Auditing Questions - Risk Assessment

3.46 Risk Assessment. This question consists of 15 items pertaining to an auditor’s risk analysis for a company. Your task is to tell how each item affects overall audit risk—the probability of giving an unqualified audit report on materially misleading financial statements. Bond, CPA, is considering audit risk at the financial statement level in planning the audit of Toxic Waste Disposal (TWD) Company’s financial statements for the year ended December 31, 2004. TWD is a privately owned company that contracts with municipal governments to remove environmental wastes. Audit risk at the overall financial statement level is influenced by the risk of material misstatements, which may be indi... click for more

Auditing

SEC filings of certain public companies can be accessed from EDGAR (electronic Data Gathering and Retrieval System), which has the following Internet address: www.sec.gov/edgar.shtml. a) Use EDGAR to locate a company in the software industry. b) Access the latest Form 10-K for the company and read “Management’s Discussion and Analysis” from Form 10-K. c) Describe four significant business risks of the company as described in “Management’s Discussion and Analysis.”

Auditing - Securities Exchange Act

The text of the Securities Exchange Act of 1934 may be accessed on the Internet, using the following address: www.law.uc.edu/CCL/34Act/index.html. a. Use the Internet to access the text of Securities Exchange Act of 1934. b. Read and summarize the internal control requirements of Section 13(b) (2) of the act.

Auditing: should a letter of representation by management be disclosed to shareholders?

SAS No. 85, requires that an auditor obtain a management representation letter that is addressed to the auditor, and signed by members of management with overall financial and operating responsibility. The representation letter includes : 1. management's acknowledgment of responsibility for the financial statements. 2. management believes that the financial statements are presented fairly in conformity with GAAP. 3. management made available all financial records, and all minutes of shareholders' and directors' meetings. 4. management recorded, and made available to the auditor, all transactions. 5. management disclosed, information about management or employee fraud, related ... click for more

Subsequent events review of auditor responsibilities

An auditor is concerned with the balance sheet as of a particular date, such at 12/31. Sometimes events occur or become know subsequent to the balance sheet date and before the issuance of the audit report. An auditor's responsibility for subsequent events and related audit procedures is addressed in the AICPA's Codification of Auditing Standards. Subsequent events are classified as two major types: Type 1-Events that reveal conditions existing at or before the balance sheet date and require adjustment to the financial statements. Type 2-Events that reveal conditions arising after the balance sheet date and require disclosure in, but not adjustment to, the financial statem... click for more