posted on February 12, 2023 by Assessments

You have just completed the accounts receivable confirmation process in the audit of Danforth Paper Company, a paper supplier to retail shops and commercial users. Following are the data related to this process: Accounts receivable recorded balance $ 2,760,000 Number of accounts 7,320 A nonstatistical sample was taken as follows: All accounts over $10,000 (23 […]

Distinguish among tests of details of balances, tests of controls, and substantive tests of transactions for the sales and collection cycle. Explain how the tests of controls and substantive tests of transactions affect the tests of details of balances.

Posted on February 11, 2023 by Assessments

Distinguish among tests of details of balances, tests of controls, and substantive tests of transactions for the sales and collection cycle. Explain how the tests of controls and substantive tests of transactions affect the tests of details of balances. 16-2 (OBJECTIVE 16-1) Cynthia Roberts, CPA, expresses the following viewpoint: “I do not believe in performing […]

List the transaction-related audit objectives for the audit of sales transactions. For each objective, state one internal control that the client can use to reduce the likelihood of misstatements.

Posted on February 11, 2023 by Assessments

Design and Performance Format Audit Procedures 1. What three types of authorizations are commonly used as internal controls for sales? Explain the importance of each. 2. List the transaction-related audit objectives for the audit of sales transactions. For each objective, state one internal control that the client can use to reduce the likelihood of misstatements.

Which of the following matters related to the year under audit would most likely result in an increase of inherent risk?

Posted on February 10, 2023 by Assessments

The following questions concern auditor responsibilities related to the assessment of risks of material misstatement. Choose the best response. a. Which of the following procedures would a CPA most likely perform during the planning stage of the audit? (1) Evaluate the reasonableness of management’s allowance for doubtful accounts. (2) Determine areas where there is a […]

Which one of the following statements is correct concerning the concept of materiality?

Posted on February 10, 2023 by Assessments

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. […]

Explain the difference between known and likely misstatements. Assume the auditor tests a sample of $100,000 of inventory and finds misstatements totaling $5,000. What is the likely misstatement if the account balance is $500,000?

Posted on February 10, 2023 by Assessments

AUDIT PLANNING AND MATERIALITY 1. What is meant by setting a preliminary judgment about materiality? Identify the mostimportant factors affecting the preliminary judgment.2. Distinguish between the terms performance materiality and preliminary judgment about materiality. How are they related to each other?3. Explain the difference between known and likely misstatements. Assume the auditortests a sample of […]

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Posted on February 3, 2023 by Assessments

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or erro and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is […]

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Tag: Misstatements

Which of the following is not a required item to be communicated by the auditor to the audit committee or others charged with governance?

Evaluate the results of the nonstatistical sample. Consider both the direct implications of the misstatements found and the effect of using a sample.

Distinguish among tests of details of balances, tests of controls, and substantive tests of transactions for the sales and collection cycle. Explain how the tests of controls and substantive tests of transactions affect the tests of details of balances.

List the transaction-related audit objectives for the audit of sales transactions. For each objective, state one internal control that the client can use to reduce the likelihood of misstatements.

Which of the following matters related to the year under audit would most likely result in an increase of inherent risk?

Which one of the following statements is correct concerning the concept of materiality?

Explain the difference between known and likely misstatements. Assume the auditor tests a sample of $100,000 of inventory and finds misstatements totaling $5,000. What is the likely misstatement if the account balance is $500,000?