AUDITING: AN INTERNATIONAL APPROACH
COMPREHENSIVE SOLVED QUESTIONS AND
COMPLETE ANSWERS
◉ Identify examples of assurance services
Answer: -audit of historical financial statements
-certain management consulting
-internal controls over financial reporting
-reviews
◉ What is meant by the term level of assurance?
Answer: Levels of assurance represent the degree of certainty the
practitioner has attained, and wishes to convey, that the conclusions
stated in his or her report are correct.
◉ An audit provides what level of assurance?
Answer: The practitioner provides a conclusion in a positive form. In
this type of report, the practitioner makes a direct statement as to
whether the presentation of the assertions, taken as a whole,
conforms to the applicable criteria. The level of assurance is high.
◉ A review provides what level of assurance?
, Answer: The practitioner provides a conclusion in the form of a
negative assurance. In this form, the practitioner's report states
whether any information came to the practitioner's attention to
indicate that the assertions are not presented in all material
respected in conformity with the applicable criteria. The level of
assurance is limited.
◉ A compilation provides what level of assurance?
Answer: The practitioner presents in the form of financial
statements, information that is the representation of management
without undertaking to express any assurance on the statements.
◉ Section 404 of the Sarbanes - Oxley Act requires public companies
to have an external auditor attest to their internal control over
financial reporting. (true/false)
Answer: True.
◉ Why is an independent auditor asked to express an opinion on the
fair presentation of financial statements?
Answer: The opinion of an independent party is needed because a
company may not be objective with respect to its own financial
statements.
◉ Independent auditing can be best described as:
COMPREHENSIVE SOLVED QUESTIONS AND
COMPLETE ANSWERS
◉ Identify examples of assurance services
Answer: -audit of historical financial statements
-certain management consulting
-internal controls over financial reporting
-reviews
◉ What is meant by the term level of assurance?
Answer: Levels of assurance represent the degree of certainty the
practitioner has attained, and wishes to convey, that the conclusions
stated in his or her report are correct.
◉ An audit provides what level of assurance?
Answer: The practitioner provides a conclusion in a positive form. In
this type of report, the practitioner makes a direct statement as to
whether the presentation of the assertions, taken as a whole,
conforms to the applicable criteria. The level of assurance is high.
◉ A review provides what level of assurance?
, Answer: The practitioner provides a conclusion in the form of a
negative assurance. In this form, the practitioner's report states
whether any information came to the practitioner's attention to
indicate that the assertions are not presented in all material
respected in conformity with the applicable criteria. The level of
assurance is limited.
◉ A compilation provides what level of assurance?
Answer: The practitioner presents in the form of financial
statements, information that is the representation of management
without undertaking to express any assurance on the statements.
◉ Section 404 of the Sarbanes - Oxley Act requires public companies
to have an external auditor attest to their internal control over
financial reporting. (true/false)
Answer: True.
◉ Why is an independent auditor asked to express an opinion on the
fair presentation of financial statements?
Answer: The opinion of an independent party is needed because a
company may not be objective with respect to its own financial
statements.
◉ Independent auditing can be best described as:
