TESTBANK FOR AUDITING A PRACTICAL APPROACH,
4TH CANADIAN EDITION 4TH EDITION, KINDLE EDITION
BY ROBYN MORONEY , FIONA CAMPBELL , JANE
HAMILTON , VALERIE WARREN
, CHAPTER 1
INTRODUCTION AND OVERVIEW OF AUDIT AND
ASSURANCE
CHAPTER LEARNING OBJECTIVES
1. Define An Assurance Engagement.
An Assurance Engagement Involves An Assurance Provider Arriving Atan Opinion About
SomeInformation Being Provided By Their Client Toa Third Party. A Financial Statement
Audit Is One Type Of Assuranceengagement. This Engagement Involves An Auditor Arriving
At An Opinionabout The Fair Presentation Of The Financial Statements. The Auditreport Is
Addressed To The Shareholders Of The Company Being Audited,But Other Users May
Read The Financial Statements. Learning Aboutauditing And Assurance Requires An
Understanding Of Auditing Andassurance Terminology, Including Terms Such As Audit Risk,
Materiality,Internal Controls, Listed Entity, And Assertions.
2. Explain Why There Is A Demand For Audit And Assurance Services.
Financial Statement Users Include Investors (Shareholders), Suppliers,Customers, Lenders,
Employees, Governments, And The General Public.These Groups Of Users Demand
Audited Financial Statements Because Oftheir Remoteness From The Entity, Accounting
Complexity, Theirincentivescompeting With Those Of The Entity‘S Managers, And Their
Needfor Reliable Information On Which To Base Decisions. The Theories Usedto Describe
The Demand For AuditAnd Assurance Services Are Agencytheory, The Information
Hypothesis, And The Insurance Hypothesis.
3. Differentiate Between Types Of Assurance Services.
Assurance Services Include Financial Statement Audits, Complianceaudits, Performance
Audits, Comprehensive Audits, Internal Audits,And Assurance On Corporate Social
Responsibility (CSR) Disclosures.
4. Explain The Different Levels Of Assurance.
The Different Levels Of Assurance Include Reasonable Assurance, Whichis The Highest
Level OfAssurance, Limited Assurance, And No Assurance.Reasonable Assurance Is
Provided On An Audit Of A Company‘Sfinancial Statements. Limited Assurance Is Provided
,In A Review Of
, 5. Outline Different Audit Opinions
An Auditor Can Issue An Unmodified Opinion, Also Known As A Cleanreport, Or An
UnmodifiedOpinion With An Emphasis Of Matter Paragraph.Alternatively, A Modified
Opinion May Be Issued As A Qualified, Anadverse, Or A Disclaimer Of Opinion.
6. Differentiate Between The Roles Of The Preparer And The Auditor, And
Discuss TheDifferent Firms That Provide Assurance Services.
It Is The Responsibility Of A Company‘S Governing Body To Ensure Thatits Financial
Statements Are Relevant, Reliable, Comparable, Understandable,And True And Fair. It Is
The Responsibility OfThe Auditor To Form Anopinion On The Fair Presentation Of The
Financial Statements. In Doing,So 1- 2 Auditing: A Practical Approach, Fourth Canadian Edition
The Auditor Must Maintain Professional Scepticism And Utilize Professionaljudgement And
DueCare.
The Firms That Provide Assurance Services Include The Big-4international Firms, The
NationalFirms (With International Links),Local And Regional Firms, And Consulting Firms
That Tend To Specializein Assurance Of CSR And Environmental Disclosures.
7. Identify The Different Regulators, Legislation, And Regulations Surrounding
TheAssurance Process.
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Introduction And Overview Of Audit And Assurance 1-3
