37 Which of the following circumstances most likely . will cause an auditor to s

Question

37 Which of the following circumstances most likely . will cause an auditor to suspect that material misstatements exist in a client's financial statements? The assumptions used in developing the prior year's accounting estimates have changed. Differences between reconciliations of control accounts and subsidiary records are not investigated. Negative confirmation requests yield fewer responses than in the prior Management consults with another CPA firm about complex accounting matters. A. B. C. s audit. D. 39 Which of the following is considered a fraudulent A. A mistake in gathering or processing accounting data from which financial statements are prepared. B. An incorrect accounting estimate arising from oversight or misinterpretation of facts. C. D. Misappropriation of assets. A mistake in the application of accounting principles relating to amount, classification, manner of presentation, or disclosure. 39. Because of the risk of material misstatement due to fraud (fraud risk), an audit of financial statements in accordance with GAAS should be planned and performed with an attitude of A. Objective judgment. B. Integrity C. Professional skepticism. D. Impartial conservatism. . Which of the following statements reflects an auditor's responsibility for detecting fraud? A. An auditor is responsible for detecting employee errors and simple fraud but not for discovering fraudulent acts involving employee coliusion or management override. B. An auditor should plan the audit to detect fraud caused by departures from GAAP C. An auditor is not responsible for detecting fraud uniess the application of auditing standards would result in such detection. D. An auditor should design the audit to provide reasonable assurance of detecting errors and fraud that are material to the financial

Explanation / Answer

ans 37 ) b. difference between reconciliation of control account and subsidiary records are not investigated

ans 38) c. misappropriation of asset

ans 39 ) c. professional skepticism

ans 40) d. An auditor should design the audit to provide reasonable assurance of detecting errors and fraud that are material to the financial statement.

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