TESTBANK FOR AUDITING A PRACTICAL APPROACH,
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v 4TH CANADIAN EDITION 4TH EDITION, KINDLE
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v EDITIONBY ROBYN MORONEY , FIONA CAMPBELL ,
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v JANE HAMILTON , VALERIE WARREN
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, TEST BANK for Auditing A Practical Approach, 4th Canadian Edition Moroney, Campbell, Warren
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CHAPTER 1 v
INTRODUCTION AND OVERVIEW OF AUDIT ANDASSURANCE v v v v v v
CHAPTER LEARNING OBJECTIVES v v
1. Define an assurance engagement. v v v
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
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v type of assuranceengagement. This engagement involves an auditor arriving at an
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v opinionabout the fair presentation of the financial statements. The auditreport is addressed
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v to the shareholders of the company being audited,but other users may read the financial
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v statements. Learning aboutauditing and assurance requires an understanding of auditing
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v andassurance terminology, including terms such as audit risk, materiality,internal controls,
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v listed entity, and 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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v employees, governments, and the general public.These groups of users demand audited
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v financial statements because oftheir remoteness from the entity, accounting complexity,
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v theirincentivescompeting with those of the entity‘s managers, and their needfor reliable v v v v v v v v v v
v information on which to base decisions. The theories usedto describe the demand for audit
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and assurance services are agencytheory, the information hypothesis, and the insurance
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v hypothesis. v
3. Differentiate between types of assurance services. v v v v v
Assurance services include financial statement audits, complianceaudits, performance
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audits, comprehensive audits, internal audits,and assurance on corporate social
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v responsibility (CSR) disclosures. v v v
4. Explain the different levels of assurance. v v v v v
The different levels of assurance include reasonable assurance, whichis the highest level of
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assurance, limited assurance, and no assurance.Reasonable assurance is provided on an
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v 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. Outline different audit opinions v v v
An auditor can issue an unmodified opinion, also known as a cleanreport, or an unmodified
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opinion with an emphasis of matter paragraph.Alternatively, a modified opinion may be
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v issued 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
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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
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v are relevant, reliable, comparable, understandable,and true and fair. It is the responsibility
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v ofthe auditor to form anopinion on the fair presentation of the financial statements. In
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v doing,so 1- 2 Auditing: A Practical Approach, Fourth Canadian Edition
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the auditor must maintain professional scepticism and utilize professionaljudgement and
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v duecare. v v
The firms that provide assurance services include the Big-4international firms, the national
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firms (with international links),local and regional firms, and consulting firms that tend to
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v specializein assurance of CSR and environmental disclosures.
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7. Identify the different regulators, legislation, and regulations surrounding the
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assurance process.
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oAR c P S D | 30878 49 5
Introduction and Overview of Audit and Assurance v v v v v v 1-3
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, TEST BANK for Auditing A Practical Approach, 4th Canadian Edition Moroney, Campbell, Warren
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TRUE-FALSE STATEMENTS v
1. Only current investors (not potential investors) are considered to be users of the
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v financialstatements. v v
Answer: False v v
Bloomcode: Knowledge v
v Difficulty: Easy v v
Learning Objective: Explain why there is a demand for audit and assurance services.
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Section Reference: 1.2 Demand for audit and assurance services
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CPA Competency: Audit and Assurance
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v AACSB: Analytic v v
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 v v
Bloomcode: Comprehension v
v Difficulty: Medium v v
Learning Objective: Explain why there is a demand for audit and assurance services.
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Section Reference: 1.2 Demand for audit and assurance services
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CPA Competency: Audit and Assurance
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v AACSB: Analytic v v
3. A compliance audit involves gathering evidence to ascertain whether the person or
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v entityunder review has followed the rules, policies, procedures, laws and regulations with
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v which they must conform
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Answer: True v v
Bloomcode: Comprehension v
v Difficulty: Medium v v
Learning Objective: Differentiate between types of assurance services.
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Section Reference: 1.3 Different assurance services
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CPA Competency: Audit and Assurance
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v AACSB: Analytic v v
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