Acc 555 -- Week 3 Homework Questions

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Question 6-19

The following questions concern the reason auditors do audits. Choose the best response.

A. Which of the following best describes the reason why an independent auditor reports on financial statements?

4. Poorly designed internal controls may be in existence

Question 6-20

The following questions deal with errors and fraud. Choose the best response.

A. An independent auditor has the responsibility to design the audit to provide reasonable assurance of detecting errors and fraud that might have a material effect on the financial statements. Which of the following, if material, is a fraud as defined in auditing standards

4. Misinterpretation of facts that existed when the financial statements were prepared

B. What assurance does the auditor provide that errors, fraud, and direct-effect illegal acts that are material to the financial statements will be detected

Errors Fraud Direct-effect illegal acts

1. limited Negative Limited

C. Which of the following statements describes why a properly designed and executed audit may not detect a material misstatement in the financial statements resulting from fraud?

3. The factors considered in assessing control risk indicated an increased risk of international misstatements, but only a low risk of unintentional misstatements

Question 6-27

The following are specific transaction-related audit objectives applied to the audit of cash disbursement transactions (a through f), management assertions about classes of transactions (1 through 5), and general transaction-related audit objectives (6 through 11)

Specific Transaction-Related Audit Objective

A. Recorded cash disbursement transaction are for the amount of goods or services received and are correctly recorded

B. Cash disbursement transactions are properly included in the accounts payable master file and are correctly summarized

C. Recorded cash disbursements are for goods and services actually received