In the course of the audit of financial statements for the purpose of expressing an opinion thereon,the auditors will normally prepare a schedule of unadjusted differences for which the auditors did not propose adjustments when they were identified.What is the primary purpose served by 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 misstatement or disputed items that were considered immaterial when discovered.
D)To summarize the misstatements made by the company so that corrections can be made after the audited financial statements are released.

Question

Quizplus · Accepted Answer

The primary purpose served by the schedule of unadjusted differences is to identify the potential financial statement effects of misstatement or disputed items that were considered immaterial when discovered. This allows the auditors to provide a better understanding of the financial statements' accuracy while also providing management with insight into potential adjustments to be made in future periods. This schedule does not exist to point out errors made by various company personnel or to summarize misstatements made by the company for later correction. Likewise, it is not directed at summarizing adjustments that must be made before submitting a federal tax return.

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