Question

 

1. Explain the objectives and steps of conducting and audit.

2. Compare managements versus auditors responsabilities.

3. Define material misstatements.

Answer 1

Answer for 1)

The primary objective of conducting an audit is to express an opinion that whether the financial statements are free from any material mistaement caused due to errors or fraud in all material mistatement such that they present true and fair view and there are adequate disclosure made and they comply with accounting standards and other Statutory requirements and reporting them.

Steps for conducting an audit:

1) Determine the audit strategy for performing an audit.

2)Set audit scope

3)Determine the reporting objectives.

4)Prepare the audit plan for collection of evidence and achievement of obejectives.

5)Perform the planned procedures and collect evidence.

6)Document and report.

Answer for 2)

1)The primary responsibility of prevention and detection and corection of material mistatements lies with the management where as the auditor is responsible only for expressing an opinion that they are free from material mistatements or not.

2)The management is responsible for identifying the subsequent events that may have material effect on financial statements after balance sheet however the auditor is responsibility whether they are material or not to financial statement.

3)The management is responsibility with compliance with legal requirements in preparation of financial statements whereas the auditor is responsibility how the laws have impact on Financial statements.

Answer for 3)

Material mistatements is the untrue information presented in financial statements which either by accidentally or intentionally which have significant influence on decisions of users of financial statements.