When auditing a public company, the auditor will most likely perform extensive tests for possible overstatement of the revenue, assets, and liabilities.
Step-by-step explanation:
1. Revenue: Auditors will test the company's revenue recognition policies and procedures to ensure that revenue is recorded accurately and in accordance with accounting principles. This may involve reviewing sales contracts, examining supporting documentation, and performing analytical procedures to identify any potential overstatement of revenue.
2. Assets: Auditors will also assess the valuation and existence of the company's assets. This may include physically inspecting assets, reviewing purchase invoices and supporting documentation, and testing the impairment assessment process. By doing so, auditors can identify any potential overstatement of asset values.
3. Liabilities: Auditors will examine the company's liabilities to verify their accuracy and completeness. This may involve reviewing loan agreements, supplier invoices, and other relevant documentation. Auditors will assess whether liabilities have been properly recorded and any potential overstatement has been identified.
When auditing a public company, auditors will conduct extensive tests to detect any potential overstatement of revenue, assets, and liabilities. These tests help ensure the accuracy and reliability of the company's financial statements.
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