Audited Financial Statements

Question 1

What is the purpose of an audit?

Answer 1

To provide financial statement users with an opinion on whether the financial statements are presented fairly.

Question 2

Does the auditor’s report give credibility to the financial statements?

Answer 2

Yes

Question 3

What are the responsibilities of management?

Answer 3

Financial statements and Internal control

Question 4

What is the auditor’s responsibility?

Answer 4

Attest function

Question 5

What type of assurance is needed for an auditor to express an opinion?

Answer 5

Reasonable assurance

Question 6

What are the inherent limitations of an audit?

Answer 6

The nature of financial reporting, audit procedures, and timeliness of financial reporting and the balance between cost and benefit

Question 7

What type of assessments require judgment by management?

Answer 7

Intangibles, impairment, asset life/salvage, bad debts, warranties, and lawsuits