The objective of the ordinary audit of financial statements is the expression of an opinion on: Show If the auditor believes that the financial statements are not fairly stated or is unable to reach an conclusion because of insufficient evidence, the auditor: Auditors accumulate evidence to: The responsibility for adopting sound accounting policies and maintaining adequate internal control rests with the: The auditor’s best defense when material misstatements are not uncovered is to have conducted the audit: If management insists on financial statement disclosures that the auditor finds unacceptable, the auditor can: If management insists on financial statement disclosures that the auditor finds unacceptable, the auditor can do all but which of the following? Which of the following is not one of the reasons that auditors provide only reasonable assurance on the financial statements? In certifying their annual financial statements, the CEO and CFO of a public company certify that the financial statements comply with the requirements of: Which of the following statements is most correct regarding errors and fraud? Which of the following statements is true of a public company’s financial statements? Which of the following is not one of the three categories of assertions? If a short-term note payable is included in the accounts payable balance on the financial statement, there is a violation of the: Professional skepticism requires auditors to possess a(n) ______ mind. The auditor has no responsibility to plan and perform the audit to obtain reasonable assurance that misstatements, whether caused by errors or fraud, that are not ________ are detected. Fraudulent financial reporting is most likely to be committed by whom? Which of the following would most likely be deemed a direct-effect illegal act? The concept of reasonable assurance indicates that the auditor is: Tests of details of balances are specific procedures intended to: Which of the following is the auditor least likely to do when aware of an illegal act? The auditor gives an audit opinion on the fair presentation of the financial statements and associates his or her name with it when, on the basis of adequate evidence, the auditor concludes that the financial statements are unlikely to mislead: The responsibility for the preparation of the financial statements and the accompanying footnotes belongs to: When engaged to audit the financial statements, it is acceptable for the auditor to draft: a. Yes Yes The auditor has considerable responsibility for notifying users as to whether or not the statements are properly stated. This imposes upon the auditor a duty to: “The auditor should not assume that management is dishonest, but the possibility of dishonesty must be considered.” This is an example of: If the auditor were responsible for making certain that all of management’s assertions in the financial statements were absolutely correct: The auditor’s best defense when existing material misstatements in the financial statements are not uncovered in the audit is: Fraudulent financial reporting is often called: Which of the following statements is usually true? Auditing standards make _____ distinction(s) between the auditor’s responsibilities for searching for errors and fraud. In comparing management fraud with employee fraud, the auditor’s risk of failing to discover the fraud is: Which of the following statements is correct with respect to the auditor’s responsibilities relative to the detection of indirect-effect illegal acts? When comparing the auditor’s responsibility for detecting employee fraud and for detecting errors, the profession has placed the responsibility: If several employees collude to falsify documents, the chance a normal audit would uncover such acts is: When planning the audit, if the auditor has no reason to believe that illegal acts exist, the auditor should: When the auditor has reason to believe an illegal act has occurred, the auditor should: When the auditor knows that an illegal act has occurred, the auditor must: If an auditor uncovers an illegal act at a public company, the auditor must notify: Why does the auditor divide the financial statements into smaller segments? Why does the auditor divide the financial statements into segments around the financial statement cycles? The most important general ledger account included in and affecting several cycles is the: Management assertions are: Which of the following statements is true? Which of the following statements is true regarding the distinction between general audit objectives and specific audit objectives for each account balance? Which of the following statements about the existence and completeness assertions is not true? The occurrence assertion applies to _______. Which of the following management assertions is not associated with transaction-related audit objectives? Which of the following statements is not true? In testing for cutoff, the objective is to determine: The detail tie-in objective is not concerned that the details in the account balance: The detail tie-in is part of the_______ assertion for account balances. Which of the following is not a proper match of a transaction-related audit objective and management assertion? Which of the following statements is not correct? Two overriding considerations affect the many ways an auditor can accumulate evidence: If the auditor has obtained a reasonable level of assurance about the fair presentation of the financial statements through understanding internal control, assessing control risk, testing controls, and analytical procedures, then the auditor: After the auditor has completed all audit procedures, it is necessary to combine the information obtained to reach an overall conclusion as to whether the financial statements are fairly presented. This is a highly subjective process that relies heavily on: Which of the following combinations is correct? If an auditor conducted an audit in accordance with auditing standards, which of the following would the auditor likely detect? Which of the following statements best describes the auditor’s responsibility with respect to illegal acts that do not have a material effect on the client’s financial statements? Which of the following statements best describes the auditor’s responsibility regarding the detection of fraud? The essence of the attest function is to: The primary difference between an audit of the balance sheet and an audit of the income statement is that the audit of the income statement deals with the verification of: The auditor’s evaluation of the likelihood of material employee fraud is normally done initially as a part of: When using the cycle approach to segmenting the audit, the reason for treating capital acquisition and repayment separately from the acquisition of goods and services is that: Illegal acts are defined in SAS 54 (AU217) as: Most illegal acts affect the financial statements: With respect to the detection of illegal acts, auditing standards state that the auditor provides: In describing the cycle approach to segmenting an audit, which of the following statements is not true? Which of the following journals would be included most often in the various audit cycles? Transaction cycles begin and end: After general audit objectives are understood, specific audit objectives for each account balance on the financial statements can be developed. Which of the following statements is true? An auditor should recognize that the application of auditing procedures may produce evidence indicating the possibility of errors or fraud and therefore should: Responsibility for the fair presentation of financial statements rests equally with management and the auditor. Errors are usually more difficult for an auditor to detect than frauds. Auditors have found that the most efficient way to conduct audits is to focus primarily on testing classes of transactions and performing minimal or no tests of ending account balances. When an auditor has reduced assessed control risk based on tests of controls, he or she may then reduce the extent to which the accuracy of the financial statement information directly related to those controls must be supported through the accumulation of evidence using substantive tests. Tests of details of balances typically involve the use of comparisons and relationships to assess the overall reasonableness of account balances. Other than inquiring of management about policies they have established to prevent illegal acts and whether management knows of any laws or regulations that the company has violated, the auditor should not search for indirect-effect illegal acts unless there is reason to believe they may exist. When an auditor believes that an illegal act may have occurred, the first step he or she should take is to inquire of management at a level above those likely to be involved in the potential illegal act. Audits are expected to provide a higher degree of assurance for the detection of material frauds than is provided for an equally material error. Auditors have a higher degree of responsibility for detecting direct-effect illegal acts than indirect-effect illegal acts. The auditor’s first course of action when an illegal act is uncovered should be to immediately notify the appropriate authorities, including but not limited to the police, and for publicly held companies, the Securities and Exchange Commission. Under the cycle approach to segmenting an audit, transactions recorded in different journals should never be combined with the general ledger balances that result from those transactions. General transaction-related audit objectives vary from audit to audit, depending on the nature and characteristics of the client’s business and industry. The audit objective of posting and summarization is associated with the management assertion of accuracy. Balance-related audit objectives are usually applied to the ending balance in income statement accounts; transaction-related audit objectives are usually applied to transactions reflected in balance sheet accounts. The transaction-related audit objective of timing is related to the assertion of cutoff. The effect of a violation of the existence transaction-related audit objective for the sales account would be an overstatement of that account. The effect of a violation of the completeness transaction-related audit objective for cash disbursements transactions would be an overstatement of cash disbursements. The transaction-related audit objective that deals with whether recorded transactions have actually occurred is the completeness objective. The general balance-related audit objective that deals with determining that details in the account balance agree with related master file amounts, foot to the total in the account balance, and agree with the total in the general ledger is the detail tie-in objective. The cutoff objective, “transactions near the balance sheet date are recorded in the proper period,” is a balance-related audit objective. For a private company audit, tests of controls are normally performed only on those internal controls the auditor believes have not been operating effectively during the period under audit. An audit generally provides no assurance that indirect-effect illegal acts will be detected. When an auditor believes there is a moderate or high risk of management fraud, the auditor will normally do less audit work at interim dates instead of at year-end. An auditor must inform a client’s audit committee of an illegal act discovered during an audit in writing. The objective of the audit of financial statements by an independent auditor is to verify that the financial statements are free of misstatements and accurately represent the company’s financial position and results of operations. The auditor’s responsibility for uncovering direct-effect illegal acts is the same as for fraud. What is the objective of an audit of financial statements?The objective of an audit of financial statements is to enable an auditor to express an opinion as to whether the financial statements are prepared, in all material respects, in accordance with International Financial Reporting Standards or another identified financial reporting framework.
What is expression of opinion in auditing?a description of the auditor's responsibility to express an opinion on the financial statements and the scope of the audit. an opinion paragraph containing an expression of opinion on the financial statements and a reference to the applicable financial reporting framework used to prepare the financial statements.
What is an expression of independent opinion on the financial statements of a company?An accountant's opinion is a statement by an independent accountant expressing its view regarding the quality of information in a set of financial reports. For audits in the U.S., the opinion may be unqualified and in accordance with generally accepted accounting principles (GAAP), qualified or adverse.
How is the auditor's responsibility for expressing the opinion?How is the auditors' responsibility for expressing the opinion on financial statements disclosed in the standard (unmodified) report for a nonpublic company? Stated explicitly in the opinion paragraph.
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