The concepts of audit risk and materiality are interrelated and must be considered together by the auditor. Which of the following is true?
A. Audit risk is the risk that the auditor may unknowingly express a modified opinion when, in fact, the financial statements are fairly stated.
B. The phrase in the auditor's report "present fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America" indicates the auditor's belief that the financial statements as a whole are not materially misstated.
C. If misstatements are not important individually but are important in the aggregate, the concept of materiality does not apply.
D. Material fraud but not material errors cause financial statements to be materially misstated.
Ans: B. The phrase in the auditor's report "present fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America" indicates the auditor's belief that the financial statements as a whole are not materially misstated.
You might also like to view...
Company Planet is expanding and needs to fill 25 new job openings as quickly as possible. After ensuring that there is a clear picture of what the hired employees will need to know and be able to do, the next step in finding these employees is to:
A. develop a recruiting process to attract qualified applicants. B. place an advertisement in the local newspaper. C. hire someone to hire employees for you. D. pass the task off to the operations manager for whom the employees will be working.
In order to serve as the "corporate conscience," public relations professionals should enjoy enough autonomy to deal honestly and openly with management
Indicate whether the statement is true or false