Which actions should the auditor take next

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Problem 1: A successor auditor discovers a possible misstatement in a client entity's financial statements reported on by a predecessor auditor. Which of the following actions should the auditor (the successor) take next?

a. Advise the client entity to inform its audit committee of the possible misstatement.
b. Have the client entity's internal audit function perform an examination to determine whether a misstatement actually exists.
c. Ask the client entity to arrange a meeting of the predecessor auditor, management, and the successor auditor to discuss the matter.
d. Require the client entity to restate its financial statements before proceeding with the audit engagement.
e. Withdraw from the audit engagement.

Problem 2: While performing procedures in planning an audit, the auditor's comparison of expectations with recorded amounts shows unusual and unexpected relationships. For what purpose should the auditor consider the results of those analytical procedures?

a. Determining planning materiality and tolerable misstatement.
b. Identifying the risks of material misstatement due to fraud or error.
c. Identifying significant accounts.
d. Determining which controls to test.
e. Determining the appropriate level of inherent risk.

Reference no: EM132829704

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