Question

Due professional care, the third general standard, is concerned with what is done by the independent auditor and how well it is done. For example, due care in the matter of audit documentation requires that audit documentation of the evidence gathered by the auditor meets which of the following criteria?

A) Workpapers be indexed to the general ledger accounts and include both a permanent file and a general file.
B) The content be sufficient to provide support for the auditor's opinion, including the auditor's representation as to compliance with auditing standards.
C) Audit evidence is principally gathered to determine if the client's financial statements, as prepared by management, can be relied upon to make managerial decisions about the firm.
D) Audit evidence as displayed in the workpapers is primarily performed to protect the auditing firm in the case of a lawsuit by investors.

Answer 1

Due care in audit documentation requires it to be sufficient in content to support the auditor's opinions and show compliance with auditing standards. It is important for evaluation criteria and includes detailed evidence to back the audit's assertions. Audit workpapers should be organized properly with a permanent and current file.

Step-by-step explanation:

Due professional care, the third general standard in auditing, pertains to the actions of the independent auditor and the quality of those actions. When it comes to audit documentation, due care requires that the documentation must meet certain criteria to support the auditor's opinion. Specifically, audit documentation should be:

• Sufficient in content to provide support for the auditor's opinion.
• Include evidence that confirms the auditor's compliance with auditing standards.
• Rotated to workings which can involve both a permanent file and a current file.

The evaluation criteria for audit documentation involve gathering specific evidence that supports the audit opinion. This evidence is collected based on established criteria, which may vary depending on the context and requirements of the auditing assignment. The quality of the audit work is evident by the proper organization and relevance of the documentation it contains.