LESSON _15

LESSON _15 - Exercise 1-4: The independence is an important...

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Exercise 1-4: The independence is an important requirement for auditors to prevent the conflict of interest and information asymmetry between the managing company and auditors. The company’s managers want to have outside auditors (independent auditors) to perform this service to assure their best knowledge about the company’s financial statements to the owners and investors. If the managers use some auditors which are related to them, they can manipulate the process and the statement presented to the owners. Therefore, having the independent auditors to attest their financial statements is in the best interest for the managers and the owners. Exercise 1-7: Audit risk is the risk that the auditor unknowingly fails to express her or his opinion about the company’s financial statements that are materially misstated. Materiality is the omission of certain information about the company or on the financial statement which other people can be influenced tremendously by those omitted information. The auditor always tries to use their best knowledge to plan the audit and give the best opinion about the company’s financial statements, but the statement may still contain
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This note was uploaded on 12/19/2009 for the course ACCT 3222 taught by Professor Delaune,l during the Spring '08 term at LSU.

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LESSON _15 - Exercise 1-4: The independence is an important...

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