Audit Engagement A1 M2

Question 1

How do an Auditor gain reasonable assurance during the Planning Phase 1?

Answer 1

1. Plan the work and properly supervise assistants,
2. Determine and apply appropriate materiality levels
3. Identify and assess risks of material misstatement whether due to fraud or error
4. Obtain sufficient appropriate audit evidence.

Question 2

What are the three types of Service?

Answer 2

1. Compilation Engagement: An auditor may draft an entity’s financial statements based on information from management’s financial system.
2. Review Engagement
3. Audit Engagement

Question 3

What is the audit process from start to finish?

Answer 3

must obtain a reasonable level of assurance about whether the financial statements are free from material misstatement, whether due to error or fraud.

1. Phase 1 Planning; plan the work and properly supervise any assistants.
2. Phase 2 Testing controls and substantive #’s on F/S; Determine and apply appropriate materiality levels.
3. Phase 3 Form Conclusion: identify and assess risks of material misstatement, whether due to error or fraud;
4. Write the Report

Question 4

What is Management’s Job?

Answer 4

(a) preparation and fair presentation of the financial statements in accordance with the applicable financial reporting framework.
(b) the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement due to error or fraud.
(c) providing the auditor with access to information and persons within the entity needed to complete the audit.

Question 5

What is the Auditor’s job?

Answer 5

• Express an opinion by obtaining reasonable assurance about whether the financial statements are free from material misstatement, whether due to error or fraud.

Question 6

How does the Auditor obtain reasonable assurance?

Answer 6

(a) plan the work and properly supervise any assistants.
(b) determine and apply appropriate materiality levels.
(c) identify and assess risks of material misstatement, whether due to error or fraud.
(d) obtain sufficient appropriate audit evidence.

Question 7

What are the Auditor’s responsibility?

Answer 7

• Comply with relevant ethical standards
• maintain professional skepticism and exercising professional judgement throughout planning and performance of the audit.
• Appropriate competence and capabilities to perform the audit.

Question 8

For an entity who uses Other Comprehensive Basis of Accounting (OCBOA), financials are fairly presented if?

Answer 8

• Preparation and the fair presentation of the financial statements which requires identification and description of the applicable financial reporting framework.

Question 9

Can we express an opinion on a single financial statement?

Answer 9

An independent auditor may express an opinion on a single financial statement as a separate engagement that is not in conjunction with the audit of the entity’s complete financial statements.