Question

When preparing and organizing audit files,

A) the rules established by the SEC and PCAOB must be followed.
B) a lead schedule contains the detailed accounts from the general ledger making up the line item on the trial balance.
C) a working trial balance is considered part of the permanent file.
D) the audit program is not part of the audit files.

Answer 1

When preparing and organizing audit files, auditors must follow the rules established by regulatory bodies, use lead schedules to track detailed accounts, include a working trial balance in the permanent file, and develop an audit program for conducting the audit.

Step-by-step explanation:

When preparing and organizing audit files:

1. A) The rules established by the SEC and PCAOB must be followed. These regulatory bodies set guidelines and standards that auditors must adhere to in order to ensure the accuracy and transparency of financial statements.
2. B) A lead schedule contains the detailed accounts from the general ledger that make up the line item on the trial balance. It helps auditors track and verify the balances in the financial statements.
3. C) A working trial balance is considered part of the permanent file. It provides a snapshot of the balances in the general ledger accounts at a specific point in time and is used for reference and comparison during the audit.
4. D) The audit program is not part of the audit files. It is a detailed plan that outlines the procedures and tests auditors will perform to gather sufficient and appropriate evidence during the audit.