Refer to the Auditing in Practice feature "Description of Common Types of Earnings Management Techniques." Why might it be difficult for auditors to disallow companies' preferences to decrease existing reserves? Explain the role of professional skepticism in the context of evaluating management's explanations for their accounting for reserves in this context.
Answer to relevant QuestionsWhy would an auditor need to use an outside specialist when performing an audit? Identify specific accounts or assertions where a specialist might be needed.What is meant by the statement audit documentation ought to stand on its own? What is the importance of this concept?Cendant Corporation, a company that sold travel and health club memberships, was the subject of an intensive fraud investigation that culminated in 1998. The company's Web site revealed the following statements contained in ...You are auditing Pell grants provided to students at six state universities. The Pell grant program is a federal financial aid program for college students. The maximum grant a student can receive during a school year is ...Auditors make materiality judgments during the planning phase of the audit in order to be sure they ultimately gather sufficient evidence during the audit to provide reasonable assurance that the financial statements are ...
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