Audit Review 2

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Author:
Joens1313
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294486
Filename:
Audit Review 2
Updated:
2015-02-01 00:59:51
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Audit Review
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Audit Review 2
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  1. If management does not make the minutes of the board meeting available to the auditor, is that sufficient to preclude an unmodified opinion?
    Yes -- An inability to obtain sufficient appropriate evidence may result from limitations imposed by management. Failing to make the minutes of board meetings available is such a limitation. It also raises a question about management’s compliance with the preconditions for an audit, e.g., providing access to relevant information and persons within the entity.
  2. If it is unlikely that a auditor can obtain sufficient appropriate audit evidence, should the engagement be rejected?
    Yes - The auditor should obtain sufficient appropriate audit evidence to draw reasonable conclusions on which to base the opinion. If the CPA is unable to obtain this evidence, the engagement most likely should be rejected.
  3. It is important for the auditor to consider the competence of the audit client’s employees, because their competence bears directly and importantly upon the
    Achievement of the objectives of internal control.

    The control environment is the foundation of internal control. A commitment to competence is one of the factors in the control environment.
  4. The audit risk against which the auditor and those who rely on his/her opinion require reasonable protection is a combination of two separate risks at the assertion level. The first risk (consisting of inherent risk and control risk) is that balances, classes of transactions, or disclosures contain material misstatements. The second is that
    Material misstatements that occur will not be detected by the audit.

    Audit risk is a function of the risks of material misstatement and detection risk. Detection risk is the risk that the procedures performed to reduce audit risk to an acceptably low level will not detect a misstatement that exists and could be material individually or combined with other misstatements. The auditor assesses the risk of material misstatement after obtaining an understanding of the entity and its environment, including its internal control. It exists at the overall financial statement level and assertion level. The RMM at the assertion level consists of inherent risk and control risk. Some auditors use a mathematical model based on the relationships of the components of audit risk to arrive at an acceptable level of detection risk. For example, it reflects that the acceptable detection risk has an inverse relationship with the RMMs at the assertion level (AU-C 200 and AS No. 8).
  5. The greatest risk in the audit of payables is that unrecorded liabilities exist. Omission of an entry to record a payable is a misstatement that is more difficult to detect than an inaccurate or false entry. The search for unrecorded payables should (1) ------------------------------------------------------------------------------ (2) sending confirmations to vendors with small and zero balances, and (3) reconciling payable balances with vendors’ documentation.
    The greatest risk in the audit of payables is that unrecorded liabilities exist. Omission of an entry to record a payable is a misstatement that is more difficult to detect than an inaccurate or false entry. The search for unrecorded payables should (1) include examining cash disbursements made after the balance sheet date and comparing them with the accounts payable trial balance, (2) sending confirmations to vendors with small and zero balances, and (3) reconciling payable balances with vendors’ documentation.
  6. The greatest risk in the audit of payables is that unrecorded liabilities exist. Omission of an entry to record a payable is a misstatement that is more difficult to detect than an inaccurate or false entry. The search for unrecorded payables should (1) include examining cash disbursements made after the balance sheet date and comparing them with the accounts payable trial balance, (2) -------------------------------------------------------------------------------, and (3) reconciling payable balances with vendors’ documentation.
    The greatest risk in the audit of payables is that unrecorded liabilities exist. Omission of an entry to record a payable is a misstatement that is more difficult to detect than an inaccurate or false entry. The search for unrecorded payables should (1) include examining cash disbursements made after the balance sheet date and comparing them with the accounts payable trial balance, (2) sending confirmations to vendors with small and zero balances, and (3) reconciling payable balances with vendors’ documentation.
  7. The greatest risk in the audit of payables is that unrecorded liabilities exist. Omission of an entry to record a payable is a misstatement that is more difficult to detect than an inaccurate or false entry. The search for unrecorded payables should (1) include examining cash disbursements made after the balance sheet date and comparing them with the accounts payable trial balance, (2) sending confirmations to vendors with small and zero balances, and (3) --------------------------------------------------------------
    The greatest risk in the audit of payables is that unrecorded liabilities exist. Omission of an entry to record a payable is a misstatement that is more difficult to detect than an inaccurate or false entry. The search for unrecorded payables should (1) include examining cash disbursements made after the balance sheet date and comparing them with the accounts payable trial balance, (2) sending confirmations to vendors with small and zero balances, and (3) reconciling payable balances with vendors’ documentation.
  8. The greatest risk in the audit of payables is that unrecorded liabilities exist. Omission of an entry to record a payable is a misstatement that is more difficult to detect than an inaccurate or false entry. The search for unrecorded payables should (1) ----------------------------------------------------------------------------------------, (2) --------------------------------------------------------------------------------------------------, and (3) -------------------------------------------------------------------.
    The greatest risk in the audit of payables is that unrecorded liabilities exist. Omission of an entry to record a payable is a misstatement that is more difficult to detect than an inaccurate or false entry. The search for unrecorded payables should (1) include examining cash disbursements made after the balance sheet date and comparing them with the accounts payable trial balance, (2) sending confirmations to vendors with small and zero balances, and (3) reconciling payable balances with vendors’ documentation.

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