The answer for question 14 would be C and question 15 is B
(b)-Statements in Lines 5-10
Recursion begins when the number is greater than zero.
Otherwise, it is only verified that the number is zero or is a negative number.
1. DNA replication
2.Mitochondria transform chemical energy into electromagnetic energy.
3. It is constructed by connecting smaller monomer subunits.
D. The auditor should assess the risks of material mis-statement due to fraud.
At the time of auditor visit in a company the financial statement represent that the company has done the fraud in this scenario, the auditor should analyze the material misstatement risk that is done for fraud
Therefore in the given case, the option D is correct as the auditor responsibility is that he or she should analyze the risk with respect to the false statements presented in the financial statement
D. The financial statements are free from material misstatement, and no disclosure is required in the notes to the financial statements.
Because the misstatements are immaterial in aggregate, they will not influence the economic decisions of the users of the financial statements. Therefore, the financial statements are considered free from material misstatement.
There will be no need to disclose these immaterial misstatements in the financial statements. Further, because of the immateriality, they will not result into a qualified opinion.
Based on the above, option D is the correct option.
d.Hex relied on the financial statements included in the registration statement
Hex relied on the financial statements included in the registration statement. Hex will have to prove that he relied on the financial statements included in the registration statement to hold West liable. Hex must prove that the decision to purchase 500 shares was influenced by the unmodified Audit opinion expressed by West on the Financial statements, and suffered losses in his investment has a result of trusting West's Unmodified audit opinion on the financial statement that contained a material misstatement
Electronic Engineering & CPA Firm
Statements that would most likely be included in the engagement letter:
Statement 1 Our audit will be conducted with the objective of expressing an unmodified opinion on the financial statements.
Statement 5 As part of our audit process, we will request from management, written confirmation concerning representations made to us in connection with the audit.
Statement 6 Our audit will be conducted on the basis that management acknowledge and understand that they have responsibility for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America.
Statement 7 We will plan and perform an audit in accordance with GAAS, which will discover all material misstatements.
Statement 8 Management will make available to the auditor draft financial statements and any accompanying other information in time to allow us to complete the audit in accordance with the proposed timetable.
Statement 9 Management will provide us with unrestricted access to persons within the entity from whom we determine it necessary to obtain audit evidence.
Statement 10 Management will provide us with access to all information of which management is aware that is relevant to the preparation and fair presentation of the financial statements such as records, documentation, and other matter.
Statement 13 Circumstances may arise in which it is necessary for us to modify our opinion, add an emphasis-of-matter or other-matter paragraph(s), or withdraw from the engagement.
The engagement letter is a formal document which the auditor uses to accept an audit appointment. It details the objective and scope of the audit, the auditor's and management responsibilities, and the form of any reports.
Generally, an engagement letter is an agreement, which is less formal than a contract because it avoids legal jargons but is enforceable in business relationships.
While conducting an audit, Larson Associates, CPAs, failed to detect material misstatements included in its client's financial statements. Larson's unqualified opinion was included with the financial statements in a registration statement and prospectus for a public offering of securities made by the client. Larson knew that its opinion and the financial statements would be used for this purpose. In a suit by a purchaser against Larson for common-law negligence, Larson's best defense would be that the audit was conducted in accordance with generally accepted auditing standards - option A.
In the scenario given, Larson did not have actual or constructive knowledge of the material misstatements so he audited according to the PCAOB auditing standards in the audit.
Thus, Larson's best defense would be that the audit was conducted in accordance with generally accepted auditing standards - option A.