ACC531 CH 3

Statement concerning illegal acts by clients is correct

An auditor's responsibility to detect illegal acts that have a direct and material effect on the financial statements is the same as that for errors and fraud

_______ auditors must ask management to authorize the predecessor auditors to discuss confidential information

Successor

Which of the following would an auditor most likely use in determining overall materiality when planning the audit?

The entity's income before taxes for the period-to-date (e.g., 6 months)

The engagement partner and manager review the work of engagement team members to evaluate the following:

The work was performed and documented, the objectives of the procedures were achieved, the results of the work support the conclusions reached

Successor auditors need to communicate with predecessor auditors ______ accepting the engagement

before

If predecessor auditors refuse communication, successor auditors ________ accept the engagement

can

If the independent authors decide that it is efficient to consider how the work performed by the internal auditors may affect the nature, timing, and extent of audit procedures, they should assess the internal auditors'

competence and objectivity

When planning an audit, an auditor should

determine overall materiality for audit purposes

Shopping for accounting principles is _______ by Sarbanes-Oxley

discouraged

During the initial planning phase of an audit, a CPA most likely would

discuss the timing of the audit procedures with the entity's management

A written understanding between the auditor and the entity concerning the auditor's responsibility for fraud is usually set forth in a(n)

engagement letter

Communication between predecessor and successor auditors aids in evaluating the _________ of management

integrity

Tolerable misstatement is

materiality used to establish a scope for the audit procedures for the individual account balance or disclosures

As generally conceived, the audit committee of a publicly held company should be made up of

members of the board of directors who are not officers or employees

Before accepting an audit engagement, a successor auditor should make specific inquiries of the predecessor auditor regarding the predecessor's

understanding as to the reasons for the change of auditors