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6-2 Distinguish between management’s and the auditor’s responsibility for the financial statements being audited

Accounting

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6-2

Distinguish between management’s and the auditor’s responsibility for the financial statements being audited.

 

6-3

Distinguish between the terms errors and fraud. What is the auditor’s responsibility for finding each?

 

6-20

1. Which of the following best describes the reason why an independent auditor reports on financial statements?

 

2. Because of the risk of material misstatement, an audit should be planned and performed with an attitude of

 

3. The major reason an independent auditor gathers audit evidence is to

 

6-21

1. An independent auditor has the responsibility to design the audit to provide reasonable assurance of detecting errors and fraud that might have a material effect on the financial statements. Which of the following, if material, is a fraud as defined in auditing standard?

 

2. What assurance does the auditor provide that errors and fraud that are material to the financial statements will be detected?

 

3. Which of the following statements describes why a properly designed and executed audit may not detect a material misstatement in the financial statements resulting from fraud?

6-22

1. An auditor reviews aged accounts receivable to assess likelihood of collection to support management’s assertion about account balances of

 

2. An auditor will most likely review an entity’s periodic accounting for the numerical sequence of shipping documents to ensure all documents are included to support management’s assertion about classes of transaction of

 

3. In the audit of accounts payable, an auditor’s procedures will most likely focus primarily on management’s assertion about account balances of

6-26

1. Identify the accounts in the trial balance that are likely to be included in each transaction cycle. Some accounts will be included in more than one cycle.

Cycle	Balance Sheet Accounts	Income Statement Accounts
Sales and collection
Acquisition and Payment
Payroll and personnel
Inventory and Warehousing
Capital acquisition and repayment

 

2. How will the general ledger accounts in the trial balance most likely differ if the company were a retail store rather than a wholesale company? How will they differ for a hospital or a government unit?