True or False

1. Brainstorming is a discussion among the engagement team that allows the more experienced team members to share insights and exchange ideas about how and where the entitys financial statements might be susceptible to material misstatement, due to either fraud or error.

2. If auditors uncover fraud that includes senior management, but the amounts are immaterial, the auditors are not required to report this fraud to the audit committee.

3. In testing the new addition of a $200,000 piece of equipment to the Balance Sheet, If the auditors test from the Ledgers to the Source Documents (and actual asset), they are testing the assertion of Existence.

4. Tracing from source documents to ledgers is most likely to address the assertion of Existence.

5. The auditors understanding established with a client should be established by a written communication with the client, called an Engagement Letter.