A1 - Audited Financial Statements - The Basics

Question 1

What is the auditor’s responsibility?

Answer 1

To express an opinion on financial statements based on an audit.

Question 2

The auditor must obtain sufficient, _____________ audit evidence to afford a reasonable basis for an opinion.

Answer 2

Appropriate

Question 3

What provides the most authoritative guidance for the auditor of a nonissuer?

Answer 3

“General guidance provided by a Statement of Auditing Standards. This is the most authoritative because it provides a level of auditing guidance for audits of nonissuers. Auditors are required to comply with SASs, and should be prepared to justify any departures.

Specific guidance provided by an interpretation of a SAS should only be applied in specific situations and is not as authoritative as GENERAL SASs.”

Question 4

An auditor of a nonissuer must conduct the audit in accordance with:

Answer 4

ASB Standards

Question 5

What attitude includes a questioning mind and a critical assessment of audit evidence, and recognizes that circumstances may exist that cause the financial statements to be materially misstated?

Answer 5

Professional Skepticism

Question 6

The Public Company Accounting Oversight Board was established by what?

Answer 6

The Sarbanes-Oxley Act of 2002