In the course of the examination of financial statements for the purpose of expressing an opinion,the auditor normally prepares a schedule of unadjusted differences for which the auditor did not propose adjustments when they were discovered.What is the primary purpose of this schedule?
A) To point out to the responsible client officials the errors made by various company personnel.
B) To summarize the adjustments that must be made before the company can prepare and submit its federal tax return.
C) To identify the potential financial statement effects of errors or disputed items that were considered immaterial when discovered.
D) To summarize the errors made by the company so that corrections can be made after the audited financial statements are released.

Question

Quizplus · Accepted Answer

The primary purpose of the schedule of unadjusted differences is to identify the potential financial statement effects of errors or disputed items that were considered immaterial when discovered. This schedule is used by auditors to communicate to management the discrepancies they found and to propose adjustments, if necessary, to correct these errors. It is important for auditors to do this because even immaterial errors can accumulate and have a material effect on the financial statements as a whole. The schedule also helps auditors to keep track of the amount and nature of unadjusted differences, and to assess their impact on the financial statements as a whole.

In the Course of the Examination of Financial Statements for the Purpose