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auditor professional judgment

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Since an auditor is unable to examine every transaction, it is necessary to determine how many transactions to examine. After completing all the steps of the internal control audit process, the auditor determines a sample of transactions to audit.

The statistical use of PPS is one way to determine sample size for certain accounts. The other method is the classical variables approach, in which the sample size is determined by the professional judgment of the auditor.

How does an auditor use their professional judgment to set the sample size?
How reliable is that judgment?

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Since an auditor is unable to examine every transaction, it is necessary to determine how many transactions to examine. After completing all the steps of the internal control audit process, the auditor determines a sample of transactions to audit. The statistical use of PPS is one way to determine sample size for certain accounts. The other method is the classical variables approach, in which the sample size is determined by the ...

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Audit Assessment of Materiality

4-58 (Audit Assessment of Materiality) The audit report provides reasonable assurance that the financial statements are free from material misstatements. The auditor is put in a difficult situation because materiality is defined from a user viewpoint, but the auditor must assess materiality in planning the audit to ensure that sufficient audit work is performed to detect material misstatements.

Required

a. Define materiality as used in accounting and auditing.
b. Briefly discuss the difference between a "quantitative" assessment of materiality and a "qualitative" assessment of materiality.Give an example of each. Is one dimension more important than the other? Explain.
c. Once the auditor develops an assessment of materiality, can it change during the course of the audit? Explain. If it does change,what is the implication of a change for audit work that has already been completed? Explain.

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