When auditing financial statements and finding indications of possible misappropriation of assets independent auditors should?
Question: 6. When Auditing Financial Statements And Finding Indications Of A Possible Misappropriation Of Assets, Independent Auditors Should First: (a) Immediately Report The Misappropriation To Those Individuals Charged With Governance Of The Organization So They Can Take Appropriate Action.
Which of the following is ordinarily considered an extended procedure during the independent audit of financial statements?
Which of the following is ordinarily considered an “extended procedure” during the independent audit of financial statements? cutoff bank statement is reconciled.
Who is responsible for the determination of the existence of misstatements in the financial statements?
Ordinarily, the appropriate level of management is the one that has responsibility and author- ity to evaluate the misstatements and take the necessary action. [Paragraph renumbered and amended, effective for audits of financial statements for peri- ods ending on or after December 15, 2021, by SAS No. 134.] .
Who is responsible for detect material error?
Prima-facie, it is the responsibility of the management of the company to prevent and detect frauds and other irregularities, have in place the selection and application of appropriate accounting policies so that the financial statements would give a true and fair view and are also free from material misstatement.
What are the auditor’s responsibilities regarding error?
The auditor may be held liable for fraud or error. In the audit planning process, the auditor should assess the risk of material misstatement in the financial statements of fraud and error and ask the management of the audited entity for information about any fraud or material error that has been discovered.
What evidence is appropriate to determine recorded purchase transactions?
What evidence is appropriate to determine whether recorded purchase transactions are valid and the vendors charged the correct prices? Receiving reports and purchase orders.
Which of the following procedures would provide the most reliable audit evidence?
Which of the following procedures would provide the most reliable audit evidence? Inspection of bank statements obtained directly from the client’s financial institution. Evidence supporting the financial statements consists of the accounting records and all other information available to the auditor.
Which of the following is the most reliable type of audit evidence?
(1) Information obtained indirectly from outside sources is the most reliable audit evidence.
Which of the following is the best example of corroborating evidence?
The best example of the corroborating evidence is Purchase Orders, which are helpful in obtaining the information. c . The sales invoice can be used as a supporting document from which relationship between accounts receivable and credit sales are established which in turn throws highest level of evidence. b .
Which is generally the most persuasive form of evidence?
The most persuasive evidence, generally, is the externally generated evidence sent directly to the auditor, and the least persuasive evidence is, generally, the internally generated evidence.
Which of the following is the most objective type of evidence?
Which of the following is the most objective type of evidence? the physical count of securities and cash. Evidence is generally considered appropriate when: it has the qualities of being relevant, objective, and free from known bias.
Why does the auditor divide the financial statements into smaller segments?
Using the cycle approach makes the audit more manageable. Why does the auditor divide the financial statements into segments around the financial statement cycles? The approach aids in the assignment of tasks to different members of the audit team.
Which of the following best describes one of the primary objectives of audit documentation?
Which of the following best describes one of the primary objectives of audit documentation? Provide reasonable assurance that the audit was conducted in accordance with auditing standards.
Which of the following is an example of objective evidence?
The term includes any statement of fact that somebody documented and based on verifiable tests, observations, or measurements. Evidence that is objective may, for example, be a test log, test report, review report, or non-conformance report.
Which of the following is one of the objectives of audit documentation?
It provides evidence of the auditor’s basis for a conclusion about the achievement of the overall objective. It provides evidence that the audit was planned and performed in accordance with ISAs and other legal and regulatory requirements. It assists the engagement team to plan and perform the audit.
When auditors use documents to support recorded transactions the process is often called?
9) When auditors use documentation to support recorded transactions and amounts, the process is usually called: A) tracing.
What is the primary purpose of audit documentation?
Objectives of Audit Documentation Audit documentation also facilitates the planning, performance, and supervision of the engagement, and is the basis for the review of the quality of the work because it provides the reviewer with written documentation of the evidence supporting the auditor’s significant conclusions.
What is not true of internal and external documents?
What is not true of internal and external documents? External documents like title to property, insurance policies and contracts are very reliable evidence. Internal documents require supporting evidence. External documents may be processed by both internal and external parties representing agreement.
Which of the following generally provide the most reliable evidence?
Objective evidence is more reliable, and hence more persuasive, than subjective evidence. The two most important factors when determining the appropriate sample size in an audit are the auditor’s expectation of misstatements and the objectivity of the evidence.
Which of the following is not a method of collecting audit evidence?
15) Which of the following is not a method of collecting audit evidence? a) observationb) enquiryc) disclosured) analytical proceduresFeedback: Disclosure is not a procedure used to gather audit evidence.
Which of the following is not a characteristic of reliability of evidence?
Anwer – Education of Auditor Education of auditor is not characteristic of reliability of evidence.
When Should IS auditors perform re performance?
4. Re-performance. Re-performance is used when inquiry, observation, and physical examination and inspection have failed to provide the requisite assurance that a control is operating effectively. This method is also helpful in determining whether automated controls are operating effectively.
What kind of control procedure should the auditors recommend?
The seven internal control procedures are separation of duties, access controls, physical audits, standardized documentation, trial balances, periodic reconciliations, and approval authority.
- Separation of Duties.
- Accounting System Access Controls.
- Physical Audits of Assets.
- Standardized Financial Documentation.
Which test is most effective but least efficient?
Reperformance is most effective as an audit test and gives the best audit evidence. However, testing by reperformance could be very time consuming and least efficient most of the time. misstatements, complexity of business, assertions being addressed, etc.
Is recalculation an audit procedure?
Recalculation is the type of audit procedure that normally done by re-performing the works performed by the client in the purpose of assessing if there any difference between the audit’s work and the client’s work.