When Determining Sufficient and Appropriate Audit Evidence in Order to Form

question 98

Essay

When determining sufficient and appropriate audit evidence in order to form an opinion on the client's financial statements the auditor compiles audit documentation to support the opinion.The largest portion of audit documentation will include detailed supporting schedules prepared by the client or the auditor in support of specific accounts on the financial statements.The major types of supporting schedules include analysis schedules and tests of reasonableness.Discuss those two schedules and give an example for each schedule.

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Definitions:

Total Utility

The total satisfaction or benefit received by consuming a particular quantity of a good or service.

Demand Curve

A visual depiction showing how the demand for a product or service varies with changes in its price over a specific time frame.

Consumer Surplus

The gap between the total sum consumers are ready and able to spend on a good or service versus the total sum they actually spend.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service relative to its market price, representing the economic benefit to consumers.