Test Bank For Auditing: A Practical Approach, 4th Canadian Edition by Moroney, All Chapters ||Complete A+ Guide

Test Bank For

Auditing: A Practical Approach,
4th Canadian Edition By Moroney

, Chapter 1

Introduction And Overview Of Audit And Assurance

Chapter Learning Objectives



1. Define An Assurance Engagement.
An Assurance Engagement Involves An Assurance Provider Arriving Atan Opinion About
Some Information Being Provided By Their Client Toa Third Party. A Financial Statement
Audit Is One Type Of Assuranceengagement. This Engagement Involves An Auditor
Arriving At An Opinionabout The Fair Presentation Of The Financial Statements. The
Auditreport Is Addressed To The Shareholders Of The Company Being Audited,But Other
Users May Read The Financial Statements. Learning Aboutauditing And Assurance
Requires An Understanding Of Auditing Andassurance Terminology, Including Terms Such
As Audit Risk, Materiality,Internal Controls, Listed Entity, And Assertions.




2. Explain Why There Is A Demand For Audit And Assurance Services.
Financial Statement Users Include Investors (Shareholders), Suppliers,Customers,
Lenders, Employees, Governments, And The General Public.These Groups Of Users
Demand Audited Financial Statements Because Oftheir Remoteness From The Entity,
Accounting Complexity, Theirincentivescompeting With Those Of The Entity‘S Managers,
And Their Needfor Reliable Information On Which To Base Decisions. The Theories Usedto
Describe The Demand For Audit And Assurance Services Are Agencytheory, The
Information Hypothesis, And The Insurance Hypothesis.




3. Differentiate Between Types Of Assurance Services.
Assurance Services Include Financial Statement Audits, Complianceaudits, Performance
Audits, Comprehensive Audits, Internal Audits,And Assurance On Corporate Social
Responsibility (Csr) Disclosures.




4. Explain The Different Levels Of Assurance.
The Different Levels Of Assurance Include Reasonable Assurance, Whichis The Highest
Level Of Assurance, Limited Assurance, And No Assurance.Reasonable Assurance Is
Provided On An Audit Of A Company‘Sfinancial Statements. Limited Assurance Is Provided
In A Review Of

,5. Outline Different Audit Opinions
An Auditor Can Issue An Unmodified Opinion, Also Known As A Cleanreport, Or An
Unmodified Opinion With An Emphasis Of Matter Paragraph.Alternatively, A Modified
Opinion May Be Issued As A Qualified, Anadverse, Or A Disclaimer Of Opinion.




6. Differentiate Between The Roles Of The Preparer And The Auditor, And
Discuss The Different Firms That Provide Assurance Services.
It Is The Responsibility Of A Company‘S Governing Body To Ensure Thatits Financial
Statements Are Relevant, Reliable, Comparable, Understandable,And True And Fair. It Is
The Responsibility Of The Auditor To Form Anopinion On The Fair Presentation Of The
Financial Statements. In Doing,So 1- 2 Auditing: A Practical Approach, Fourth Canadian
Edition



The Auditor Must Maintain Professional Scepticism And Utilize Professionaljudgement And
Due Care.


The Firms That Provide Assurance Services Include The Big-4international Firms, The
National Firms (With International Links),Local And Regional Firms, And Consulting Firms
That Tend To Specializein Assurance Of Csr And Environmental Disclosures.




7. Identify The Different Regulators, Legislation, And Regulations Surrounding
The Assurance Process.
Lo m O ar C P S D | 30 8 78 4 9 5




Introduction And Overview Of Audit And Assurance 1-3

, True-False Statements

1. Only Current Investors (Not Potential Investors) Are Considered To Be Users Of The
Financial Statements.


Answer: False


Bloomcode: Knowledge
Difficulty: Easy
Learning Objective: Explain Why There Is A Demand For Audit And Assurance Services.
Section Reference: 1.2 Demand For Audit And Assurance Services
Cpa Competency: Audit And Assurance Aacsb:
Analytic




2. Insurance Hypothesis Is A Means Whereby The Investor Can Guarantee The Success Of
Their Investment.


Answer: False


Bloomcode: Comprehension
Difficulty: Medium
Learning Objective: Explain Why There Is A Demand For Audit And Assurance Services.
Section Reference: 1.2 Demand For Audit And Assurance Services
Cpa Competency: Audit And Assurance Aacsb:
Analytic




3. A Compliance Audit Involves Gathering Evidence To Ascertain Whether The Person Or
Entity Under Review Has Followed The Rules, Policies, Procedures, Laws And
Regulations With Which They Must Conform


Answer: True


Bloomcode: Comprehension
Difficulty: Medium
Learning Objective: Differentiate Between Types Of Assurance Services.
Section Reference: 1.3 Different Assurance Services
cpa competency: audit and assurance aacsb:
analytic