TESTBANK FOR AUDITING A PRACTICAL APPROACH,
S! S! S! S! S! S!
4TH CANADIAN EDITION 4TH EDITION, KINDLE EDITION
S! S! S! S! S! S! S!
BY ROBYN MORONEY , FIONA CAMPBELL , JANE HAMI
S! S! S! S! S! S! S! S!
LTON , VALERIE WARREN
S! S! S!
, Stuvia.comS!-
S!TheS!MarketplaceS!toS!BuyS!andS!SellS!yourS!StudyS!Material
CHAPTER 1 S !
INTRODUCTION AND OVERVIEW OF AUDIT AND ASSURANC S! S! S! S! S! S!
E
CHAPTER LEARNING OBJECTIVES S! S!
1. Define an assurance engagement. S! S! S!
An assurance engagement involves an assurance provider arriving atan opinion about som
S! S! S! S! S! S! S! S! S! S! S!
e information being provided by their client toa third party. A financial statement audit is o
S! S! S! S! S! S! S! S! S! S! S! S! S! S! S!
ne type of assuranceengagement. This engagement involves an auditor arriving at an opi
S! S! S! S! S! S! S! S! S! S! S! S!
nionabout the fair presentation of the financial statements. The auditreport is addressed t
S! S! S! S! S! S! S! S! S! S! S! S!
o the shareholders of the company being audited,but other users may read the financial s
S! S! S! S! S! S! S! S! S! S! S! S! S! S!
tatements. Learning aboutauditing and assurance requires an understanding of auditing a
S! S! S! S! S! S! S! S! S! S!
ndassurance terminology, including terms such as audit risk, materiality,internal controls, l
S! S! S! S! S! S! S! S! S! S!
isted entity, and assertions.
S! S! S!
2. Explain why there is a demand for audit and assurance services.
S! S! S! S! S! S! S! S! S! S!
Financial statement users include investors (shareholders), suppliers,customers, lenders,
S! S! S! S! S! S! S! S!
employees, governments, and the general public.These groups of users demand audited f
S! S! S! S! S! S! S! S! S! S! S!
inancial statements because oftheir remoteness from the entity, accounting complexity, th
S! S! S! S! S! S! S! S! S! S!
eirincentivescompeting with those of the entity‘s managers, and their needfor reliable infor S! S! S! S! S! S! S! S! S! S! S!
mation on which to base decisions. The theories usedto describe the demand for audit and
S! S! S! S! S! S! S! S! S! S! S! S! S! S! S
assurance services are agencytheory, the information hypothesis, and the insurance hypo
! S! S! S! S! S! S! S! S! S! S!
thesis.
3. Differentiate between types of assurance services. S! S! S! S! S!
Assurance services include financial statement audits, complianceaudits, performance audit
S! S! S! S! S! S! S! S!
s, comprehensive audits, internal audits,and assurance on corporate social responsibility (
S! S! S! S! S! S! S! S! S! S!
CSR) disclosures. S!
4. Explain the different levels of assurance. S! S! S! S! S!
The different levels of assurance include reasonable assurance, whichis the highest level o
S! S! S! S! S! S! S! S! S! S! S! S!
f assurance, limited assurance, and no assurance.Reasonable assurance is provided on a
S! S! S! S! S! S! S! S! S! S! S!
n audit of a company‘sfinancial statements. Limited assurance is provided in a review of
S! S! S! S! S! S! S! S! S! S! S! S! S!
acompany‘s financial Dsotwante
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A+ DistributionS!ofS!thisS!documentS!isS!illeg
al
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, TEST BANK for Auditing A Practical Approach, 4th Canadian Edition Moroney, Campbell, Warre
S! S! S! S! S! S! S! S! S! S! S! S!
Stuvia.com -
n
S!
https://browsegrades.net/singlePaper/416762/testbank-for-auditing-a-practical-approach-4th-c
The Marketplace to Buy and Sell your Study Material S! S! S! S! S! S! S! S! S!
5. Outline different audit opinions S! S! S!
An auditor can issue an unmodified opinion, also known as a cleanreport, or an unmodified
S! S! S! S! S! S! S! S! S! S! S! S! S! S!
S! opinion with an emphasis of matter paragraph.Alternatively, a modified opinion may be is
S! S! S! S! S! S! S! S! S! S! S! S!
sued as a qualified, anadverse, or a disclaimer of opinion.
S! S! S! S! S! S! S! S! S!
6. Differentiate between the roles of the preparer and the auditor, and discuss th
S! S! S! S! S! S! S! S! S! S! S! S!
e different firms that provide assurance services.
S! S! S! S! S! S!
It is the responsibility of a company‘s governing body to ensure thatits financial statement
S! S! S! S! S! S! S! S! S! S! S! S! S!
s are relevant, reliable, comparable, understandable,and true and fair. It is the responsibilit
S! S! S! S! S! S! S! S! S! S! S! S!
y of the auditor to form anopinion on the fair presentation of the financial statements. In do
S! S! S! S! S! S! S! S! S! S! S! S! S! S! S! S!
ing,so 1- 2 Auditing: A Practical Approach, Fourth Canadian Edition
S! S! S! S! S! S! S! S! S!
the auditor must maintain professional scepticism and utilize professionaljudgement and du
S! S! S! S! S! S! S! S! S! S!
e care.
S!
The firms that provide assurance services include the Big-
S! S! S! S! S! S! S! S!
4international firms, the national firms (with international links),local and regional firms, an
S! S! S! S! S! S! S! S! S! S! S!
d consulting firms that tend to specializein assurance of CSR and environmental disclosur
S! S! S! S! S! S! S! S! S! S! S! S!
es.
7. Identify the different regulators, legislation, and regulations surrounding th
S! S! S! S! S! S! S! S!
e assurance process.
S! S!
lO M S! S! S! S! S! S!S! S! S!
o AR c P S D | 3 08 78 49 5
Introduction and Overview of Audit and Assurance S! S! S! S! S! S! 1- 3
S! S!
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, TEST BANK for Auditing A Practical Approach, 4th Canadian Edition Moroney, Campbell, Warre
S! S! S! S! S! S! S! S! S! S! S! S!
Stuvia.com -
n
S!
https://browsegrades.net/singlePaper/416762/testbank-for-auditing-a-practical-approach-4th-c
The Marketplace to Buy and Sell your Study Material S! S! S! S! S! S! S! S! S!
TRUE-FALSE STATEMENTS S!
1. Only current investors (not potential investors) are considered to be users of the financi
S! S! S! S! S! S! S! S! S! S! S! S! S!
al statements.
S!
Answer: False S!
Bloomcode: Knowledge Diffic S! S!
ulty: Easy S!
Learning Objective: Explain why there is a demand for audit and assurance services. Sec
S! S! S! S! S! S! S! S! S! S! S! S! S!
tion Reference: 1.2 Demand for audit and assurance services
S! S! S! S! S! S! S! S!
CPA Competency: Audit and Assurance AACS
S! S! S! S! S!
B: Analytic
S!
2. Insurance hypothesis is a means whereby the investor can guarantee the success of the
S! S! S! S! S! S! S! S! S! S! S! S! S!
ir investment.
S!
Answer: False S!
Bloomcode: Comprehension S! S!
Difficulty: Medium S!
Learning Objective: Explain why there is a demand for audit and assurance services. Sec
S! S! S! S! S! S! S! S! S! S! S! S! S!
tion Reference: 1.2 Demand for audit and assurance services
S! S! S! S! S! S! S! S!
CPA Competency: Audit and Assurance AACS
S! S! S! S! S!
B: Analytic
S!
3. A compliance audit involves gathering evidence to ascertain whether the person or entit
S! S! S! S! S! S! S! S! S! S! S! S!
y under review has followed the rules, policies, procedures, laws and regulations with w
S! S! S! S! S! S! S! S! S! S! S! S! S!
hich they must conform
S! S! S!
Answer: True S!
Bloomcode: Comprehension S! S!
Difficulty: Medium S!
Learning Objective: Differentiate between types of assurance services. Sect
S! S! S! S! S! S! S! S!
ion Reference: 1.3 Different assurance services
S! S! S! S! S!
CPA Competency: Audit and Assurance AACS
S! S! S! S! S!
B: Analytic
S!
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extraS! pe rS! ye a r
S! S! S! S! S! S!
4TH CANADIAN EDITION 4TH EDITION, KINDLE EDITION
S! S! S! S! S! S! S!
BY ROBYN MORONEY , FIONA CAMPBELL , JANE HAMI
S! S! S! S! S! S! S! S!
LTON , VALERIE WARREN
S! S! S!
, Stuvia.comS!-
S!TheS!MarketplaceS!toS!BuyS!andS!SellS!yourS!StudyS!Material
CHAPTER 1 S !
INTRODUCTION AND OVERVIEW OF AUDIT AND ASSURANC S! S! S! S! S! S!
E
CHAPTER LEARNING OBJECTIVES S! S!
1. Define an assurance engagement. S! S! S!
An assurance engagement involves an assurance provider arriving atan opinion about som
S! S! S! S! S! S! S! S! S! S! S!
e information being provided by their client toa third party. A financial statement audit is o
S! S! S! S! S! S! S! S! S! S! S! S! S! S! S!
ne type of assuranceengagement. This engagement involves an auditor arriving at an opi
S! S! S! S! S! S! S! S! S! S! S! S!
nionabout the fair presentation of the financial statements. The auditreport is addressed t
S! S! S! S! S! S! S! S! S! S! S! S!
o the shareholders of the company being audited,but other users may read the financial s
S! S! S! S! S! S! S! S! S! S! S! S! S! S!
tatements. Learning aboutauditing and assurance requires an understanding of auditing a
S! S! S! S! S! S! S! S! S! S!
ndassurance terminology, including terms such as audit risk, materiality,internal controls, l
S! S! S! S! S! S! S! S! S! S!
isted entity, and assertions.
S! S! S!
2. Explain why there is a demand for audit and assurance services.
S! S! S! S! S! S! S! S! S! S!
Financial statement users include investors (shareholders), suppliers,customers, lenders,
S! S! S! S! S! S! S! S!
employees, governments, and the general public.These groups of users demand audited f
S! S! S! S! S! S! S! S! S! S! S!
inancial statements because oftheir remoteness from the entity, accounting complexity, th
S! S! S! S! S! S! S! S! S! S!
eirincentivescompeting with those of the entity‘s managers, and their needfor reliable infor S! S! S! S! S! S! S! S! S! S! S!
mation on which to base decisions. The theories usedto describe the demand for audit and
S! S! S! S! S! S! S! S! S! S! S! S! S! S! S
assurance services are agencytheory, the information hypothesis, and the insurance hypo
! S! S! S! S! S! S! S! S! S! S!
thesis.
3. Differentiate between types of assurance services. S! S! S! S! S!
Assurance services include financial statement audits, complianceaudits, performance audit
S! S! S! S! S! S! S! S!
s, comprehensive audits, internal audits,and assurance on corporate social responsibility (
S! S! S! S! S! S! S! S! S! S!
CSR) disclosures. S!
4. Explain the different levels of assurance. S! S! S! S! S!
The different levels of assurance include reasonable assurance, whichis the highest level o
S! S! S! S! S! S! S! S! S! S! S! S!
f assurance, limited assurance, and no assurance.Reasonable assurance is provided on a
S! S! S! S! S! S! S! S! S! S! S!
n audit of a company‘sfinancial statements. Limited assurance is provided in a review of
S! S! S! S! S! S! S! S! S! S! S! S! S!
acompany‘s financial Dsotwante
l om ednbtsy:.BNRo
ade S ! aTsEsRuSrTaUnDcIeESis| jp
I GH roohvriadbehd
am in70a@cgm
asa omail.p
coilm
ationengagem
Weannttt.o S ! S ! earnS ! $1.236
extraS! pePrS!ayegaer
A+ DistributionS!ofS!thisS!documentS!isS!illeg
al
2
, TEST BANK for Auditing A Practical Approach, 4th Canadian Edition Moroney, Campbell, Warre
S! S! S! S! S! S! S! S! S! S! S! S!
Stuvia.com -
n
S!
https://browsegrades.net/singlePaper/416762/testbank-for-auditing-a-practical-approach-4th-c
The Marketplace to Buy and Sell your Study Material S! S! S! S! S! S! S! S! S!
5. Outline different audit opinions S! S! S!
An auditor can issue an unmodified opinion, also known as a cleanreport, or an unmodified
S! S! S! S! S! S! S! S! S! S! S! S! S! S!
S! opinion with an emphasis of matter paragraph.Alternatively, a modified opinion may be is
S! S! S! S! S! S! S! S! S! S! S! S!
sued as a qualified, anadverse, or a disclaimer of opinion.
S! S! S! S! S! S! S! S! S!
6. Differentiate between the roles of the preparer and the auditor, and discuss th
S! S! S! S! S! S! S! S! S! S! S! S!
e different firms that provide assurance services.
S! S! S! S! S! S!
It is the responsibility of a company‘s governing body to ensure thatits financial statement
S! S! S! S! S! S! S! S! S! S! S! S! S!
s are relevant, reliable, comparable, understandable,and true and fair. It is the responsibilit
S! S! S! S! S! S! S! S! S! S! S! S!
y of the auditor to form anopinion on the fair presentation of the financial statements. In do
S! S! S! S! S! S! S! S! S! S! S! S! S! S! S! S!
ing,so 1- 2 Auditing: A Practical Approach, Fourth Canadian Edition
S! S! S! S! S! S! S! S! S!
the auditor must maintain professional scepticism and utilize professionaljudgement and du
S! S! S! S! S! S! S! S! S! S!
e care.
S!
The firms that provide assurance services include the Big-
S! S! S! S! S! S! S! S!
4international firms, the national firms (with international links),local and regional firms, an
S! S! S! S! S! S! S! S! S! S! S!
d consulting firms that tend to specializein assurance of CSR and environmental disclosur
S! S! S! S! S! S! S! S! S! S! S! S!
es.
7. Identify the different regulators, legislation, and regulations surrounding th
S! S! S! S! S! S! S! S!
e assurance process.
S! S!
lO M S! S! S! S! S! S!S! S! S!
o AR c P S D | 3 08 78 49 5
Introduction and Overview of Audit and Assurance S! S! S! S! S! S! 1- 3
S! S!
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extraS! pe rS! ye a r
, TEST BANK for Auditing A Practical Approach, 4th Canadian Edition Moroney, Campbell, Warre
S! S! S! S! S! S! S! S! S! S! S! S!
Stuvia.com -
n
S!
https://browsegrades.net/singlePaper/416762/testbank-for-auditing-a-practical-approach-4th-c
The Marketplace to Buy and Sell your Study Material S! S! S! S! S! S! S! S! S!
TRUE-FALSE STATEMENTS S!
1. Only current investors (not potential investors) are considered to be users of the financi
S! S! S! S! S! S! S! S! S! S! S! S! S!
al statements.
S!
Answer: False S!
Bloomcode: Knowledge Diffic S! S!
ulty: Easy S!
Learning Objective: Explain why there is a demand for audit and assurance services. Sec
S! S! S! S! S! S! S! S! S! S! S! S! S!
tion Reference: 1.2 Demand for audit and assurance services
S! S! S! S! S! S! S! S!
CPA Competency: Audit and Assurance AACS
S! S! S! S! S!
B: Analytic
S!
2. Insurance hypothesis is a means whereby the investor can guarantee the success of the
S! S! S! S! S! S! S! S! S! S! S! S! S!
ir investment.
S!
Answer: False S!
Bloomcode: Comprehension S! S!
Difficulty: Medium S!
Learning Objective: Explain why there is a demand for audit and assurance services. Sec
S! S! S! S! S! S! S! S! S! S! S! S! S!
tion Reference: 1.2 Demand for audit and assurance services
S! S! S! S! S! S! S! S!
CPA Competency: Audit and Assurance AACS
S! S! S! S! S!
B: Analytic
S!
3. A compliance audit involves gathering evidence to ascertain whether the person or entit
S! S! S! S! S! S! S! S! S! S! S! S!
y under review has followed the rules, policies, procedures, laws and regulations with w
S! S! S! S! S! S! S! S! S! S! S! S! S!
hich they must conform
S! S! S!
Answer: True S!
Bloomcode: Comprehension S! S!
Difficulty: Medium S!
Learning Objective: Differentiate between types of assurance services. Sect
S! S! S! S! S! S! S! S!
ion Reference: 1.3 Different assurance services
S! S! S! S! S!
CPA Competency: Audit and Assurance AACS
S! S! S! S! S!
B: Analytic
S!
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