Audit Research

You are currently working on a public company and your partner has asked you to provide him with some information that he can use in a report to the audit committee. Your task is to answer his questions in your own words and provide him with the specific authoritative citation.

Example: What is the objective of audit evidence?	AS 1105.03 States that objective of the auditor is to plan and perform the audit to obtain sufficient audit evidence to support the auditors report.
1. The auditor should assess the risks of material misstatement at two levels. What are they?
2. How many material weaknesses in internal controls must exist for the companys internal control over financial reporting not be considered effective?
3. Does the audit risk model impact the confirmation process?
4. Should you only confirm accounts receivable balances when auditing revenue and accounts receivable?
5. Why should the auditor exercise an appropriate level of professional skepticism?
6. How can you mitigate the risk of people signing/returning a confirmation without paying attention to the fact?
7. Can a confirmation response be returned by fax?
8. Can the external auditors use internal auditors to assist with the confirmation process?
9. Can an unqualified opinion be given if you do not confirm accounts receivable?
10. Who is responsible for estimating the Allowance for Doubtful Accounts?
11. Is the auditor always required to recalculate an estimate used in the financial statements?
12. What does the auditor do about inventory owned by their client but held in a public warehouse by an outside custodian?