Escolar Documentos
Profissional Documentos
Cultura Documentos
Unit 1
Review Question 1-20
Type of Firm
Local
Characteristics
One to two offices, one or few CPAs as
partners
Regional
National
International
Services Offered
income tax, consulting, and
accounting services, small
amount of auditing
Increased amount in services
as local firms and a larger
auditing presence
Offer services similar to local
and regional firms just on a
larger scale and international
dealings
Offers professional services,
auditing represents a large
portion of the services
provided
during the review. An unmodified (unqualified) opinion indicating that the audit was adequate in
scope and that the financial statements present fairly the financial position, results of operations,
and cash flows in conformity with generally accepted accounting principles. (Whittington,
2012) The Audit report is usually requested by management thus authorizing the need for an
audit report.
As for the second statement an auditor may not issue a qualified statement without having
performed a review or audit of the financial statements. The auditors responsibility is to
express an opinion on the financial statements based on having conducted an audit following
generally accepted auditing standards of the United States of America. (Whittington, 2012) If
the auditor has not reviewed the material he would have no grounds to give a qualified opinion
which states an error or fraudulent finding among the financial statements.
Questions Requiring Analysis 2-28
Be sure to check out pages 40-41!
Your answer:
Part A:
The responsibility of the auditor is perform an audit that will provide reasonable assurance
(Whittington, 2012) that financial statements of company under review are presented fairly of
free of error. When reviewing for unintentional (errors) or intentional (fraud) misstatements an
auditor should look for reasonable assurance to validate such issues.
Part B:
The responsibility of the auditor is to determine the clients noncompliance with laws and
regulations. With regards to laws and regulations that have a direct effect (Whittington, 2012)
on the financial statements the auditor needs an understanding of the guidelines of the law and
the framework of the entity and their policies for dealing with those laws. It is important the
auditor points out the noncompliance to help make the client aware so they may become
compliant.
Part C:
If the results of the audit find acts that client action are illegal in nature and have not made any
attempt to become compliant it is the duty of the auditor to report the matter to the next higher of
authority within the organization. When no higher authority exists that is uninvolved, or if the
auditors believe that the communication may not be acted upon or do not know whom to report
to, they should consider the need to obtain legal advice. (Whittington, 2012)
References
Whittington, R. (2012). Principles of Auditing & Other Assurance Services, 18th edition.
McGraw-Hill Irwin.