1. Auditing and Assurance Engagements

Question 1

assurance

Answer 1

the confidence one can place in business, credible information (CREDIBILITY)

Question 2

assurance engagement

Answer 2

independent professional service in which the assurance provider expresses a conclusion on the outcome of an evaluation or measurement of a subject matter against criteria

Question 3

levels of assurance

Answer 3

REASONABLE ASSURANCE: high but not absolute assurance on the reliability of the subject matter

LIMITED ASSURANCE: provides negative assurance on the reliability of the subject matter

Question 4

Materiality

Answer 4

assurance that the relevant information is free of material misstatement

Question 5

when are misstatements or omissions considered to be material

Answer 5

when they would likely influence the economic decisions of users who rely upon the information of a specific reporting entity

Question 6

5 required elements of an assurance engagement

Answer 6

1. 3 party accountability relationship
2. subject matter
3. criteria
4. evidence
5. written conclusion

Question 7

ethical requirements that assurance providers must comply with

Answer 7

1. professional judgment
2. integrity
3. professional skepticism
4. independence of mind

Question 8

subject matter

Answer 8

matter of interest to the users, and for whose benefit an assurance engagement is conducted (ex: financial statement for SH)

Question 9

criteria

Answer 9

benchmark used to evaluate or measure the subject matter (ex: IFRS)

Question 10

subject matter information

Answer 10

outcome of the evaluation/measurement of the subject matter against the criteria

Question 11

evidence

Answer 11

any information used by the auditor to assess whether the information being audited is stated in accordance with the established criteria

Question 12

forms of evidence

Answer 12

• electronic documents about transactions
• written electronic communications from outsiders
• observations by auditor
• oral testimony of the client

Question 13

assurance vs auditing

Answer 13

assurance: level of confidence or certainty an auditor has that the subject matter is reliable

auditing: accumulation and evaluation of evidence about information to determine and report on the degree of correspondence between the information and established criteria

Question 14

information risk

Answer 14

risk that the information upon which a business decision is made is inaccurate

Question 15

causes of information risk

Answer 15

• remoteness of information
• bias and motives of the provider
• voluminous data
• complex exchange transactions

Question 16

types of assurance engagements

Answer 16

1. financial statement audit
2. compliance audit
3. performance/operational audit
4. sustainability audit

Question 17

types of auditors