Which of the Following Best Describes the Auditor's Responsibility with Respect

question 695

Multiple Choice

Which of the following best describes the auditor's responsibility with respect to fair values?

• A) The auditor should determine whether management has the intent and ability to carry out courses of action that may affect fair values.
• B) The auditor should assess the risk of material misstatement of fair value measurements.
• C) The auditor should obtain sufficient appropriate audit evidence to provide reasonable assurance that fair value measurements and disclosures are in conformity with GAAP.
• D) The auditor should make fair value measurements and disclosures in accordance with GAAP and should identify and support any significant assumptions used.

---

Definitions:

Par Value

The stated value of a financial instrument such as a bond or stock, as declared by the issuer.

Yield To Maturity

The total expected return on a bond if held until it matures, considering both interest payments and capital gains or losses due to the difference between purchase price and maturity value.

Semiannually

Taking place twice annually, often every six months.

Coupon Rate

The annual interest rate paid by a bond, expressed as a percentage of its face value.