Read the extract below from an audit report written by an auditing student and identify and explain
Question:
Read the extract below from an audit report written by an auditing student and identify and explain the errors in the extract. (Do not redraft the report)‘We conducted our audit in accordance with Auditing Standards.
An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of all the estimates and judgements made by the directors in the preparation of the financial statements, and whether the accounting policies are appropriate to the company’s circumstances, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain as much information and explanation as possible given the time available for the audit. We confirm that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. The directors, however, are wholly responsible for the accuracy of the financial statements and no liability for errors can be accepted by the auditor. In forming our opinion we also evaluated the overall adequacy of the presentation of the information in the company’s annual report.
Briefly explain three 3 difference between positive and negative assurance, outlining three 3 advantages and three 3 disadvantages to the directors of providing a negative assurance on for example a cash flow forecast.
Taxes and Business Strategy A Planning Approach
ISBN: 9780132752671
5th edition
Authors: Myron Scholes, Mark Wolfson, Merle Erickson, Michelle Hanlon