statements, taken as a whole, or state not based on the results of a proper that an opinion cannot be expressed, audit examination. Jones should in the auditor’s report. When the disclaim an opinion because she auditor cannot express an overall failed to conduct an examination in opinion, the auditor should state the accordance with generally accepted reasons therefore in the auditor’s auditing standards. report. In all cases where an auditor’s name is associated with financial statements, the auditor should clearly indicate the character of the auditor’s work, if any, and the degree of responsibility the auditor is taking, in the auditor’s report. b. Brief Description of Principles Underlying Sally Jones' Actions Resulting in Failure to an Audit Comply with Principles Underlying an Audit Purpose and Premise of an Audit: An audit is to provide an opinion by an Jones expressed an opinion regarding the auditor on whether financial statements are financial statements, but not on whether the presented fairly, in all material respects, financial statements are presented fairly in according to the applicable framework. accordance with generally accepted accounting Management and those charged with principles, or any other financial reporting governance are responsible for the preparation framework. Therefore, she did not fulfill the and fair presentation of the financial primary purpose of the audit. statements and for the design, implementation, and maintenance of internal control over Jones did not ensure that management fulfilled financial reporting. They are also responsible its responsibilities for the fair presentation of for providing the auditor with all information the financial statements, since that requires relevant to the preparation of the financial making the appropriate disclosures in the statements. financial statements. Responsibilities: Auditors are responsible for having It was inappropriate for Jones to hire the two appropriate competence and capabilities to students to conduct the audit, because they do perform the audit; complying with relevant not have appropriate competence and ethical requirements; and maintaining capabilities. professional skepticism and exercising professional judgment, throughout the In order to comply with ethical requirements, planning and performance of the audit. Jones must be without bias with respect to the client under audit. Because of the financial interest in whether the bank loan is granted to Boucher, Jones is not independent in either fact
statements, taken as a whole, or state that an opinion cannot be expressed, in the auditor’s report. When the auditor cannot express an overall opinion, the auditor should state the reasons therefore in the auditor’s report. In all cases where an auditor’s name is associated with financial statements, the auditor should clearly indicate the character of the auditor’s work, if any, and the degree of responsibility the auditor is taking, in the auditor’s report. not based on the results of a proper audit examination. Jones should disclaim an opinion because she failed to conduct an examination in accordance with generally accepted auditing standards. b. Brief Description of Principles Underlying an Audit Sally Jones' Actions Resulting in Failure to Comply with Principles Underlying an Audit Purpose and Premise of an Audit: An audit is to provide an opinion by an auditor on whether financial statements are presented fairly, in all material respects, according to the applicable framework. Management and those charged with governance are responsible for the preparation and fair presentation of the financial statements and for the design, implementation, and maintenance of internal control over financial reporting. They are also responsible for providing the auditor with all information relevant to the preparation of the financial statements. Jones expressed an opinion regarding the financial statements, but not on whether the financial statements are presented fairly in accordance with generally accepted accounting principles, or any other financial reporting framework. Therefore, she did not fulfill the primary purpose of the audit. Jones did not ensure that management fulfilled its responsibilities for the fair presentation of the financial statements, since that requires making the appropriate disclosures in the financial statements. Responsibilities: Auditors are responsible for having appropriate competence and capabilities to perform the audit; complying with relevant ethical requirements; and maintaining professional skepticism and exercising professional judgment, throughout the planning and performance of the audit. It was inappropriate for Jones to hire the two students to conduct the audit, because they do not have appropriate competence and capabilities. In order to comply with ethical requirements, Jones must be without bias with respect to the client under audit. Because of the financial interest in whether the bank loan is granted to Boucher, Jones is not independent in either fact
Solution-Manual-Auditing-and-Assurance-Services-9th-Edition-Messier.docx