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

TESTBANKFOR AUDITINGAPRACTICALAPPROACH,
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4THCANADIAN EDITION 4THEDITION, KINDLEEDITIONBY
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x ROBYNMORONEY,FIONA CAMPBELL,JANEHAMILTON
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,VALERIE WARREN
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, TESTBANKforAuditingAPracticalApproach,4thCanadianEditionMoroney,Campbell,Warren
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Stuvia.com- TheMarketplacetoBuy andSellyourStudy Material x x x x x x x x x x




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CHAPTER 1 x




INTRODUCTIONANDOVERVIEWOFAUDITANDASSURANCE x




CHAPTERLEARNINGOBJECTIVES



1. Defineanassurance engagement. g




Anassuranceengagement involvesanassuranceprovider arrivingatanopinionaboutsome
x x x x x x




xinformationbeingprovidedbytheirclienttoathirdparty.Afinancialstatementauditisonetype of
x x x x x x x x x x x x x x x x




assuranceengagement.Thisengagementinvolves anauditorarrivingat anopinionabout thefair
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presentationofthefinancialstatements.Theauditreportisaddressedtothe shareholdersofthe
x x x x x x x x x x x x x x




companybeingaudited,butotherusersmayreadthefinancialstatements. Learning
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aboutauditing andassurancerequiresanunderstanding ofauditingandassurance terminology,
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includingtermssuchasauditrisk,materiality,internalcontrols,listedentity,and assertions.
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2. Explainwhythereisademandforauditand assuranceservices. x x




Financial statement users include investors (shareholders), suppliers,customers, lenders,
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xemployees, governments, andthegeneralpublic.These groupsof usersdemand audited
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xfinancialstatementsbecause oftheirremoteness from the entity, accounting complexity,
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xtheirincentivescompetingwiththoseof theentity‘smanagers, andtheir needforreliable x x x x x x x x x x




xinformationonwhichtobasedecisions.Thetheoriesusedtodescribethedemandforaudit and
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xassurance services areagencytheory, theinformation hypothesis, andtheinsurance hypothesis.
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3. Differentiatebetweentypesofassuranceservices. g




x Assuranceservices includefinancialstatement audits,complianceaudits,performanceaudits, g x x




x comprehensiveaudits,internalaudits,andassuranceoncorporatesocialresponsibility(CSR)
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x disclosures.




4. Explainthedifferentlevelsofassurance. g




Thedifferent levelsof assuranceincludereasonableassurance,whichisthehighestlevelof
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xassurance,limitedassurance,andnoassurance.Reasonableassuranceisprovidedonan auditof
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acompany‘sfinancialstatements.Limitedassuranceisprovidedinareviewof
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, TESTBANKforAuditingAPracticalApproach,4thCanadianEditionMoroney,Campbell,Warren
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5. Outlinedifferentauditopinions g




An auditorcanissue anunmodifiedopinion, alsoknown asacleanreport, oranunmodified
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x opinionwithanemphasisofmatterparagraph.Alternatively,amodifiedopinionmaybeissued as
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x a qualified, anadverse, or a disclaimer ofopinion.
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6. Differentiatebetweentherolesofthepreparerandtheauditor,anddiscussthe x x x




x different firmsthat provide assurance services.
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Itistheresponsibilityofacompany‘sgoverningbodytoensurethatitsfinancialstatementsare
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xrelevant,reliable, comparable, understandable,andtrueandfair.Itistheresponsibilityof the
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xauditortoformanopiniononthefairpresentationofthefinancialstatements.Indoing,so1- 2
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x Auditing: A Practical Approach, Fourth Canadian Edition
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theauditormust maintainprofessionalscepticismandutilizeprofessionaljudgementanddue care.
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Thefirmsthat provide assuranceservices includetheBig-4internationalfirms,the national firms
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x (with international links),local and regional firms, and consulting firms that tend to specializein
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x assurance of CSR and environmental disclosures.
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7. Identifythedifferentregulators,legislation,andregulationssurroundingthe x




x assuranceprocess. x




lO M x x x x x xo xAR x x x x x x xc x x x x x P x x x x x xS x x x x x xD x x x x x x| x x x x x x3 x0 x8 x7 x8 x x x x x x4 x9 x x x x x x5




IntroductionandOverviewofAuditand Assurance x 1- 3
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TRUE-FALSESTATEMENTS

1. Only current investors (not potentialinvestors) are consideredto beusersof thefinancial
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x statements.


Answer:False x




Bloomcode:Knowledge
x Difficulty:Easy x




LearningObjective:Explainwhythereisademandforauditandassuranceservices.Section
x x x x x x x x




x Reference: 1.2 Demand for audit and assurance services
x x x x x x x




CPA Competency:AuditandAssuranceAACSB:
g x x




Analytic




2. Insurancehypothesis isa meanswhereby the investor canguarantee thesuccess of their
x x x x x x x x




x investment.


Answer:False x




Bloomcode:Comprehension
x Difficulty:Medium x




LearningObjective:Explainwhythereisademandforauditandassuranceservices.Section
x x x x x x x x




x Reference: 1.2 Demand for audit and assurance services
x x x x x x x




CPA Competency:AuditandAssuranceAACSB:
g x x




Analytic




3. Acomplianceaudit involvesgatheringevidencetoascertain whether the person or entity
x x x g x x




x under review has followed the rules, policies, procedures,laws and regulations withwhich they
x x x x x x x x x x x x x




xmustconform x




Answer:True


Bloomcode:Comprehension
x Difficulty:Medium x




LearningObjective:Differentiatebetweentypesofassuranceservices. Section Reference:
x x x x




x 1.3 Different assurance services
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CPA Competency:AuditandAssuranceAACSB:
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Analytic
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Wanttoearn $1.236
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