Chapter 1 Flashcards

1
Q

T or F
assurance engagements require independence on the part of the auditor

A

T

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

T or F
Assurance refers to the responsible party’s satisfaction as to the reliability of an assertion being made by one party for use by another party

A

F(Assurance refers to the practitioner’s satisfaction)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

The degree of satisfaction achieved(the level of assurance which may be provided) is directly related to the scope of procedures performed by their results.
T or F

A

T

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Assurance services are ________ contracts.

A

3 party

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Users of financial statements

A

investors
creditors
government
customers
employees

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

why investors, creditors, government, customers and employees needs financial statements?

A

*To know whether to buy, hold, or sell shares of a company
*To approve loans applies for by a debtor or borrower
* to amend or retain the taxation rules and regulations currently in force
* whether to continue doing business with the company, or to find another supplier
* whether to demand a salary increase; whether to stay with the company, or to go looking for another job

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Elements of assurance engagement:

A
  • A 3 party relationship involving a practitioner (CPA), a responsible party and intended users
  • An appropriate subject matter
  • Suitable criteria
  • Sufficient appropriate evidence
  • A written assurance report in the form appropriate to a reasonable assurance engagement or a limited assurance engagement.

3SECC para masaulo

  • All of this elements must be present in an engagement for the engagement to be classified as an assurance engagement
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

3 separate parties involve in assurance engagement

A

practitioner (auditor)
responsible party
intended users

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

who’s responsible for the subject matter or the subject matter information in an assurance engagement

May or may not be the party who engages the practitioner (the engaging party)

Provides the practitioner with a written representation that evaluates or measures the subject matter against the identified criteria, whether or not it is to be made available as an assertion to the intended users

A

responsible party

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Who are the person, persons or class of persons whom the practitioner prepares the assurance report?

A

Intended users

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Assurance engagements performed by CPAs are intended to enhance the ______ about a subject matter by evaluating whether the subject matter conforms in all material respects with suitable criteria.

A

credibility of information

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Criteria are the benchmarks used to evaluate or measure the subject matter including, where relevant, benchmarks for presentation and disclosure.
Required for reasonably consistent evaluation or measurement of a subject matter within the context of professional judgment.
The evaluation or measurement of a subject matter merely on the basis of the practitioner’s own expectations, judgments and individual experience would not constitute suitable criteria.

A

Suitable Criteria

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Criteria are the _______ used to evaluate or measure the subject matter including, where relevant, benchmarks for presentation and disclosure.

A

benchmarks

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Applicable criteria for: Audit on internal control

A

Established internal control framework or individual control objectives specifically designed for the engagement COS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Applicable criteria for: compliance audits

A

applicable law, regulation or contract

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Characteristics of suitable criteria

A

Relevance
Completeness
Reliability
Neutrality
Understandability

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

_________ are those embodied in laws or regulations, or issued by authorized or recognized bodies of experts that follow a transparent due process.

A

Established criteria

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

__________ are those designed for the purpose of the engagement.

A

Specifically developed criteria

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

The ability in recognizing that circumstances may exist that cause the subject matter information to be materially misstated.
The professional makes a critical assessment, with a questioning mind, of the validity of evidence obtained and is alert to evidence that contradicts or brings into question the reliability of documents or representations by the responsible party.

A

Professional Skepticism

19
Q

Attitude of being alert to:
Evidence that is inconsistent with other evidence obtained;
Information that calls into question the reliability of documents and responses to inquiries to be used as evidence;
Circumstances that suggest the need for procedures in addition to those required by relevant Assurance Standards; and
Conditions that may indicate likely misstatement

A

Professional Skepticism

20
Q

Evidence is more reliable when obtained from ________sources.

A

independent

21
Q

Evidence generated internally is more reliable when controls are _______.

A

effective

22
Q

Evidence ________ by practitioner is more reliable than evidence obtained indirectly or by inference.

A

obtained directly

23
Q

Evidence is more reliable when it exists in _________form, whether paper, electronic, or other media

A

documentary

24
Q

Evidence provided by ________ is more reliable than evidence provided by photocopies or facsimiles.

A

original documents

25
Q

Risk that the practitioner expresses an inappropriate conclusion when the subject matter information is materially misstated.
The more extensive the evidence gathering procedures, the lower the chances of an inappropriate conclusion.

A

Assurance Engagement Risk

26
Q

The objective is the reduction in assurance engagement risk to an acceptably low level in the circumstances of the engagement as the basis for a positive form of expression of the practitioner’s conclusion.

A

Reasonable Assurance Engagement

27
Q

The objective is the reduction in assurance engagement risk to a level that is acceptable in the circumstances of the engagement, but where that risk is greater than for a reasonable assurance engagement, as the basis for a negative form of expression of the practitioner’s conclusion.

A

Limited Assurance Engagement

28
Q

Form used in a reasonable assurance engagement.
Form used in a limited assurance engagement.

A

positive
negative

29
Q

Styles of Reporting

A

Short-form
Ordinarily include the basic elements
Long-form
Include other information and explanations that are not intended to affect the practitioner’s conclusion.

30
Q

The measurer or evaluator, who is not the practitioner, measures or evaluates the underlying subject matter against the criteria, the outcome of which is the subject matter information.
The role of the practitioner is to obtain sufficient appropriate evidence in order to express a conclusion about whether the subject matter information is free from material misstatement.

A

Attestation Engagement

31
Q

The practitioner either directly performs the evaluation or measurement of the subject matter against the criteria and presents the resulting subject matter information as part of , or accompanying the assurance report.

A

Direct Engagement

32
Q

An engagement in which a practitioner is engaged to issue, or does issue, a written communication that expresses a conclusion about the reliability of a written assertion that is the responsibility of another party

A

Attestation Engagements

33
Q

Attestation Engagements
Provides a reasonable level of assurance that the subject matter is free of material misstatement

A

Independent Audit Engagement

34
Q

Attestation Engagements
Involves a limited investigation of much narrower scope than an audit and undertaken for the purpose of providing limited assurance that the subject matter is presented in accordance with identified suitable criteria.

A

Review Engagement

35
Q

Provides assurance about whether financial and non-financial information being reported from the entity’s performance measurement system is reliable and whether the performance measures are being used are accurately leading the entity toward meeting its strategic goals and objectives.

A

Business Performance Measurement

36
Q

Involves the evaluation of the quality of health care, medical services and outcome. It looks into the health care delivery system, the medical services provided and quality attributes associated with those services

A

Health Care Performance Measurement

37
Q

Evaluation designed to provide assurance to the elderly and their relatives about the quality of care being provided by various care givers by comparing their specific objectives in providing care with actual services rendered.

A

Elder Care Plus

38
Q

Identifies a set of risks that affect the organization. Studies also the link between risks and organization’s vision, mission, objectives and strategies and development of new and relevant measures to address these risks

A

Risk Assessment Services

39
Q

is a seal of assurance service developed jointly by AICPA and CICA. Enables consumers and businesses to purchase goods and services over the Internet with the confidence that the Web site business meet the high standards of business practice as set forth in the CPA WebTrust Principles and Criteria

A

CPA Web Trust

40
Q

Involves evaluating whether financial and non-financial information systems provide reliable information for operating and financial decisions by an entity’s management.

A

Information Systems Reliability

41
Q

Auditor is engaged to carry out only agreed procedures. Recipients of the report must form their own conclusions

A

Non-Assurance Services
Agreed-upon procedures

42
Q

Accountant uses accounting expertise to classify and summarize financial information. No assurance is expressed

A

Non-Assurance Services
Compilation of Financial or Other Information

43
Q

such as preparation of tax returns where no conclusion is expressed, and tax consulting

A

Non-Assurance Services
Some tax services

44
Q

Refers to helping organizations improve their performance, primarily through the thorough analysis of existing business problems and development of plans for improvement.

A

Non-Assurance Services
Management consulting and other advisory services