The auditor is required to document in the work papers his understanding of the company and its environment and his assessment of the risks of material misstatement.This documentation should include
A)the significant decisions during the discussion among the audit team regarding the susceptibility of the company's financial statements to material misstatement due to fraud
B)where and why the discussion occurred
C)the audit team members who were assigned to the audit
D)the identified and assessed risks of material misstatement due to fraud at both the financial statement level,and the procedures performed to obtain the information
E)both A and C
F)both A and D
G)both B and E

Question

Quizplus · Accepted Answer

The auditor is required to document his understanding of the company and its environment, his assessment of the risks of material misstatement, and his significant decisions about the susceptibility of the financial statements to material misstatement due to fraud. The documentation should also include the identified and assessed risks of material misstatement due to fraud at both the financial statement level and the procedures performed to obtain the information. Therefore, both options A and D are correct. Options B and C are not necessary to document, but they may be included if relevant. Option E is incorrect because it only includes two of the required elements of documentation. Option G is incorrect because it includes unnecessary information.

The Auditor Is Required to Document in the Work Papers