6 15 objectives 6 6 6 8 identify the management

6-15 (Objectives 6-6, 6-8) Identify the management assertion and general balance-related audit
objective for the specific balance-related audit objective: All recorded fixed assets exist at the
balance sheet date.
6-16 (Objectives 6-6, 6-8) Explain how management assertions, general balance-related audit
objectives, and specific balance-related audit objectives are developed for an account balance
such as accounts receivable.
6-17 (Objectives 6-6, 6-9) Identify the management assertion and presentation and dis- closure-
related audit objective for the specific presentation and disclosure-related audit objective: Read
the fixed asset footnote disclosure to determine that the types of fixed assets, depreciation
methods and useful lives are clearly disclosed.
Chapter 6 / AUDIT RESPONSIBILITIES AND OBJECTIVES 165
6-18 (Objective 6-10) Identify the four phases of the audit. What is the relationship of the four
phases to the objective of the audit of financial statements?
MULTIPLE CHOICE QUESTIONS FROM CPA EXAMINATIONS
6-19 (Objective 6-1) The following questions concern the reasons auditors do audits. Choose the
best response.
Which of the following best describes the reason why an independent auditor reports on
financial statements?
(1) A misappropriation of assets may exist, and it is more likely to be detected by
independent auditors.

(2) Different interests may exist between the company preparing the statements and
the persons using the statements.
(3) A misstatement of account balances may exist and is generally corrected as the
result of the independent auditor’s work.
(4) Poorly designed internal controls may be in existence.
Because of the risk of material misstatement, an audit should be planned and per- formed with
an attitude of
(1) objective judgment. (3) professional skepticism.
(2) independent integrity. (4) impartial conservatism.
The major reason an independent auditor gathers audit evidence is to (1) form an opinion on
the financial statements.
(2) detect fraud.
(3) evaluate management.
(4) assess control risk.
6-20 (Objective 6-3) The following questions deal with errors and fraud. Choose the best
response.

An independent auditor has the responsibility to design the audit to provide reasonable
assurance of detecting errors and fraud that might have a material effect on the financial
statements. Which of the following, if material, is a fraud as defined in audit- ing standards?
(1) Misappropriation of an asset or groups of assets.
(2) Clerical mistakes in the accounting data underlying the financial statements.
(3) Mistakes in the application of accounting principles.
(4) Misinterpretationoffactsthatexistedwhenthefinancialstatementswereprepared.
What assurance does the auditor provide that errors, fraud, and direct-effect illegal acts that are
material to the financial statements will be detected?