Chapter 24 Solutions Manual
Chapter 24 Completing the Audit
Review Questions There are four presentation and disclosure-related audit objectives:
24-1
PRESENTATION AND DISCLOSURE-RELATED AUDIT OBJECTIVES Occurrence and rights and obligations Completeness Accuracy and valuation Classification and understandability
DESCRIPTION Account-related information as described in the footnotes exists and represents the rights and obligations of the company. All required disclosures are included in the financial statement footnotes. Footnote disclosures are accurate and valued correctly. Account balances are appropriately classified and related financial statement disclosures are understandable.
24-2 A financial statement disclosure checklist is an audit tool that summarizes all disclosure requirements contained in generally accepted accounting principles. Auditors use the disclosure checklist to determine that all required disclosures are completely presented and disclosed in the financial statements and accompanying footnotes. This helps the auditor obtain sufficient appropriate evidence about the completeness objective for the presentation and disclosure-related audit objective. 24-3 A contingent liability is a potential future obligation to an outside party for an unknown amount resulting from activities that have already taken place. Some examples would be:
Pending litigation Income tax disputes Product warranties Notes receivable discounted Guarantees of obligations of others Unused balances of outstanding letters of credit
24-1
24-3 (continued) An actual liability is a real future obligation to an outside party for a known amount from activities that have already taken place. Some examples would be:
Notes payable Accounts payable Accrued interest payable Income taxes payable Payroll withholding liabilities Accrued salaries and wages
24-4 If you are concerned about the possibility of contingent liabilities for income tax disputes, there are
Review Questions There are four presentation and disclosure-related audit objectives:
24-1
PRESENTATION AND DISCLOSURE-RELATED AUDIT OBJECTIVES Occurrence and rights and obligations Completeness Accuracy and valuation Classification and understandability
DESCRIPTION Account-related information as described in the footnotes exists and represents the rights and obligations of the company. All required disclosures are included in the financial statement footnotes. Footnote disclosures are accurate and valued correctly. Account balances are appropriately classified and related financial statement disclosures are understandable.
24-2 A financial statement disclosure checklist is an audit tool that summarizes all disclosure requirements contained in generally accepted accounting principles. Auditors use the disclosure checklist to determine that all required disclosures are completely presented and disclosed in the financial statements and accompanying footnotes. This helps the auditor obtain sufficient appropriate evidence about the completeness objective for the presentation and disclosure-related audit objective. 24-3 A contingent liability is a potential future obligation to an outside party for an unknown amount resulting from activities that have already taken place. Some examples would be:
Pending litigation Income tax disputes Product warranties Notes receivable discounted Guarantees of obligations of others Unused balances of outstanding letters of credit
24-1
24-3 (continued) An actual liability is a real future obligation to an outside party for a known amount from activities that have already taken place. Some examples would be:
Notes payable Accounts payable Accrued interest payable Income taxes payable Payroll withholding liabilities Accrued salaries and wages
24-4 If you are concerned about the possibility of contingent liabilities for income tax disputes, there are