You are currently working on a public company and your partner has asked you to provide her with some information that she can use in a report to the audit committee. Your task is to answer her questions in your own words and provide her with the specific authoritative citation. There should be a citation in each of your answers.

Example: What is the objective of audit evidence?

States that objective of the auditor is to plan and perform the audit to obtain sufficient audit evidence to support the auditor's report.

7. Where specifically is audit risk defined in the standards? How is it defined and what is it a function of?

 

8. The auditor should assess the risks of material misstatement at two levels.  What are they?

 

9. What affects the quantity of audit evidence needed?

 

10. Read AS 1105.07 and .08. Is this consistent with class discussions? When is the reliability of internal documents increased?

 

11. What are the financial statement assertions and where are they cited? Can the auditor ever use different assertions?

 

12.  Does the audit risk model impact the confirmation process?

 

13.  Why should the auditor exercise an appropriate level of professional skepticism?

 

14. We learned in class that confirmations in the area of accounts receivable provides the best evidence for the existence assertion. Is this stated in the standard and if so, where?

 

15. Should you only confirm accounts receivable balances when auditing revenue and accounts receivable?

 

16.   How can you mitigate the risk of people signing/returning a confirmation without paying attention to the fact?

 

17. Can the external auditors use internal auditors to assist with the confirmation process?

 

18. Can an unqualified opinion be given if you do not confirm accounts receivable? 

 

19.  Who is responsible for estimating the Allowance for Doubtful Accounts?

 

20. Is the auditor always required to recalculate an estimate used in the financial statements?

 

21. What does the auditor do about inventory owned by their client but held in a public warehouse by an outside custodian?

 

22. Who should the audit report be addressed to?

Answer rating: 100% (QA)

7 Audit risk is defined in AUC Section 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Generally Accepted Auditing Standards of the AICPA Professional ... View the full answer