Test Bank for Auditing & Assurance Services 4th Canadian Edition by William F. Messier, ISBN: 9781264876204.

TESTBANKFOR AUDITINGAPRACTICALAPPROACH,
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4THCANADIANEDITION4THEDITION,KINDLEEDITIONBY
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ol ROBYNMORONEY,FIONA CAMPBELL,JANEHAMILTON
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,VALERIE WARREN
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, TESTBANKforAuditingAPracticalApproach,4thCanadianEditionMoroney,Campbell,Warren
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CHAPTER 1 o l




INTRODUCTIONANDOVERVIEWOFAUDITANDASSURANCE l
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CHAPTERLEARNINGOBJECTIVES



1. Defineanassurance engagement. g




Anassuranceengagementinvolvesanassuranceproviderarrivingatanopinionaboutsome
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ol informationbeingprovidedbytheirclienttoathirdparty.Afinancialstatementauditisonetype of
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assuranceengagement.Thisengagementinvolvesanauditorarrivingatanopinionabout thefair
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presentationofthefinancialstatements.Theauditreportisaddressedtothe shareholdersofthe
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companybeingaudited,butotherusersmayreadthefinancialstatements. Learningaboutauditing
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andassurancerequiresanunderstandingofauditingandassurance terminology,includingterms
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suchasauditrisk,materiality,internalcontrols,listedentity,and assertions.
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2. Explainwhythereisademandforauditandassuranceservices. l
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Financialstatementusersinclude investors(shareholders),suppliers,customers,lenders,
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ol employees,governments,andthegeneralpublic.Thesegroupsofusersdemandaudited financial
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statementsbecauseoftheirremotenessfromtheentity,accountingcomplexity,
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ol theirincentivescompetingwiththoseoftheentity‘smanagers,andtheirneedforreliable l
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ol informationonwhichtobasedecisions.Thetheoriesusedtodescribethedemandforauditand
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ol assuranceservicesareagencytheory,theinformationhypothesis,andtheinsurance hypothesis.
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3. Differentiatebetweentypesofassuranceservices. g




ol Assuranceservices includefinancialstatement audits,complianceaudits,performanceaudits, g ol l
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ol comprehensiveaudits,internalaudits,andassuranceoncorporatesocialresponsibility(CSR) l
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ol disclosures.




4. Explainthedifferentlevelsofassurance. g




Thedifferent levelsofassuranceincludereasonableassurance,whichisthehighestlevelof
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ol assurance,limitedassurance,andnoassurance.Reasonableassuranceisprovidedonan auditof
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acompany‘sfinancialstatements.Limitedassuranceisprovidedinareviewof
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acompany‘s fna o l ol Dsotw
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, TESTBANKforAuditingAPracticalApproach,4thCanadianEditionMoroney,Campbell,Warren
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5. Outlinedifferentauditopinions g




Anauditorcanissueanunmodifiedopinion, alsoknownasacleanreport, oranunmodified opinion
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withanemphasisofmatterparagraph.Alternatively,amodifiedopinionmaybeissued asa
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qualified,anadverse,oradisclaimerofopinion.
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6. Differentiatebetweentherolesofthepreparerandtheauditor,anddiscussthe l
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ol different firmsthat provide assuranceservices. ol ol ol ol




Itistheresponsibilityofacompany‘sgoverningbodytoensurethatitsfinancialstatementsare
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relevant,reliable,comparable,understandable,andtrueandfair.Itistheresponsibilityof the
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auditortoformanopiniononthefairpresentationofthefinancialstatements.Indoing,so1-2
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Auditing: A Practical Approach, Fourth Canadian Edition
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theauditormust maintainprofessionalscepticismandutilizeprofessionaljudgementanddue care. g ol l
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Thefirmsthat provide assuranceservices includetheBig-4internationalfirms,the national firms
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ol (with international links),local and regional firms, and consulting firms that tend to specializein
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ol assurance of CSR and environmentaldisclosures. ol ol ol ol ol




7. Identifythedifferentregulators,legislation,andregulationssurroundingthe l
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ol assuranceprocess. l
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IntroductionandOverviewofAuditandAssurance l
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, TESTBANKforAuditingAPracticalApproach,4thCanadianEditionMoroney,Campbell,Warren
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Stuvia.com-TheMarketplacetoBuy andSellyourStudyMaterial
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TRUE-FALSESTATEMENTS

1. Only current investors (not potentialinvestors) are consideredto beusersof thefinancial
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ol statements.


Answer:False l
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Bloomcode:Knowledge
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LearningObjective:Explainwhythereisademandforauditandassuranceservices.Section
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ol Reference:1.2Demandfor audit andassuranceservices
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CPA Competency:AuditandAssuranceAACSB:
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Analytic




2. Insurancehypothesis isa meanswhereby the investor canguarantee thesuccess of their ol l
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ol investment.


Answer:False l
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Bloomcode:Comprehension
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LearningObjective:Explainwhythereisademandforauditandassuranceservices.Section
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ol Reference:1.2Demandfor audit andassuranceservices
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CPA Competency:AuditandAssuranceAACSB:
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Analytic




3. Acomplianceaudit involvesgatheringevidencetoascertain whether the person or entity
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ol under reviewhas followed the rules,policies, procedures,laws and regulations withwhich they
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mustconform
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Answer:True


Bloomcode:Comprehension
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LearningObjective:Differentiatebetweentypesofassuranceservices.Section Reference:
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ol 1.3Differentassuranceservices
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CPA Competency:AuditandAssuranceAACSB:
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Analytic
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