FREE Bachelor of Science in Accountancy: Audit Questions and Answers

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An Emphasis-of-Matter Paragraph should be inserted to the auditors' report when:

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The auditor must include an explanation that uses the terms "serious doubt" and "going concern" where there is ambiguity about the going concern.

Which form of statement does the auditor tackle from the bottom up?

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An auditor must start with the source document, follow each individual item through the process, and confirm that they appear in the financial statements in order to verify completeness and ensure that nothing is being falsified.

For BDE Company, the ratio of accounts payable turnover grew from year 3 to year 4. What might be the cause of this?

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Cost of goods sold divided by average accounts payable equals the accounts payable turnover ratio.
The ratio will rise if the numerator rises.

According to the PCAOB standard, issuer auditors must do the

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The auditor must conduct an integrated audit on behalf of the issuer, which entails examining both the financial statements and the management's evaluation of the efficiency of internal controls over financial reporting.

The kind of control that is intended to stop, catch, and fix important misstatements before the action takes place is called a:

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Preventive measures. A corporation implements preventative control to find problems before they happen.
Making the manager evaluate an adjusting journal entry created by a senior accountant before booking is an illustration of this.

A nonissuer's internal control problems should be reported as soon as possible if:

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A nonissuer's timely basis is taken into account 60 days after the report release date.

True or False: Even if an auditor does not find any false statements during an audit, a serious flaw or material weakness may still exist within a corporation.

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Even if there are no false statements found during an audit, an auditor may not find any flaws or significant weaknesses in internal controls.

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