Wiley Test Bank - Engagement Planning Flashcards
Disagreements between the auditor and management that do NOT have to be communicated by the auditor to those charged with governance would be:
those that involved preliminary information as they may well be satisfactorily resolved.
As guidance for measuring the quality of the performance of an auditor, the auditor should refer to:
Generally accepted auditing standards.
It would NOT be appropriate for the auditor to INITIATE discussion with the audit committee concerning:
Details of the procedures which the auditor intends to apply.
The auditor may refer to and identify a specialist in the auditor’s report if the auditor:
Believes it will facilitate an understanding of the reason for modification of the report.
With regards to the auditor’s responsibility for the detection of material errors and fraud:
auditing procedures may or may not need to be extended if the auditor’s analysis indicates the existence of fraud risk factors.
When an outside specialist has assumed full responsibility for taking the client’s physical inventory, reliance on the specialist’s report is acceptable if:
The auditor conducted the same audit tests and procedures as would have been applicable if the client employees took the physical inventory.
During an audit there is ordinarily a presumption of overstatements relating to:
Revenue, because the professional standards suggest that there is a presumption that improper revenue recognition is a fraud risk.
Which of the following courses of action is the most appropriate if an auditor concludes that there is a high risk of material misstatement?
Select more effective substantive tests.
–because a high risk of material misstatement requires that the auditor increase the scope of audit procedures through their nature (e.g., obtain more reliable evidence), timing (year-end testing) and/or extent (e.g., take larger sample sizes).
Underlying elements to the application of generally accepted auditing standards?
materiality and audit risk
