Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Textbook Question
Chapter 23, Problem 26DQP
The amount of subjectivity involved in establishing fair value estimates can be complex for management responsible for making the fair value measurements and disclosures contained in financial statements. This is particularly true for fair value measurements for which observable market prices are not available. Auditing standards require auditors to obtain sufficient appropriate audit evidence to provide reasonable assurance that fair value measurements and disclosures are in conformity with accounting standards, and auditing standards provide guidance for auditing those measurements and disclosures contained in financial statements.
Required
- a. Visit the PCAOB’s website (www.pcaobus.org) to identify wherein the PCAOB Auditing Standards guidance is provided for auditing fair value measurements and disclosures.
- b. PCAOB auditing standards require the auditor to obtain an understanding of the entity’s process for determining fair value measurements and disclosures. Identify five things the auditor should consider when obtaining that understanding.
- c. What should the auditor consider when engaging a specialist to perform substantive tests related to fair value assertions?
- d. Briefly describe the three types of substantive tests of fair value measurements that the auditor may perform.
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Briefly explain why accounting standards related to fair valueestimates make the audit of financial instruments more complex
Which of the following best describes why an independent auditor is asked to expressan opinion on the fair presentation of financial statements?(1) It is difficult to prepare financial statements that fairly present a company’s financialposition, operations, and cash flows without the expertise of an independent auditor.(2) It is management’s responsibility to seek available independent aid in theappraisal of the financial information shown in its financial statements
The amount of subjectivity involved in establishing fair value estimates can be complex for management responsible for making the fair value measurements and disclosures contained in financial statements. This is particularly true for fair value measurements for which observable market prices are not available. Auditing standards require auditors to obtain sufficient appropriate audit evidence to provide reasonable assurance that fair value measurements and disclosures are in conformity with accounting standards, and auditing standards provide guidance for auditing those measurements and disclosures contained in financial statements.
a. Visit the PCAOB's web site (pcaobus.org) to identify where in the PCAOB Auditing Standards guidance is provided for auditing fair value measurements and disclosures.
b. PCAOB auditing standards require the auditor to obtain an understanding of the entity's process for determining fair value measurements and disclosures. Identify 5 things the auditor…
Chapter 23 Solutions
Auditing And Assurance Services
Ch. 23 - Explain the relationships among the initial...Ch. 23 - Prob. 2RQCh. 23 - Prob. 3RQCh. 23 - Prob. 4RQCh. 23 - Prob. 5RQCh. 23 - Prob. 6RQCh. 23 - Prob. 7RQCh. 23 - Prob. 8RQCh. 23 - Prob. 9RQCh. 23 - Prob. 10RQ
Ch. 23 - Prob. 11RQCh. 23 - Prob. 12RQCh. 23 - Prob. 13RQCh. 23 - Prob. 14RQCh. 23 - Prob. 15.1MCQCh. 23 - Prob. 15.2MCQCh. 23 - Prob. 15.3MCQCh. 23 - Prob. 16.1MCQCh. 23 - Prob. 16.2MCQCh. 23 - Prob. 16.3MCQCh. 23 - Prob. 17.1MCQCh. 23 - Prob. 17.2MCQCh. 23 - Prob. 17.3MCQCh. 23 - Prob. 18DQPCh. 23 - Prob. 19DQPCh. 23 - Prob. 20DQPCh. 23 - Prob. 21DQPCh. 23 - Prob. 22DQPCh. 23 - You are doing the first-year audit of Sherman...Ch. 23 - Prob. 24DQPCh. 23 - Prob. 25DQPCh. 23 - The amount of subjectivity involved in...
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