An Auditor Is Required to Establish an Understanding with a Client

question 54

Multiple Choice

An auditor is required to establish an understanding with a client regarding the responsibilities for each engagement. This understanding generally includes:

• A)management's responsibility to guarantee that there are no material misstatements due to fraud.
• B)the auditor's responsibility to plan and perform the audit to provide reasonable, but not absolute, assurance of detecting material errors or fraud.
• C)management's responsibility for providing the auditor with an assessment of the risk of material misstatement due to fraud.
• D)the auditor's responsibility for the fairness of the financial statements.

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Definitions:

Abstract Thought

The ability to think about objects, principles, and ideas that are not physically present.

Concrete Operations

A stage in Piaget's theory of cognitive development, typically occurring from age 7 to 12, where children gain the ability to think logically about concrete events.

Logical Operations

Mental processes that follow systematic patterns of thinking, allowing for problem-solving and reasoning based on established rules.

Abstract Thinking

The ability to think about objects, principles, and ideas that are not physically present, involving complex thought processes like analysis and synthesis.