During the Course of the Audit Engagement, the External Auditor

question 30

Multiple Choice

During the course of the audit engagement, the external auditor suggests an adjustment to the financial statements. The suggestion is accepted by management without argument. This suggests that:

• A) the external auditor is primarily responsible for the fairness of the financial statements.
• B) the internal auditor has assumed responsibility for the changes made.
• C) the external auditor has prepared the financial statements.
• D) the client has assumed responsibility for the changes made.

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Definitions:

Observation

Observation is the active process of carefully watching, noting, and analyzing phenomena or behavior in order to gain information or insights.

Interpret

To explain the meaning of information, words, or actions, often requiring context and understanding of the underlying concepts.

External Factors

Elements outside an organization or system that can affect its performance, including economic conditions, legislation, and social trends.

Perceptual Selection

The process by which individuals filter and interpret sensory information, focusing on certain aspects while ignoring others, based on expectations and preferences.