Auditing and Assurances Eighth Edition Week One Homework
a. Auditing evidence could be defined as the more relevant and accompanying data and information which helps the auditor in their evaluation of financial documents.
b. The management of an accounting firm will ultimately make the assertions about the many parts of the financial statements that they are handling or are in question. Such assertions are a tool to assist them in making sure that they have not overlooked any components that might be detrimental to the overall integrity of their reports. For example, if a given financial institution lists accounts that might be receivable for a specific amount, the management is ...view middle of the document...
The audit will then be carefully planned out, and at this time the auditor and their team will go over the needs and requirements being requested by their client in order to devise a methodology and a series of procedures to make the whole process go smoothly and effectively. The auditor must then consider their client’s “internal controls” so that any risks can be properly evaluated to avoid any misinformation from finding its way into the financial documents being audited. This is especially crucial to those companies that are publicly traded, as there are many newer regulations, spelled out in the Sarbanes-Oxley Act (and elsewhere), that provide for the conduction of those internal controls in order to maintain the appropriate integrity of the firm’s financial reporting. Furthermore, auditors will then perform a number of tests and other analysis as to the specific information contained within the financial data and reports that they are signing off on, being especially sure to not overlook any misstatements or inaccuracies in the process. Once the audit is finished, any lingering contingencies will hopefully be uncovered and a final review of all of the information that has been assembled will be conducted. Finally, the results will be evaluated and the audit report will be issued and within it a statement will be given as to how fairly the financial documentation has been presented.
b. Even though many auditing procedures are designed for the testing of a specific assertion, sometimes they will also give reasonable evidence as to the condition or state of another assertion or account. For example, an auditor might uncover evidence about their client’s transactions that affect the data of their inventory and whether or not such shipments of their inventory to their own clients were properly included for the right period. This type of evidence could also have a bearing on the client’s assertions of whether the amounts listed under their accounts receivable were correct or not at the finale of the time period in question.
c. An astute auditor will often gain a good understanding of a firm’s internal...