Which are more important, tests of controls or substantive tests?

Which are more important, tests of controls or substantive tests? Why?

An audit seeks to provide “reasonable assurance” that the financial statements are free from material error.

An audit seeks to provide “reasonable assurance” that the financial statements are free from material error. Explain the concept “reasonable assurance”. Why doesn’t an audit provide absolute assurance?

Merry-Go-Round (MGR)

Merry-Go-Round (MGR), a clothing retiler located primarily in shopping mall,was founded in 1968. By the early 1990's the company hd gone public, and had expanded to approcimately 1500 stores, 15000 employess and $1 billion in annual sales. The compan's locations in malls targeted the youth and teen market. The company was listed by Forbes magazine as one of the top 25 companies in the late 1980's. However, in the early 1990's, the company faced stiff competitiion from other retailers (e.g/. The Gap and Banana Republic), fashion trends changed, and mall traffic declined. Sales fell and experts speculated that MGR failed to anticipate key industry trends and lost sight of it customer mark... click for more

Post, CPA, accepted an engagement to audit the financial statements of General Company, a new client.

Post, CPA, accepted an engagement to audit the financial statements of General Company, a new client. General is a publicly held retaling entity that recently replace its operating management. In the course of applying auditin procedures, Post discovered that General's financial statements may be materially misstated due to the existence of fraud. Required: a) Describe Post's responsibilites regardign the circumstance described. b) Describe Post's responsibilites to report (including what type of opinion) on General's financial statements and other communications if Post is precluded from applying necessary procedures in searching for fraud. c) Describe Post's responsibilite... click for more

Which of the following factors most likely would lead a CPA to conclude that a potential audit engagement should be rejected?

Which of the following factors most likely would lead a CPA to conclude that a potential audit engagement should be rejected? a. The details of most recorded transactions are not available after a specified period of time b. Internal control activities requiring the segregation of duties are subject to management override c. It is unlikely that sufficient competent evidence is available to support an opinion on the financial statements d. Management has a reputation for consulting with several accounting firms about significant accounting issues. Which of the following procedures would an auditor most likely perform in planning a financial statement audit? e. Inquiring of the client’... click for more