SOLUTIONS MANUAL to accompany MODERN AUDITING & ASSURANCE SERVICES
SOLUTIONS MANUAL
to accompany
MODERN AUDITING &
ASSURANCE SERVICES
3rd edition
Prepared by
Philomena Leung, Paul Coram and Barry Cooper
© John Wiley & Sons Australia, Ltd 2007
Chapter 1
Auditing, assurance and the public accounting profession
Review questions
1.1 How does an expanded role of professional accountants affect the accounting profession?
The expanded role of professional accountants has affected the accounting profession, in that new opportunities have been created for the profession to extend the range of services it offers to business organisations and the public. With the enhancements of technology, global transactions and competition between accountancy firms, professional accountants now provide various consultancy engagements to maintain their competitive advantage. The expanded role of professional accountants has resulted in accountants carrying out tasks which may include risks, management, personnel, consulting, investment, controls and investigation.
Following recent significant corporate collapses and their relationship to auditors and accountants discharging their responsibilities, there have been spate of regulatory and profession reforms that are designed to restore confidence to both the public and the profession. The concept of audit independence is being examined critically in respect of its relevance and contribution to the public interest. The impact of the expanded role include:
Increased public scrutiny of the fees payable to and the independence of auditors;
Increased opportunities for auditors and accountants to be involved in the management of businesses, with the increasing risks to independence.
Increased government regulations and professional regulations regarding the tasks performed, quality control and scope of auditors’ work.
Increased acceptance of the importance of auditor independence.
1.2 What role does ASIC have in the regulation of
to accompany
MODERN AUDITING &
ASSURANCE SERVICES
3rd edition
Prepared by
Philomena Leung, Paul Coram and Barry Cooper
© John Wiley & Sons Australia, Ltd 2007
Chapter 1
Auditing, assurance and the public accounting profession
Review questions
1.1 How does an expanded role of professional accountants affect the accounting profession?
The expanded role of professional accountants has affected the accounting profession, in that new opportunities have been created for the profession to extend the range of services it offers to business organisations and the public. With the enhancements of technology, global transactions and competition between accountancy firms, professional accountants now provide various consultancy engagements to maintain their competitive advantage. The expanded role of professional accountants has resulted in accountants carrying out tasks which may include risks, management, personnel, consulting, investment, controls and investigation.
Following recent significant corporate collapses and their relationship to auditors and accountants discharging their responsibilities, there have been spate of regulatory and profession reforms that are designed to restore confidence to both the public and the profession. The concept of audit independence is being examined critically in respect of its relevance and contribution to the public interest. The impact of the expanded role include:
Increased public scrutiny of the fees payable to and the independence of auditors;
Increased opportunities for auditors and accountants to be involved in the management of businesses, with the increasing risks to independence.
Increased government regulations and professional regulations regarding the tasks performed, quality control and scope of auditors’ work.
Increased acceptance of the importance of auditor independence.
1.2 What role does ASIC have in the regulation of