Reintroduction - Chapter 1 Flashcards

1
Q

what is an assurance engagement?

A

a practitioner expresses a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the outcome of the evaluation of a subject matter against a suitable criteria

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

two types of assurance?

A

reasonable & limited

or high & moderate

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

two types of opinions?

A

positive & negative

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

benefits of assurance?

A
  • enhanced credibility
  • reduced risk of management bias & fraud
  • draws attention to deficiencies
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

who are audits governed by?

A

ISAs

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

ISA200?

A

sets out overall objectives of an auditor when auditing FSs

  • to obtain reasonable assurance
  • to report on FSs & communicate to TCWG
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

what determines who is subject to a statutory audit and what is the threshold?

A

companies act 2006 governs this

to not be subject to an audit, pass 2/3 of the following:
- less than 50 employees
- turnover doesn’t exceed 10.2m
- total assets don’t exceed 5.1m

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

when do subsidiary companies not require an audit?

A

if their liabilities are guaranteed by their parent company

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

do some companies require audits regardless of if they exceed the threshold or not?

A

yes

  • banks
  • PLCs
  • companies where a shareholder with 10% or more equity asks for an audit
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

statutory audit characteristics?

A
  • governed by companies act 2006
  • procedures include inspection, observation, confirmation, analytical procedures, inquiry, reperformance and recalculation
  • reasonable level of assurance
  • express opinion on FSs & other matters
  • conclusion’s publicly available
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

other assurance engagement characteristics?

A
  • governed by ISAEs & ISREs
  • procedures only include APs, inquiry & management written representations
  • less work than an audit
  • limited level of assurance
  • info normally restricted to in-house
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

benefits of an audit include…

A
  • independent scrutiny
  • promotes accounting discipline
  • aids TCWG with more information
  • additional assurance may be required by 3rd parties
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

do auditors need to ensure consistency with director’s report?

A

yes

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