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 entity 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 a schedule of unadjusted differences is to identify potential financial statement effects of errors or disputed items that were considered immaterial when discovered. This helps the auditor and the entity officials to determine if adjustments are necessary to ensure the fairness and accuracy of the financial statements. The schedule is not meant to point out errors made by company personnel or to summarize the errors made by the company after the audited financial statements are released. It is also not directly related to federal tax returns, although adjustments made as a result of the schedule may impact the tax return.

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