fdgs
SOLUTIONS
Chapter 1: Assurance and auditing: an overview
Review questions
1.1 (a) C Audit is one level of assurance that can be offered. Under the assurance framework, assurance can be at two levels: reasonable (sometimes referred to as audit) and limited (sometimes referred to as review). (b) D For the objectives of the assurance engagement, both A and B may be considered suitable criteria.
1.2 (a) B Systematic process refers to audits being properly planned and structured, following a logical sequence. (b) B Representing their client in matters identified by regulators is not a fundamental principle underlying an audit.
1.3 (a) C Timeliness is not an attribute identified in the Framework for the Preparation and Presentation of Financial Statements. (b) C Management is responsible for the preparation of the financial report, including disclosures made in the accompanying notes.
1.4 (a) A One of the major incentives for audit is to correct potential biases in reporting by management. (b) D The aim of undertaking an assurance engagement is to increase the level of assurance for users of the engagement.
1.5 (a) B Auditors currently use a business risk approach that requires the auditor to understand items that affect the business and may flow through into the financial report. (b) D Auditors initially followed a statement of financial position approach then changed to transactions cycle approach then changed to a financial risk approach before finally adopting a business risk approach.
1.6 (a) C As following Australian auditing standards is mandatory for auditors, it is reasonable for users to believe that auditors have done so. (b) A The expectation gap has been attributed to a number of different causes, including misunderstanding of the audit function by non-auditors.
1.7 (a) B The auditor is expected to comply with the requirements contained in the ASAs in all but rare and exceptional circumstances, and GSs provide guidance
Chapter 1: Assurance and auditing: an overview
Review questions
1.1 (a) C Audit is one level of assurance that can be offered. Under the assurance framework, assurance can be at two levels: reasonable (sometimes referred to as audit) and limited (sometimes referred to as review). (b) D For the objectives of the assurance engagement, both A and B may be considered suitable criteria.
1.2 (a) B Systematic process refers to audits being properly planned and structured, following a logical sequence. (b) B Representing their client in matters identified by regulators is not a fundamental principle underlying an audit.
1.3 (a) C Timeliness is not an attribute identified in the Framework for the Preparation and Presentation of Financial Statements. (b) C Management is responsible for the preparation of the financial report, including disclosures made in the accompanying notes.
1.4 (a) A One of the major incentives for audit is to correct potential biases in reporting by management. (b) D The aim of undertaking an assurance engagement is to increase the level of assurance for users of the engagement.
1.5 (a) B Auditors currently use a business risk approach that requires the auditor to understand items that affect the business and may flow through into the financial report. (b) D Auditors initially followed a statement of financial position approach then changed to transactions cycle approach then changed to a financial risk approach before finally adopting a business risk approach.
1.6 (a) C As following Australian auditing standards is mandatory for auditors, it is reasonable for users to believe that auditors have done so. (b) A The expectation gap has been attributed to a number of different causes, including misunderstanding of the audit function by non-auditors.
1.7 (a) B The auditor is expected to comply with the requirements contained in the ASAs in all but rare and exceptional circumstances, and GSs provide guidance