When Substantive Tests Performed Identify Errors or Exceptions, the Auditor's

question 33

Multiple Choice

When substantive tests performed identify errors or exceptions, the auditor's first response is to:

• A) qualify the audit report.
• B) report the client to CPA Canada.
• C) understand why the exception or error has arisen.
• D) none of the above.

---

Definitions:

Source Document

A piece of evidence, such as an invoice or receipt, that records a financial transaction.

Manufacturing Overhead-Applied

Indirect costs related to manufacturing that are assigned to products based on a predetermined rate.

Overhead Applied Rate

A rate calculated to allocate indirect costs to cost objects based on a predetermined formula.

Direct Labor Hours

The total time workers or employees spend directly working on goods or services that are being produced.