Assurance

Question 1

Control testing

Answer 1

Control:
Why strong:
How test:

Question 2

Audit procedures

Answer 2

What test
Why test
How test

Question 3

Review

Answer 3

Review
Level of assurance: Limited assurance (whether the FS is plausible)
Applicable Standards: IFRS/ASPE
Planning: calculate materiality, no internal controls review.
Type of work: inquiry and analytical procedures.
Cost: Moderate
Independence: needed

Question 4

Compilation

Answer 4

Compilation
Level of assurance: No assurance
Applicable Standards: not required to comply to GAAP, basic accouting must be agreed with management
Planning: basic understanding to perform engagement
Type of work: compile FS, ensure it doe not appear misleading
Cost: Low
Independence: not needed, but disclosed

Question 5

Audit

Answer 5

Audit
Level of assurance: reasonable assurance (free from material misstatement)
Applicable Standards: ASPE/IFRS
Planning: test internal controls
Type of work: full audit procedures, substantial testing
Cost: High
Independence: needed

Question 6

Materiality

Answer 6

Based on user needs
Adjusted net income: 3%-7%
NPO: 1%-3% expenses, revenue/assets or 3%-5% equity
Performance materiality: 50%-90% of materiality

Question 7

Risk of Material Misstatement (RMM)

Answer 7

Increase/Decrease factors and explanation

Question 8

Audit approach

Answer 8

Substantive or combined (can rely on controls)