Solutions for Auditing: A Practical Approach, 4th Canadian Edition by Moroney
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Module
Auditing
Institution
Auditing
Complete Solutions Manual for Auditing: A Practical Approach, 4th Canadian Edition 4ce by Robyn Moroney, Fiona Campbell, Jane Hamilton, Valerie Warren. ISBN-13: 9480
1 Introduction and Overview of Audit and Assurance 1-1
1.1 Auditing and Assurance Defined 1-4
1.2 Demand for Audit and Assur...
Moroney, Campbell, Hamilton, Warren Auditing: A Practical Approach, Fourth Canadian Edition
Solutions Manual
Auditing: A Practical
Approach
Fourth Canadian Edition
by
Robyn Moroney
Fiona Campbell
Jane Hamilton
Valerie Warren
CHAPTER 1
Introduction and Overview of Audit and Assurance
Solutions Manual Chapter 1: Introduction and overview of audit assurance 1-1
.
, Moroney, Campbell, Hamilton, Warren Auditing: A Practical Approach, Fourth Canadian Edition
Chapter 1
Introduction and Overview of Audit and Assurance
SOLUTIONS TO REVIEW QUESTIONS
REVIEW QUESTION 1.1
In the financial reporting context, “assurance” relates to the audit or review of an entity’s
financial statements.
An audit provides reasonable assurance about the fair presentation of the financial
statements, while a review provides limited assurance. The audit contains a positive
expression of opinion (e.g., ”in our opinion the accompanying financial statements present
fairly, in all material respects….”, while the review contains a negative expression of their
conclusion (e.g., “nothing has come to our attention that causes us to believe that the
financial statements do not present fairly….”.
The practitioner is an auditor working in public practice providing assurance on financial
statements of publicly listed companies, or other entities. Intended users are the people for
whom the provider prepares their report (e.g., the shareholders). The responsible or
accountable party is the person or organization (e.g., a company) responsible for the
preparation of the subject matter (e.g., the financial statements).
An “assurer” must have the knowledge and expertise to assess the fairness of the
information being presented by the preparers. Auditors of financial statements need to be
trained accountants with detailed knowledge about the complex technical accounting and
disclosure issues required to assess the choices made by the financial statement preparers.
When undertaking an audit, the auditor should use professional scepticism, professional
judgement, and due care.
Auditors should be independent of the client. Independent auditors have no incentives to
aid the entity in presenting their results in the best possible light. They are concerned with
ensuring that the information contained in the financial statements is reliable and free from
any significant (material) misstatements (error or fraud). A user needs to believe that the
auditor is acting independently. This means that not only should auditors be independent
(i.e., not have any undue personal or financial incentive to protect the client), auditors should
avoid doing anything that would cause a reasonable person to doubt their independence.
Solutions Manual Chapter 1: Introduction and overview of audit assurance 1-2
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