chap 6 objective of conducting an audit of financial statements

Question 1

the issuance of an opinion on internal control over financial reporting for larger public companies is required by what?

Answer 1

Section 404 of the Sarbanes Oxley Act

Question 2

What are the 5 steps to developing audit objectives?

Answer 2

1. understand objectives and responsibililities for the audit 2. divide FSs into cycles 3. Know management assertions about FSs 4. know general audit objectives for classes of transactions, accounts, and disclosures 5. know specific audit objectivies for classes of transactions, account, and disclosures

Question 3

An auditors opinion enhances what?

Answer 3

the degree of confidence that intended users can place in the FSs

Question 4

If the auditor believes the FS are not fairly presented or in unable to reach a conclusion becuase of insufficient evidence, the auditor has the responsiblility to do what?

Answer 4

notify users through the auditors report

Question 5

the purpose of an audit os to provide FS user with an ?

Answer 5

opinion by the auditor on whether the FSs are presented fairly, in all material respects, in accordance witht he applicable financial accounting framework

Question 6

For larger public compmanies, the auditor not only issues an opinion on FSs but also a report on ?

Answer 6

internal control over financial reporting

Question 7

after their issuance, if the facts indicate that the FSs were not fairly presented, what will the auditor have to do?

Answer 7

demonstreate to the courts or regulatory agencies that the audit was conducted in a proper manner and the auditor reached reasonable conclusions