Chapter 6 HW Solutions - Auditing Chapter 6 Homework...

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Auditing Chapter 6 Homework Solutions Multiple Choice 6-19 a. (2) b. (2) c. (1) 6-20 a. (1) b. (2) c. (1) Problem 6-22 a. 1. The function of the auditor in the audit of financial statements is to provide users of the statements with an informed opinion based on reasonable assurance obtained as to the fairness with which the statements portray financial position, results of operations, and cash flows in accordance with generally accepted accounting principles applied on a basis consistent with that of the preceding year. 2. The responsibility of the independent auditor is to express an opinion on the financial statements he or she has audited. Since the financial statements are the representation of management, responsibility rests with management for the proper recording of transactions in books of account, for the safeguarding of assets, and for the substantial accuracy and adequacy of the financial statements. In developing the basis for his or her opinion, the auditor is responsible for conducting an audit that conforms to auditing standards. These standards constitute the measure of the adequacy of the audit. Those standards require the auditor to obtain sufficient, appropriate evidence about material management assertions in the financial statements. The informed judgment of a qualified professional accountant is required of an independent auditor. The auditor must exercise this judgment in selecting the procedures he or she uses in the audit and in arriving at an opinion. In presenting himself or herself to the public as an independent auditor, he or she makes himself or herself responsible for having the abilities expected of a qualified person in that profession. Such qualifications do not include those of an appraiser, expert in materials, expert in styles, insurer, or lawyer. The auditor is entitled to rely upon the judgment of experts in these other areas of knowledge and skill. b. Auditors are responsible for obtaining reasonable assurance that material misstatements included in the financial statements are detected, whether those misstatements are due to error or fraud. Professional standards acknowledge that it is often more difficult to detect fraud than errors because management or employees
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This note was uploaded on 09/30/2009 for the course BSNS 252 taught by Professor William during the Spring '09 term at The School of the Art Institute of Chicago.

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Chapter 6 HW Solutions - Auditing Chapter 6 Homework...

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