The Auditor Is Required to Document His Response to the Assessed

question 76

Multiple Choice

The auditor is required to document his response to the assessed risk of material misstatement.This documentation should include

• A)the results of audit procedures,including the procedures designed to address the risk of management override of internal controls
• B)the overall response to the assessed risk of material misstatement due to fraud at the financial statement level and the nature,timing,and extent of audit procedures at the assertion level and a linkage between the audit procedures and the assessed risk of material misstatement
• C)other conditions and analytical procedures that cause the auditor to believe that additional auditing procedures were appropriate to address the risk of misstatement
• D)the significant decisions during the discussion among management regarding the susceptibility of the company's financial statements to material misstatement due to fraud
• E)the identified and assessed risks of material misstatement at both the financial statement level,and the procedures performed to obtain the information
• F)both A and B
• G)both B and D
• H)both C and E

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Definitions:

Paid-In Capital

Paid-in capital is the amount of money investors have contributed to a company in exchange for equity.

Retained Earnings

The portion of net income not distributed to shareholders and instead reinvested in the company or used to pay off debt.

Common Stock

A type of security that represents ownership in a corporation, with voting rights and potential for dividends.

Stated Value

A value assigned to no-par value stock by the board of directors of a company and used for accounting purposes.