The assertions in conjunction with the assessment of

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Unformatted text preview: hat an auditor will mistakenly issue a clean opinion on financial statements that are materially misstated cannot be driven to zero. Even careful and competent auditors can only offer reasonable, rather than absolute, assurance. Evidence Regarding Management Assertions The third major concept involved in auditing is evidence regarding management’s assertions. Most of the auditor’s work in arriving at an opinion on the financial statements consists of obtaining and evaluating evidence. Chapter 5 contains more detail about the specific assertions relevant to financial statement auditing. Audit evidence consists of the underlying accounting data and any additional information available to the auditor, whether originating from the client or externally. As illustrated earlier in our discussion about EarthWear, management’s assertions are used as a framework to guide the collection of audit evidence. The assertions, in conjunction with the assessment of materiality and audit risk, are used by the auditor to determine the nature, timing, and extent of evidence to be gathered. Once the auditor has obtained sufficient appropriate evide...
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