When auditing debt and equity transactions,the auditor should be skeptical,and therefore alert to the possibility that management is managing earnings by not appropriately recording expenses,such as charging expenses directly to retained earnings or under-recording interest expense.

Question

Quizplus · Accepted Answer

Yes, the auditor should be skeptical and alert to the possibility that management is managing earnings by not appropriately recording expenses, such as charging expenses directly to retained earnings or under-recording interest expense. This is necessary to ensure that the financial statements are free from material misstatements and the users of financial statements can rely on them for decision-making.

When Auditing Debt and Equity Transactions,the Auditor Should Be Skeptical,and