Discussion Questions Ch 7,8,9
6-22
What are the purposes of the two parts of the report of management?
The purpose of the first part of the report of management is for management to state its responsibilities for internal control over financial reporting. The Second part of the report states management’s responsibility for the fair presentation of the financial statements.
What is the auditor’s responsibility related to the report of management?
The auditor’s responsibility is to express an opinion on the fairness of the presentation of the financials, and an opinion on the effectiveness of internal control of financial reporting, including an opinion on whether management’s assessment of internal control is fairly stated.
6-25
Explain the differences among management assertions about classes of transactions and events. Management assertions about account balances and management assertions about presentation and disclosure…
Management assertions relate to transactions and other events that are reflected in the accounting records. In contrast, assertions about account balances relate to the ending account balances that are included in the financials, and assertions about presentation and disclosure relate to how those balances are reflected and disclosed in the financials.
For each assertion, indicate whether it is an assertion about classes of transactions and events, an assertion about account balances, or an assertion about presentation and disclosure…and indicate the name of the assertion made by management…..
a) Classes of transactions - Completeness b) Presentation and disclosure – Classification and understandability c) Account balances – Valuation and allocation d) Classes of transactions - Cutoff e) Classes of transactions - Classification f) Presentation and disclosure - Completeness g) Account balances – Completeness h) Account balances – Rights and obligations i) Presentation and disclosure – Accuracy and valuation j) Classes of transactions -
What are the purposes of the two parts of the report of management?
The purpose of the first part of the report of management is for management to state its responsibilities for internal control over financial reporting. The Second part of the report states management’s responsibility for the fair presentation of the financial statements.
What is the auditor’s responsibility related to the report of management?
The auditor’s responsibility is to express an opinion on the fairness of the presentation of the financials, and an opinion on the effectiveness of internal control of financial reporting, including an opinion on whether management’s assessment of internal control is fairly stated.
6-25
Explain the differences among management assertions about classes of transactions and events. Management assertions about account balances and management assertions about presentation and disclosure…
Management assertions relate to transactions and other events that are reflected in the accounting records. In contrast, assertions about account balances relate to the ending account balances that are included in the financials, and assertions about presentation and disclosure relate to how those balances are reflected and disclosed in the financials.
For each assertion, indicate whether it is an assertion about classes of transactions and events, an assertion about account balances, or an assertion about presentation and disclosure…and indicate the name of the assertion made by management…..
a) Classes of transactions - Completeness b) Presentation and disclosure – Classification and understandability c) Account balances – Valuation and allocation d) Classes of transactions - Cutoff e) Classes of transactions - Classification f) Presentation and disclosure - Completeness g) Account balances – Completeness h) Account balances – Rights and obligations i) Presentation and disclosure – Accuracy and valuation j) Classes of transactions -