TEST BANK for Auditing A Practical Approach, 4th Canadian Edition Moroney, Campbell, Warren. All Chapters 1-14

TESTBANKFORAUDITINGAPRACTICALAPPROACH,
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4TH CANADIAN EDITION 4TH EDITION, KINDLE EDITION BY
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ROBYNMORONEY,FIONACAMPBELL,JANEHAMILTON
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,VALERIEWARREN
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, TEST BANK for Auditing A Practical Approach, 4th Canadian Edition Moroney, Campbell, Warren
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CHAPTER 1 g




INTRODUCTIONAND OVERVIEW OFAUDIT AND ASSURANCE g g g g g g




CHAPTERLEARNING OBJECTIVES g g




1. Definean assurance engagement. g g g




An assurance engagement involves an assurance provider arriving atan opinion about some
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information 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
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the fair presentation of the financial statements. The auditreport is addressed to the
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shareholders of the company being audited,but other users may read the financial statements.
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Learning aboutauditing and assurance requires an understanding of auditing andassurance
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terminology, including terms such as audit risk, materiality,internal controls, listed entity, and
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assertions.
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2. Explain why there is a demand for audit and assurance services.
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Financial statement users include investors (shareholders), suppliers,customers, lenders,
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g employees, governments, and the general public.These groups of users demand audited
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g financial statements because oftheir remoteness from the entity, accounting complexity,
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g theirincentivescompeting with those of the entity‘s managers, and their needfor reliable g g g g g g g g g g




g information on which to base decisions. The theories usedto describe the demand for audit and
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g assurance services are agencytheory, the information hypothesis, and the insurance
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g hypothesis.




3. Differentiatebetween types of assurance services. g g g g g




Assuranceservices include financial statement audits, complianceaudits, performance audits,
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g comprehensive audits, internal audits,and assurance on corporate social responsibility (CSR)
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g disclosures.




4. Explainthe different levels of assurance. g g g g g




The different levels of assurance include reasonable assurance, whichis the highest level of
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g assurance, limited assurance, and no assurance.Reasonable assurance is provided on an
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g audit of a company‘sfinancial statements. Limited assurance is provided in a review of
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, TEST BANK for Auditing A Practical Approach, 4th Canadian Edition Moroney, Campbell, Warren
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5. Outlinedifferent audit opinions g g g




An auditor can issue an unmodified opinion, also known as a cleanreport, or an unmodified
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g opinion with an emphasis of matter paragraph.Alternatively, a modified opinion may be issued
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g as 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 g g g g g g g g g g g g




different firms that provide assurance services.
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It is the responsibility of a company‘s governing body to ensure thatits financial statements are
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relevant, reliable, comparable, understandable,and true and fair. It is the responsibility of the
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auditor to form anopinion on the fair presentation of the financial statements. In doing,so 1- 2
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g Auditing: A Practical Approach, Fourth Canadian Edition
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the auditor must maintain professional scepticism and utilize professionaljudgement and due
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care.
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The firms that provide assurance services include the Big-4international firms, the national firms
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(with international links),local and regional firms, and consulting firms that tend to specializein
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assurance of CSR and environmental disclosures.
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7. Identifythe different regulators, legislation, and regulations surrounding the
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assurance process.
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Introduction and Overview of Audit and Assurance g g g g g g 1- 3
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TRUE-FALSE STATEMENTS g




1. Only current investors (not potential investors) are considered to be users of the financial
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statements.
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Answer: False g




Bloomcode: Knowledge g




Difficulty: Easy
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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
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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 success of their
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investment.
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Answer: False g




Bloomcode: Comprehension g




Difficulty: Medium
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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
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CPACompetency: Audit and Assurance AACSB:
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Analytic
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3. A compliance audit involves gathering evidence to ascertain whether the person or entity
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under review has followed the rules, policies, procedures, laws and regulations with which
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they must conform
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Answer: True g




Bloomcode: Comprehension g




Difficulty: Medium
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Learning Objective: Differentiate between types of assurance services. Section
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Reference: 1.3 Different assurance services
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CPACompetency: Audit and Assurance AACSB:
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Analytic
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Want to earn $1.236
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3