Also, in Auditing Standard No.14 of PCAOB, it says the communication just gives the management an opportunity to correct misstatements. However, auditors should be more suspicious of these uncorrected misstatements, because there may be a sign of fraud. Thus, PCAOB requires auditors to understand why their clients refuse to make corrections, and evaluate the effect of the uncorrected misstatements, both individually and in combination with relevant accounts. 2. Should auditors take explicit measures to prevent their clients from discovering or becoming aware of the materiality thresholds used on individual audit engagements?
The objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared, in all material respects, in conformity with an identified financial reporting framework of Generally Accepted Accounting Principles. In essence, materiality should function as a cut-off threshold to determine the nature of the audit testing. Auditors should not reveal its materiality level to clients because clients might take advantage of it to deceive the auditors and make its financial statement better. When the Deloitte auditors are suspicious of certain accounts, they not only can’t reveal it but also make more substantive investigation into these accounts. Question 4: Existence: the
In addition, much of the new assignments are given to untrained professionals with strict completion deadlines. Because of such dilemmas the auditing firm has been faced with the ethical dilemma of whether to assist with the accounting issues at MHA and NYH. As a professional in accounting I have agreed to terms of independence. By confirming to such terms, I must not issue any non-audit services. As the auditor of both MHA and NYH, according to Sarbanes-Oxley Section 201, I am prohibited most non-audit services to public audit clients.
We are responsible for noticing and monitoring our own emotions. Right to make sure that opportunities for lawsuits are minimized. (Incorrect) Because the legal process can be both properly used as well as abused, operating from a place of protection is not useful. We cannot guarantee what people will or will not do. Right to expect that processes will be followed.
The company should have been able to follow up with all venders and customers to attest to the validity of the financial statements and they were not able to do this and not able to gather the “appropriate and sufficient evidence” needed. When a client will not allow the auditor to gather evidence needed to perform a correct auditor then the opinion can be affected. The auditor cannot attest to the fairness of the financial statements if the evidence is lacking or
Robbin Industries is jeopardizing itself by not properly reporting the advertising costs. As an operating company, they must understand the generally accepted accounting principles and adhere to them (Weygandt, Kieso, & Kimmel, 2010). (c) What would you do if you were Wayne Terrago? Wayne Terrago should try to report the financial condition and results of operations fairly and in accordance with the generally accepted accounting principles. As controller, Wayne should inform management and understand what is acceptable according to the GAAP.
Bureaucratic systems are orderly and made up of governing action, laws, and orders that hold back individuals such as the patron – client systems from making judgments’ without official consent. According to WeeKoh (2009) this is what is known as the red tape rule where formal documentations processed by administration before any significance can be made p. one The patron – client system associates are allowed to get external means, connections, and manage tasks without acceptance but the tasks has to be helpful to the system. Moreover, individuals associated in the bureaucratic system fault
True B. False Question 22 of 50 1.0/ 1.0 Points Deciding that internal controls are effective when they in fact they are not is an example of assessing control risk too high. A. True B. False Question 23 of 50 1.0/ 1.0 Points The SEC is responsible for setting standards for not-for-profit organizations.
They can easily use fraud to authorize payment for a false invoice. The accountant also should not be able to print checks and complete the bank reconciliation. It allows the accountant to perpetrate fraud because they have access to blank checks to write fake checks and then cover it up with their record keeping responsibility. Along with segregation of duties, this also violates independent internal verification. A different employee, separate from personnel responsibility for the information, should make the verification and should report any discrepancies to management.
This is necessary in order to assess the risk of misstatement of the financial statements, whether due to a mistake or fraud. The evidence obtained through the audit needs to be sufficient and complete (Boynton & Johnson, 2006). The standards of reporting, the auditor is required to imply that the financial statements were provided in accordance with the Generally Accepted Accounting Principles (GAAP). Otherwise, the report needs to be recognized the reasons in which the principles have not been observed. The audit report needs to contain an opinion concerning the financial