Question

Which of the following are true statements?

A. An auditor is responsible for detecting fraud.

B. When an auditor issues an opinion, they are guaranteeing the company will continue into the future.

C. An unqualified audit opinion guarantees that the financial statements are 100% correct.

D. The auditor tests a sample of transactions.

E. The primary responsibility for fraud prevention and detection remains with those charged with governance.

F. Peer reviews of audits ensure that auditing standards have been applied correctly.

G. An unqualified opinion does not guarantee that there are no misstatements, but it does mean that there is no fraud at that entity.

Remoteness is why the landlord may be requesting a report on the store sales information.

The required parties for an assurance engagement are met—the landlord is the intended user, the auditor is the practitioner, and Bravo Bags is the responsible party.

An auditor could not perform this engagement as they would not have the expertise.

The auditor could issue a Notice to Reader and meet the landlord’s objectives.

This is not a financial statement audit, and only financial statements can be audited.

The landlord would like to enhance the reliability of the sales figures reported.

Answer 1

The part of the after Part G are vague.

Out of the statements A to G the following statements hold true:

D - An auditor checks only a sample of the transactions. this is true as the Auditor does not check 100% of the transactions but checks samples as 100% verifictaion is a cumbersome task. The use of sampling is widely adopted in auditing because it offers the opportunity for the auditor to obtain the minimum amount of audit evidence, which is both sufficient and appropriate, in order to form valid conclusions on the population.

E -  The primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management. It is important that management, with the oversight of those charged with governance, place a strong emphasis on fraud prevention, which may reduce opportunities for fraud to take place, and fraud deterrence, which could persuade individuals not to commit fraud because of the likelihood of detection and punishment. This involves a commitment to creating a culture of honesty and ethical behavior which can be reinforced by an active oversight by those charged with governance. An auditor conducting an audit is responsible for obtaining reasonable assurance that the financial statements taken as a whole are free from material misstatement, whether caused by fraud or error. Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements of the financial statements may not be detected, even though the audit is properly planned and performed in accordance with standards.

F - The purpose of a peer review is to promote quality in the accounting and auditing services provided by firms. Peer reviews ensure that firms are preforming at a high standard and offer firms opportunities to improve the quality of their services and processes. They thus verify and ensure whether auditing standards have been applied correctly or not.

The rest of the statements are False.