Choose the quantitative factors that hep determine materiality from below.

Income from continuing operations

potential for fraud or illegal acts

higher than normal risk of bankruptcy

potential loan covenant violations

Which of the following would be an acceptable solution is the misstatement is greater than materiality?

Do not tell the client so they will not try to change anything in the financial statements

Do take the financial risk of walking away from the audit.

Auditors on new engagements need to contact the preceding auditor, with permission from the potential client.

Auditors on new engagements need to contact the preceding auditor, whether the potential content likes it or not.

Quiz

Stephany Fox 5 Fragen

Quiz starten

1Choose the quantitative factors that hep determine materiality from below.
1. AIncome before taxes
2. BIncome from continuing operations
3. C3 year average income
4. Dtotal assets
5. Etotal revenues
6. Fgross profit
7. Gpotential for fraud or illegal acts
8. Hhigher than normal risk of bankruptcy
9. Ipotential loan covenant violations
2The sum of the misstatements in financial statements can be more than the materiality threshold.
1. ARichtig
2. BFalsch
3Which of the following would be an acceptable solution is the misstatement is greater than materiality?
1. ALeave opinion as is.
2. BDo not tell the client so they will not try to change anything in the financial statements
3. CDo additional testing
4. DDo take the financial risk of walking away from the audit.
4SAS 84 requires which of the following?
1. AAuditors on new engagements need to contact the preceding auditor, with permission from the potential client.
2. BAuditors on new engagements need to contact the preceding auditor, whether the potential content likes it or not.
5IT specialists are rarely needed for audit engagements.
1. ARichtig
2. BFalsch