Assume that an auditor finds a material misstatement regarding the financial statements while performing substantive tests of
Question:
a. What actions should the auditor take upon detecting an intentional misstatement in the financial statements? To whom must the misstatement be reported?
b. If the company agrees to correct the misstatement, is there a need to communicate the nature of the misstatement to important stakeholders of the company? If yes, explain the avenues the auditor has available to report the misstatement.
c. What are the implications of detecting an intentional misstatement in terms of evaluating the control environment and the effectiveness of internal controls in general?
Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Stakeholders
A person, group or organization that has interest or concern in an organization. Stakeholders can affect or be affected by the organization's actions, objectives and policies. Some examples of key stakeholders are creditors, directors, employees,...
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a When auditors detect an intentional misstatement they should do the following 1 reconsider the lev...View the full answer
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Related Book For 
Auditing a risk based approach to conducting a quality audit
ISBN: 978-1133939153
9th edition
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg
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