An entity may have a poorly designed internal control system 15 Which of the

An entity may have a poorly designed internal control

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An entity may have a poorly designed internal control system15. Which of the following best describes relationships among auditing, attest and assurance services?a.Attest is a type of auditing serviceb.Auditing and attest services represent two distinctly different types of servicesc.Auditing is a type of assurance serviced.Assurance is a type of attest service
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17. For what primary purpose does the auditor obtain an understanding of the entity and its environment?a.To determine the audit feeb.To decide which facts about the entity to include in the audit reportc.To plan the audit and determine the scope of audit procedures to be performedd.To limit audit risk to an appropriately high level.26. You were recently hired by the CPA firm Honson & Hansen. Within two weeks, you were sent to the first-year staff-training course. The instructor asks you to prepare answers for the following questions:a.How is audit evidence defined?b.How does audit evidence relate to assertions and to the audit repor?c.What characteristics of evidence should an auditor be concerned with when searching for and evaluating audit evidence?a.Evidence that assists the auditor in evaluating financial statement assertions consists of the underlying accounting data and any additional information available to the auditor, whether originating from the client or externally.b.Management makes assertions about components of the financial statements. For example, an entity’s financial statements may contain a line item that accounts receivable amount to $1.75 million. In this instance, management is asserting, among other things, that the receivables exist, the entity owns the receivables, and the receivables are properly valued. Audit evidence helps the auditor determine whether managements assertions are being met. If the auditor is comfortable that he or she can provide reasonable assurance that all assertions are met for all accounts, he or she can issue a clean audit report. In short, the assertions are a conceptual tool to help the auditor ensure that she or he has “covered all the bases”c.In searching and evaluating evidence, the auditor should be concerned with the relevance and reliability of evidence. If the auditor mistakenly relies on evidence that does not relate to the assertion being tested, an incorrect conclusion may be reached about the management assertion. Relaibility refers to the ability of evidence to signal the true state of the assertion, i.e.
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