Question

Tick mark the correct answer.
Consider the following actions taken by an auditor:
$1$. Carrying on vouching
$2$. Preparing the audit report
$3$. Checking the valuation of asset
$4$. Decision to qualify the report
The correct sequence of these actions is:

• A. $1,3,4$ and $2$
• B. $4,1,3$ and $2$
• C. $3,4,2$ and $1$
• D. $1,2,4$ and $3$

Answer 1

The correct option is A $1,3,4$ and $2$

The duty of an auditor is to report to the shareholders whether the statements show a true and fair view.

1) The auditor first will vouch all the documents to check the authenticity and validate the transactions.

3) After vouching the documents the auditor has to verify the assets that is check their existence and check whether they are valued at the right price.

4) Qualifying the reports mean to determine whether the statements of the company are free from frauds and errors. An auditor can qualify a report only after vouching and verification.

2) Once the auditor is sure that the statements show a true and fair view that auditor should communicate the same to the shareholder through an audit report.