Which of the following is included in the independent auditor's report? O materiality level used in the audit O expression of opinion on the financial statements O audit evidence used to support the audit opinion O a list of audit procedures to be performed
Added by Karen S.
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The report is intended to provide an opinion on the fairness of the financial statements based on the audit conducted. Show more…
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Akash M.
Auditors gather several different types of evidence during the audit, including physical evidence, third-party representation, documentary evidence, computations, and client representation. Listed below are FIVE (5) audit procedures that are typically performed in an audit: i. Observe the client's inventory-taking procedures. ii. Computer printout from the client's accounts receivable subsidiary ledger. iii. Obtain a report on the valuation of inventory by a specialist. iv. Examine an invoice in support of a sales transaction. v. Inspect the client's bank statements. Required: a) Verify whether each of the above (i) to (v) documentary evidence is used, is received directly by auditors, created externally and held by the client, or created internally by the client. b) Exhibit the difference between the relative reliability of the above THREE (3) forms of documentary evidence.
Madhur L.
Pictures for Less has engaged Devinson CPAs to audit their complete set of financial statements for the year ended December 31, Year 2. As a manager, you are helping your senior staff, John Jacobs, fill out a materiality worksheet for Pictures for Less. You have referred him to review Devinson CPAs' manual on materiality, which is included in the "Devinson Manual" tab. In addition, you have reviewed the planning workpapers, which documented the knowledge of the client's business and noted the following items/notes: - Low likelihood that there will be uncorrected or undetected misstatements - Interim revenue as of 06/30/Year 2 is $2,550,000 - Total assets as of 06/30/Year 2 are $4,900,000 For benchmark factor utilized, these are the possible answers (Gross Profit, Profit before tax, total assets, total equity, total expenses, total revenue). For the preliminary planning materiality and tolerable misstatement cells, input the correct dollar amount. Client Name: Pictures for Less Prepared by: John Jacobs Date Prepared: September 20, Year 2 Benchmark Factor Utilized: Preliminary Planning Materiality: Tolerable Misstatement: Devinson CPAs' Materiality Guidelines: 1. Materiality should be based on either total assets or total revenue, whichever is lower. 1a. If annual revenue is not available, then the auditor should annualize revenue. 2. Materiality is calculated by taking the benchmark amount and multiplying it by the appropriate materiality percentage as shown in the Materiality Table below. Materiality should be rounded down to two significant digits. 3. Tolerable misstatement is calculated by multiplying the rounded materiality for the financial statements as a whole by either 60% (for low likelihood of uncorrected and undetected misstatements) or 70% (for high likelihood of uncorrected and undetected misstatement). Tolerable misstatement should be rounded down to two significant digits. Materiality Table: Base Amount Materiality Percentage $0-$150,000 4.00% $150,001-$450,000 2.00% $450,001-$1,000,000 1.00% $1,000,001-$3,000,000 0.80% $3,000,001-$5,500,000 0.60% $5,500,001+ 0.50%
Breanna O.
Recommended Textbooks
Horngren’s Cost Accounting
Cost Accounting A Managerial Emphasis
Principles of Accounting Volume 1: Financial Accounting
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