Question

Chapter 1: INTRODUCTION AND OVERVIEW OF AUDIT AND ASSURANCE 7) In Canada, publicly traded companies are a) required to have audits. b) strongly encouraged to have audits. c) not required to have an audit if they have a review. d) not required to have an audit. primary difference between internal and external auditors The 8) What is the primary difference between intern a) level of competence required. b) parties to whom the auditor is responsible. c) type of audit that is being completed d) all of the above inancial statement audit? 9) Which of the following best describes the purpose of a financial stateme a) To provide an opinion on whether the company is run effectively b) To assist management with the preparation of the vear-end financial staten c) To assess whether the financial statements are fairly presented in accordance all material respects d) To provide shareholders with a guarantee that there are no errors in the financial statements are fairly presented in accordance with IFRS, in rors in the financial 10) Performance audits are generally performed by internal auditors or government auditors. The primary purpose of an operational audit is to provide: a) To aid the independent auditors with the financial statement audit b) To assess whether the company's processes are efficient and effective -) To review operational management to ensure they are complying with company policies ) To ensure that individuals are completing their tax returns properly extbook Homework Assignment to be ready for Day 2 Self-Test Questions (page 1-31): #1.1 to 1.5 Review Questions (page 1-31): #1.3 & #1.4 rofessional Application Questions (page 1-32): #1.1 & 1.2

Answer 1

Q.1. An audit engagement provides.

A.1. Option d. Reasonable Assurance.

The audit engagement provides the reasonable assurance that the organisation's financial statements are free from material misstatements and are fairly presented based upon the applicable generally acepted accounting principles.

Q.2. A Compilation engagement provides which type of assurance.

A.2. Option b. no assurance.

Compilation audit involves verification of the compilation of financial statements an therefore doesnot provide any assurance. It considers only whther the financial statements appear in appropriatein form and free from misstatements.

Q.3. An audit report is generally addressed to the

A.3. Option a.Shareholders

The Auditors are appointed by the owners of the company i.e., the shareholders and their report should be addressed to the shareholders of the company.

Q.4. During an audit, which of the following is false with regard to materiality

A.4. Option b. If an auditor finds accounting errors thtat are not material,they don not need to track them.

If auitor finds an error during the audit, whether material or not, the auditor should track the errors. They might be not material as a single item but when consolidated such errors it migt effect the financial statements.

Q.5. Which of the following engagements would include audit procedures such as confirmatons and inspections ?

A.5. Option c.Audit Engagement.

Review engagement procedures involves the procedures consisting the inquiries of company personnel and analytical procedures and the accountant does not gather any evidence. The compilation audit procedures involves whther the managent prepared financial statements by following all the applicable principles and regulations which are required to be complied with. Only in audit engagement the auditor gather external and internal evidences to give an opinion on the true and fair view of the financial statements.

Q.7. In canada, Publicly traded companies are

A.7. Option c. not required to have audits if they have a review.

Q.8. What is primary difference between iinternal and external auditors?

A.8. Option d. All of the above

Q.9. Which of the following best describes the purpose of a financial statement audit ?

A.9. Option c. To assess whether the financial statements are fairly presented in accordance with IFRS, in all material aspects.

The financial statements audit gives assurance that the managent prepared financial statements by following all the applicable principles and regulations which are required to be complied with.

Q.10. Performance audits are generally performed by internal auditors (or) government auditors. The primary purpose of an operational audit is to provide.

A.10. Option b. To assess whether the company's processes are efficient and effective.

The performance audit is generally performaned to identify the areas whether the resources are not utilised effectively and the problems facing by the organisation to achieve the 100% performance.