into to audit service

Question 1

advantages of audit/ assurance engagements?

Answer 1

1 it increase the credibility of F/S
2auditor identifies the deficiencies in internal control
3 it confirms management is performing its statutory and bon statutory duties
4it assists in sale and purchase of business
5 it assists in grant of loan by bank

Question 2

what is audit engagement?

Answer 2

it is the engagement in which practioner obtains the evidence to evaluate the subject matter to enhance the confidence of its users and express its opinion

Question 3

elements of audit engagement?

Answer 3

1 three party relationship
2 a subject matter
3 a suitable criteria
4 evidence
5 written audit report

Question 4

2 levels of assurance

Answer 4

1 limited assrance
2 reasonable assurance

Question 5

what is limited assurance

Answer 5

it the assurance in conclusion is drawn in negative form of opinion

Question 6

reasonable assurance?

Answer 6

it the assurance in which opinion is expressed in positive form

Question 7

why limited assurance can not be provided?

Answer 7

due to inherent limitation
1 Nature of financial statements
2 nature of audit procedures
a) management may not provide complete information
b) auditor doesn’t have legal powers
c)fraud involving collusion, senior management, complex techniques
3 time and cost limitation
4 always inherent limitation in client’s internal control
5 company s staff may not be available
6 many audit procedures are based on judgment which may be faulty