B) The auditor is also an attorney who advises the client as its general counsel. C) An employee of the auditor serves as treasurer of a charitable organization that is a client. D) The client owes the auditor fees for two consecutive annual audits.
The auditor is also an attorney who advises the client as its general counsel. Auditor An individual or group of individuals who are responsible for the verification of the financial books of the...
a. The auditor has an automobile loan from a client bank. b. The auditor is also an attorney who advises the client as its general counsel. c. An employee of the auditor donates service as treasurer to a charitable organization that is a client. d. The client owes the auditor fees for two consecutive annual audits.
B) The auditor is also an attorney who advises the client as its general counsel. C) An employee of the auditor serves as treasurer of a charitable organization that is a client. D) The client owes the auditor fees for two consecutive annual audits.
But in fact, it is the investors who pay the fee and who trust the auditor to protect their investment interests. The investor is the client.
What are the Main Functions of an Auditor?Provide recommendations to improve weak internal controls.Investigate instances of possible fraud (even those considered immaterial)Perform reconciliations of financial and operating information.Monitor compliance with industry standards, laws, and guidelines.More items...•
The auditor is responsible for preparing an audit report based on the financial statements of the company. The books of accounts so examined by him should be maintained in accordance with the relevant laws.
Auditing standards require that the report be titled and the the title include the word "independent" - conveying to users that the audit was unbiased in all aspects. The report is usually addressed to those for whom the report is prepared, including the company, its stockholders, or the board of directors.
The auditor has a responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud.
The main duty of an auditor is to determine whether financial statements follow generally accepted accounting principles (GAAP). The Securities and Exchange Commission (SEC) requires all public companies to conduct regular reviews by external auditors, in compliance with official auditing procedures.
The auditor is responsible for verifying that all important management assertions related to transactions, accounts, and line items and disclosures in the financial statements are reasonable, that is, free of significant misstatement.
To verify that transactions are free from errors or frauds. To verify whether voucher is processed through all the stages of Internal Check system properly. To verify and confirm that the entries are recorded according to the capital and the revenue nature or not. To check the accuracy of accounting transactions.
Ordinarily, the auditor's report on general purpose financial statements is addressed either to the shareholders or to those charged with governance of the entity whose financial statements are being audited.
An audit opinion (or independent auditor's report) is a certification that accompanies financial statements. Auditors examine information that supports the financial statements to provide a formal auditor's opinion.
The auditor prepares the report after taking into account the provisions of the Companies Act, the accounting standards and auditing standards. Also, he lays the report before the company in the annual general meeting.
A) The CPA firm is engaged and paid by the client; therefore, the firm has primary responsibility to be an advocate for the client.
A rationalization method that can easily result in unethical behavior is the argument that "everybody does it."
Professionals are expected to conduct themselves at a higher level than most other members of society.
According to the profession's ethical standards, an auditor would be considered independent in which of the following instances?
An individual or group of individuals who are responsible for the verification of the financial books of the client are known as auditors of the company. Auditors verify financial records for ensuring the compliance that needs to be followed while preparing financial records.
A) The CPA firm is engaged and paid by the client; therefore, the firm has primary responsibility to be an advocate for the client.
3) One of the AICPA's Ethical Principles deals with the public interest. It states that members should accept the obligation to act in a way that will
D) being an advocate for a client.
In planning an examination, the auditor would consider all of the following matters, except a. Anticipated reliance on internal controls. b. Preliminary judgment about materiality levels for audit purposes. c. Financial statement items likely to require adjustment. d. The kind of opinion (unqualified, qualified, disclaimer, or adverse), likely to be given.
Principal auditor is a. The auditor who audited and reported on the prior period's financial statements and
Governmental effectiveness (program) auditing seeks to determine whether the desired results are being achieved and objectives are being met. The first step in the performance of such an audit would be: a. Evaluate the system used to measure results. b. Determine the sampling frame to use in studying the system. c. Collect and analyze quantifiable data. d. Identify the legislative intent of the program being audited.
A technique for regularly and systematically appraising a unit of function and its effectiveness against corporate and industry standards with the objective of assuring management that its aims are being carried out and/or identifying conditions capable of being improved a. Financial auditing. c. Operations auditing. b. Compliance tests. d. Management auditing.
Assurance services are best described as a. Services designed for the improvement of operations, resulting in better outcomes. b. Independent professional services that improve the quality of information, or its context, for decision makers. c. The assembly of financial statements based on assumptions of a reasonable party. d. Services designed to express an opinion on historical financial statements based on the results of an audit.
Williams & Co., a large international CPA firm, is to have an “external peer review.” The peer review will most likely be performed by a. Employees and partners of Williams & Co. who are not associated with the particular audits being reviewed. b. Audit review staff of the Securities and Exchange Commission. c. Audit review staff of the American Institute of Certified Public Accountants. d. Employees and partners of another CPA firm.
The Accountancy Law provided that a CPA certificate may be suspended or revoked on grounds except a. Immoral or dishonorable conduct. b. Gross negligence or incompetence in the practice of profession. c. Refusal to accept an audit engagement with a government corporation. d. Conduct discreditable to the accounting profession.
The auditor’s responsibility is to express an independent, objective opinion on the financial statements of a company.
At the completion of the audit, the auditor may also offer objective advice for improving financial reporting and internal controls to maximize a company’s performance and efficiency.
The outside, independent audito r is engaged to render an opinion on whether a company’s financial statements are presented fairly, in all material respects, in accordance with financial reporting framework. The audit provides users such as lenders and investors with an enhanced degree of confidence in the financial statements. An audit conducted in accordance with GAASand relevant ethical requirements enables the auditor to form that opinion.
To form the opinion, the auditor gathers appropriate and sufficient evidence and observes, tests, compares and confirms until gaining reasonable assurance. The auditor then forms an opinion of whether the financial statements are free of material misstatement, whether due to fraud or error.
Small companies, in particular, often lacked the level of accounting sophistication necessary to carry out these tasks. Relying on the audit firm often made sense from the perspective of efficiency and cost containment.
Management’s responsibility is the underlying foundation on which audits are conducted.
In practical terms, there are a number of tasks you should not expect your auditor to perform. ✎ Analyze or reconcile accounts. ✎ “Close the books”. ✎ Locate invoices, etc., for testing. ✎ Prepare confirmations for mailing.