If an auditor suspects management is overriding controls relating to the closing process, the auditor should _________.
A)extend audit procedures to carefully check adjusting and allocating entries that are prepared at the end of the period
B)extend audit procedures to check all balance sheet accounts
C)obtain management's written representation in lieu of further audit procedures
D)make these audit procedures the focus of the audit engagement

Question

Quizplus · Accepted Answer

If an auditor suspects management is overriding controls relating to the closing process, the auditor should extend audit procedures to carefully check adjusting and allocating entries that are prepared at the end of the period. This is because management could override controls by making adjusting entries or alloctions that are not in accordance with Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS), which could materially misstate the financial statements. Therefore, the auditor should carefully review and test these entries to ensure their accuracy and compliance with GAAP or IFRS. Extending audit procedures to all balance sheet accounts or relying solely on management's written representation without further testing would not provide sufficient evidence to address the suspicion of control override. Similarly, making these audit procedures the focus of the audit engagement would be too narrow in scope and could overlook other important areas of the audit.

If an Auditor Suspects Management Is Overriding Controls Relating to the Closing