An auditor is required to establish an understanding with a client regarding the responsibilities for each engagement. This understanding generally includes:
A)management's responsibility to guarantee that there are no material misstatements due to fraud.
B)the auditor's responsibility to plan and perform the audit to provide reasonable, but not absolute, assurance of detecting material errors or fraud.
C)management's responsibility for providing the auditor with an assessment of the risk of material misstatement due to fraud.
D)the auditor's responsibility for the fairness of the financial statements.

Question

Quizplus · Accepted Answer

The understanding between the auditor and the client includes the responsibilities of both parties. Management is responsible for preventing and detecting fraud, and providing the auditor with an assessment of the risk of material misstatement due to fraud. The auditor is responsible for planning and performing the audit to provide reasonable, but not absolute assurance of detecting material errors or fraud. The auditor is not responsible for guaranteeing the absence of material misstatements due to fraud, nor the fairness of the financial statements.

An Auditor Is Required to Establish an Understanding with a Client