Jones, CPA, is auditing the financial statements of XYZ Retailing, Inc. What assurance does Jones provide that direct effect illegal acts that are material to XYZ's financial statements, and illegal acts that have a material, but indirect effect on the financial statements will be detected?

Question

Quizplus · Accepted Answer

Choice "A" is correct. The auditor should design the audit to provide reasonable assurance that direct effect illegal acts are detected. Because of the nature of illegalities having an indirect effect on the financial statements, the auditor provides no assurance that such acts will be detected. Choices "B", "C", and "D" are incorrect, based on the above explanation.

Jones, CPA, Is Auditing the Financial Statements of XYZ Retailing