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15
An attitude that includes a questioning mind and a critical assessment of audit
evidence is referred to as:
(A) Due professional care.
(B) Professional skepticism.
(C) Reasonable assurance.
(D) Supervision.
Unit 2
C
A
The auditor does have some responsibility for detecting errors and
fraud.
The auditor is not “responsible for” detecting all material errors, but is responsible for designing an
audit to provide reasonable assurance of detecting material misstatements.
Due to the fact that fraudulent activity is frequently concealed, even a properly planned and performed
audit may not detect a material misstatement resulting from fraud.
The auditor should design the audit to provide reasonable assurance of detecting errors and fraud.
An engagement letter is an agreement between the accounting firm and the client for the conduct of the
audit and related services.
An auditor’s engagement letter documents and confirms his acceptance of the appointment, the
objective and scope of the audit, the extent of auditor responsibilities to the client, and the form of
any reports.
The engagement letter may affect legal responsibilities to the client.
In litigation, the auditor may use an engagement letter as a contract stating its scope, responsibilities,
and limitations.
The letter describes the auditor’s purpose, that the audit entails study of internal control, the time
schedule of the engagement, and fees.
/Certification Exam Question 5.318
Before accepting an audit engagement, a successor (proposed) auditor should make
specific inquiries of the predecessor (existing) auditor regarding:
(A) Disagreements the predecessor had with the client concerning auditing procedures
and accounting principles.
(B) The predecessor’s evaluation of matters of continuing accounting significance.
(C) Opinion of any subsequent events occurring since the predecessor’s audit report
was issued.
(D) The predecessor’s assessments of inherent risk and judgments about materiality.