E using samples rather than examining entire

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Unformatted text preview: tatements. This report covers financial statements that include balance sheets for two years and statements of income, stockholders’ equity, and cash flows for three years. The audit report presented in Exhibit 1–1 is the standard type of unqualified audit opinion issued for publicly traded companies. Take a moment to read through the report. You will see that the title refers to the “Independent Registered Public Accounting Firm” issuing the audit report. The report is addressed to the individual or group that is the intended recipient of the report. The body of the report begins with an introductory paragraph indicating which financial statements are covered by the report, that the statements are the responsibility of management, and that the auditor has a responsibility to express an opinion. The second, or scope, paragraph communicates to the users, in very general terms, what an audit entails. In addition to indicating that the audit was conducted in accordance with applicable auditing standards, it emphasizes the fact that the audit provides only reasonable assurance that the financial statements contain no material misstatements. The scope paragraph also discloses that an audit involves an examination of evidence on a test basis (i.e., using samples rather than examining entire populations), an assessment of accounting principles used and significant estimates,...
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