ASA 720 Requires the Auditor to Read Other Information in Documents

question 34

Multiple Choice

ASA 720 requires the auditor to read other information in documents containing audited financial reports that pertains directly to the financial report and to compare that information to make sure that it corresponds. If there is a material inconsistency, the client should be requested to change the information. If the client refuses, the auditor should:

• A) include an explanatory paragraph in the audit report or withdraw from the engagement.
• B) include an emphasis of matter section in the audit report.
• C) issue a qualified opinion or withdraw from the engagement.
• D) issue an adverse opinion.

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Definitions:

Pearson Correlation

A measure of the linear correlation between two variables, ranging from -1 to 1, where 1 is total positive linear correlation, 0 is no linear correlation, and -1 is total negative linear correlation.

Critical Values

Thresholds in statistical testing that delineate areas where the test statistic leads to the rejection or acceptance of the null hypothesis.

Variables

Elements, characteristics, or conditions that can change or vary within a study, potentially influencing the outcome.

Negative Number

A number less than zero, indicating a lack or subtraction in mathematics.