Auditing Profession: Responsibilities and Professional Judgment

What are the key responsibilities of auditors in adopting a financial reporting framework?

A) with management.

B) with the auditor.

C) equally with management and the auditor.

D) with the internal audit department.

Answer:

The responsibility for adopting a sound financial reporting framework rests with management.

Auditors play a vital role in ensuring the credibility and fairness of financial statements. However, it is the responsibility of management to adopt a suitable financial reporting framework and corresponding accounting policies. Auditors provide independent opinions on the fairness and reliability of the financial reports but do not adopt the framework themselves. This division of responsibilities helps maintain transparency and accountability in financial reporting practices.

What distinguishes an error from fraud or other irregularities in auditing?

A) materiality.

B) intent.

C) whether it is a rand amount or a process.

D) whether it is caused by the auditor or the client.

Answer:

The factor that distinguishes an error from fraud or other irregularities is intent.

Intent behind an action is a critical factor in differentiating between an error and fraud in auditing. Errors are usually unintentional mistakes, while fraud involves deliberate intent to deceive. Auditors must carefully assess the intentions behind any irregularities they encounter during the audit process to ensure accurate reporting and compliance with auditing standards.