Due to the complexities involved in preparing

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management. Due to the complexities involved in preparing financial statements, the potential for misstatement on the part of management increases the need for an objective examination of those financial statements by a qualified independent party. 6-17
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6-32 (continued) e. The auditor is responsible for obtaining reasonable assurance that material misstatements are detected, whether those misstatements are due to errors or fraud. To obtain reasonable assurance, the auditor is required to gather sufficient, appropriate evidence. Auditors’ chief responsibility to stockholders, creditors, and management is to conduct the audit in accordance with auditing standards in order to fulfill their responsibilities of the engagement. Internet Problem Solution: International and PCAOB Audit Objectives Internet Problem 6-1 a. Paragraph .01 of AU 110 states that “[T]he objective of the ordinary audit of financial statements by the independent auditor is the expression of an opinion on the fairness with which they present, in all material respects, financial position, results of operations, and its cash flows in conformity with generally accepted accounting principles.” U.S. GAAS require the auditor to express an opinion on whether the financial statements are presented in conformity with generally accepted accounting principles and to identify those circumstances in which such principles have not been consistently observed in the preparation of financial statements. Paragraph .11 of ISA 200 states that “In conducting an audit of financial statements, the overall objectives of the auditor are (a) to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, thereby enabling the auditor to express an opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework and (b) to report on the financial statements, and communicate as required by the ISAs, in accordance with the auditor’s findings. While there are differences in the wording about the objective of an audit of financial statements, the overall objectives stated in U.S. GAAS and the ISAs are the same. Both U.S. GAAS and the ISAs note that the objective of the audit of financial statements is the expression of an opinion of whether the financial statements comply, in all material respects, with accounting standards. b. Paragraph .03 of PCAOB Auditing Standard 5 states that “The auditor’s objective in an audit of internal control over financial reporting is to express an opinion on the effectiveness of the company’s internal control over financial reporting.” That standard notes that to form a basis for an opinion, the auditor must plan and perform the audit to 6-18
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Internet Problem 6-1 (continued) obtain competent evidence that is sufficient to obtain reasonable assurance about whether material weaknesses exist as of the date specified in management’s assessment.
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