1. Which of the following best describes the reason why independent auditors report on financial statements?
A management fraud may exist and it is more likely to be detected by independent auditors. |
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An audit provides credibility to the financial statements. |
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A misstatement of account balances may exist and it is generally corrected as the result of the independent auditors' work. |
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Poorly designed internal controls may be present. 2. Audits of financial statements are designed to obtain reasonable assurance of detecting misstatements due to:
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Audit is an independent examination of financial statement with a view to express an opinion on that financial statement.
After accepting the audit engegement auditor assess the risk of
material misstatement and control risk, then perform risk
assessement procedure and further audit procedure and collect audit
evidence and form an opinion on the basis of audit evidence
collect. the audited financial statement used by the user of
financial statement in making various decison.
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