Question: The Auditing in Practice feature Application of Accounting Principles and
The Auditing in Practice feature, "Application of Accounting Principles and Related Disclosures," discusses guidance from AS 12 regarding the auditor's responsibilities to understand management's application of accounting principles and related disclosures. Locate AS 12 on the PCAOB Web site, read the standard, and summarize the other risk assessment procedures addressed in the standard.
Answer to relevant QuestionsExhibit provides examples of questions that an auditor should ask when assessing inherent risk relating to financial reporting.The first question asks, "What are the significant judgment areas (reserves, contingencies, asset ...What is the directional relationship between the risks of material misstatement (inherent and control risk) and both audit risk and detection risk? In other words, if the risks of material misstatement increase or decrease, ...Describe how auditors use sampling and GAS for gathering audit evidence.Define the following terms: (a) Simple random sampling, (b) Systematic sampling, (c) Systematic random sampling, (d) Haphazard sampling, (e) Block sampling.Calculate the sampling interval for cases a. through h. in Problem, assuming a population size of $8,500,000. Recall that sampling interval = population size ÷ sample size. Round the value of the interval down to the ...
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