Module 7 Introduction to Assurance Flashcards

1
Q

What are the key elements of an assurance engagement? CUTER

A
  1. Suitable criteria
  2. An appropriate underlying subject matter
  3. A three party relationship
  4. Sufficient, appropriate evidence
  5. An assurance report
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are the two types of assurances?

A

Reasonable assurance - positive form and concludes that the subject matters are reasonably free from material misstatement, not absolute level of assurance

Limited assurance - Negative form, concludes that there is no evidence that the subject matter is materially misstated

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

What are the two commercial risk for auditors taking on a new client?

A

Financial risk - Risk of financial loss to the firm

Reputational - risk of damage to the firm’s public perception and brand

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

What are the two professional risk for auditors taking on a new client?

A

Ethical - the risk that the firm fails (or is seen to fail) to conduct the engagement in a way that is professional and ethical

Legal - the risk that the firm could face criminal or civil legal proceedings

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

What are the stages of the audit process?

A

1 - Acceptance - (Audit process stages)
2 - Planning - (Audit process stages)
3 - Systems and Controls analysis - (Audit process stages)
4 - Substantive testing - (Audit process stages)
5 - Completion - (Audit process stages)

6 - Risk assessment (ongoing elements)
7 - Engagement and client management (ongoing elements)

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

What is the client acceptance procedure?

A
  • Identify the users and nature
  • Assess the legal and financial stability
  • Assess the integrity of those charged with governance
  • Ability to undertake the assurance engagement
  • Client identification procedures
  • Basis of performance
  • Communicate with previous auditor
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What document includes the terms of engagement for audits?

A

The engagement letter

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

Assurance engagement

A

An engagment in which a practitioner aims to obtain sufficent appropriate evidence in order to express a conclusion.

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