You have been hired to perform the audit of Hanmei, Inc.’s financial statements. When planning such an audit, you often may need to access the profession’s auditing standards to perform research. For each of the following circumstances, select the topic most closely related in the Professional Standards topics on the following page. A topic may be selected once, more than once, or not at all.
a. Possible risk factors related to misappropriation of assets
b. The relationship between materiality used for planning versus evaluation purposes
c. Hanmei, Inc., has transactions with the corporation president’s brother
d. Comparing a client’s unaudited results for the year with last year’s audited results
e. Requirements relating to identifying violations of occupational safety and health regulations
f. The need to “brainstorm” among audit team members about how accounts could be intentionally misstated
g. Details on considering design effectiveness of controls
h. The importance of considering the possibility of overstated revenues (e.g., through premature revenue recognition)

Professional Standards Topics
1. Analytical procedures
2. Materiality in planning and performing an audit
3. Consideration of fraud in a financial statement audit
4. Understanding the entity and its environment and assessing the risks of material misstatement
5. Consideration of laws and regulations
6. Management representations
7. Related parties

  • CreatedOctober 25, 2014
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