The Auditor Is Required to Document His Response to the Assessed

question 51

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 misstatement 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 material misstatement due to fraud
• 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 C
• G)both B and D
• H)both C and E

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Definitions:

Investing Activities

Transactions involving the purchase and sale of long-term assets and investments, reflected in a company's cash flow statement.

Book Value

The value of an asset as it appears on a balance sheet, calculated by subtracting depreciation from the asset's cost.

Treasury Stock

Shares that were once part of the outstanding shares but were bought back by the company and are held in the company's treasury.

Equipment

Tangible assets used in the operations of a business, such as machinery, computers, and tools, which have a useful life of more than one year.