Problem 3.53 General Audit Procedures and Financial Statement Assertions. The eight general audit procedures produce evidence about the principal management assertions in financial statements. However, some procedures are useful for producing evidence about certain assertions, and other procedures are useful for producing evidence about other assertions. The assertion being audited can influence the auditors’ choice of procedures.
Opposite each general audit procedure, write the management assertions most usefully audited by using each procedure.
Problem 4.61 Risk Assessment
This question consists of a number of items pertaining to an auditor’s risk analysis for a company. Your task is to tell how each item affects overall audit risk-that is, the probability of issuing an unmodified audit report on materially misleading financial statements.Bond, CPA, is considering audit risk at the financial statement level in planning the audit of Toxic Waste Disposal (TWD) Company’s financial statements for the year ended December 31, 2014. TWD is a privately owned company that contracts with municipal governments to remove environmental wastes. Audit risk at the overall financial statement level is influenced by the risk of material misstatements, which may be indicated by a combination of factors related to management, the industry, and the company.Required:Based only on the following information, indicate whether each of the following factors (Items 1 through 15) would most likely increase overall audit risk, decrease overall audit risk, or have no effect on overall audit risk. Discuss your reasoning.
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