Chapter 14 Solutions - ACG 6065 Solutions to Chapter 14...

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ACG 6065 Solutions to Chapter 14 Problems Problem 14-1 The auditors decide what audit procedures are necessary to provide reasonable assurance that the financial statements do not include material misstatements. The auditor’s fee should not play a role in setting the scope of an audit. In making their examination, auditors do not rely primarily on a detailed rechecking of the analysis, journalizing, and posting of each transaction. Rather, they satisfy themselves that the accounting system is designed to ensure that the data are processed properly. The auditors (1) make test checks of how well the system is working, (2) verify the existence of assets (for example, they must observe the taking of physical inventory), (3) ask a sample of customers to confirm, or verify, the accuracy of the accounts receivable, (4) check bank balances and investment securities, and (5) make sure that especially important or non-routine transactions are recorded in conformity with generally accepted accounting principles (GAAP). These checks provide reasonable assurance that material errors have not been committed through oversight or carelessness and that there has been no misstatement of financial statements due to fraudulent
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Chapter 14 Solutions - ACG 6065 Solutions to Chapter 14...

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