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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
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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