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TESTBANK FOR AUDITING APRACTICAL APPROACH, 4
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TH CANADIAN EDITION 4TH EDITION, KINDLE EDITION BY
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ROBYN MORONEY , FIONA CAMPBELL , JANE H AMILTO
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N , VALERIE WARREN
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, TEST BANK for Auditing A Practical Approach, 4th Canadian Edition Moroney, Campbell, W arren
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Stuvia.com - The Marketplace to Buy and Sell your Study Material
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CHAPTER 1 n j




INTRODUCTION A ND O VERVIEW OF AUDIT A ND ASSURANCE n
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CHAPTERLEARNING OBJECTIVES nj nj




1. Define an assurance engagement. nj nj nj




An assurance engagement involves an assurance provider arriving atan o pinion about some in
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formation being provided by their client toa third party. A financial statement audit is one type
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of assuranceengagement. This engagement involves an auditor arriving at an opinionabout t
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he fair presentation of the financial statements. The auditreport is addressed to the sharehold
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ers of the company being audited,but other users may read the financial statements. Learning
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nj aboutauditing and assurance requires an understanding of auditing andassurance terminolo
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gy, including terms such as audit risk, materiality,internal controls, listed entity, and assertion
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s.




2. Explain why there is a demand for audit and assurance services. nj nj nj nj nj nj nj nj nj nj




Financial statement users include investors (shareholders), suppliers,customers, lenders, em
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ployees, governments, and the general public.These groups of users demand audited financi
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al statements because oftheir remoteness from the entity, accounting complexity, theirincenti
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vescompeting with those of the entity‘s managers, and their needfor reliable information on w
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hich to base decisions. The theories usedto describe the demand for audit and assurance servi
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ces are agencytheory, the information hypothesis, and the insurance hypothesis.
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3. Differentiate between types of assurance services. nj nj nj nj nj




Assurance s ervices include financial s tatement audits, c omplianceaudits, performance audits,
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comprehensive audits, internal audits,and assurance on corporate social responsibility (CSR nj nj nj nj nj nj nj nj nj




) disclosures.
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4. Explain the different levels of assurance. nj nj nj nj nj




The different levels of assurance include reasonable assurance, whichis the highest level o f as
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surance, limited assurance, and no assurance.Reasonable assurance is provided on an audit
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nj of a company‘sfinancial statements. Limited assurance is provided in a review of
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acompany‘s financial Dsotwante
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5. Outline different audit opinions nj nj nj




An auditor can issue an unmodified opinion, also k nown as a c leanreport, or an unmodified opi
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nion with an emphasis of matter paragraph.Alternatively, a modified opinion may be issued a
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s a qualified, anadverse, or a disclaimer of opinion.
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6. Differentiate between the roles of the preparer and the auditor, and discuss the d nj nj nj nj nj nj nj nj nj nj nj nj nj




ifferent firms that provide assurance services.
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It is the responsibility of a company‘s governing body to ensure thatits financial statements ar
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e relevant, reliable, comparable, understandable,and true and fair. It is the responsibility o f the
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auditor to form anopinion on the fair presentation of the financial statements. In doing,so 1-
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nj 2 Auditing: A Practical Approach, Fourth Canadian Edi tion
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the auditor m ust m aintain professional s cepticism and utilize professionaljudgement and due c
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are.


The firms that provide assurance s ervices include the Big-
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4international firms, the national firms (with international links),local and regional firms, and co
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nsulting firms that tend to specializein assurance of CSR and environmental disclosures.
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7. Identify the different regulators, legislation, and regulations surrounding the a
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ssurance process. nj


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Introduction a nd O verview of Audit a nd Assurance nj nj nj nj nj nj 1- 3 nj nj




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Stuvia.com - The Marketplace to Buy and Sell your Study Material
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TRUE-FALSE STATEMENTS nj




1. Only current investors (not potential investors) are considered to be users o f the financial st
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atements.


Answer: False nj




Bloomcode: Knowledge Diffic nj nj




ulty: Easy nj




Learning Objective: Explain why there is a demand for audit and assurance services. Section
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Reference: 1.2 Demand for audit and assurance services nj nj nj nj nj nj nj




CPACompetency: Audit and Assurance AACSB:
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Analytic
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2. Insurance hypothesis is a means whereby the investor can guarantee the s uccess of their in
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vestment.


Answer: False nj




Bloomcode: Comprehension nj nj




Difficulty: Medium nj




Learning Objective: Explain why there is a demand for audit and assurance services. Section
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Reference: 1.2 Demand for audit and assurance services nj nj nj nj nj nj nj




CPACompetency: Audit and Assurance AACSB:
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Analytic
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3. Ac ompliance audit involves gathering evidence to ascertain whether the person or entity u
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nder review has followed the rules, policies, procedures, laws and regulations with which th
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ey must conform
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Answer: True nj




Bloomcode: Comprehension nj nj




Difficulty: Medium nj




Learning Objective: Differentiate between t ypes o f assurance s ervices. Sectio
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n Reference: 1.3 Different assurance services
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CPACompetency: Audit and Assurance AACSB:
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Analytic
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