Concept Of And Need For Assurance

Question 1

What is an assurance engagement?

Answer 1

A PRACTITIONER expressing a conclusion enhancing the degree of confidence the INTENDED USERS other than the RESPONSIBLE PARTY have about a subject against CRITERIA.

Question 2

Key elements of assurance

Answer 2

1. 3 party involvement
2. Subject matter
3. Suitable criteria
4. Evidence
5. Written report

Question 3

3 party involvement

Answer 3

1. Practitioner
2. Intended user
3. Responsible party

Question 4

Evidence should be

Answer 4

Sufficient and appropriate

Question 5

Written report will have a …

Answer 5

Conclusion or opinion

Question 6

The 2 main levels of assurance

Answer 6

1. Limited assurance
2. Reasonable assurance

Question 7

Reasonable assurance level of assurance

Answer 7

High but not absolute

Question 8

Limited assurance: conclusion expressed how?

Answer 8

Negatively

Question 9

Reasonable assurance: conclusion expressed how?

Answer 9

Positively

Question 10

Limited assurance e.g.

Answer 10

Engagement to review interim accounts

Question 11

Reasonable assurance e.g.

Answer 11

FS audit

Question 12

Assurance engagement some examples

Answer 12

Statutory audit
Fraud investigation
Due diligence
Internal controls assessment
Business plan/project reviews
Environmental audits

Question 13

Audits governed by what regulations?

Answer 13

1. CA 06
2. International standards on auditing (ISAs)

Question 14

ISA (UK) 200: what are the auditor’s 2 overall objectives?

Answer 14

1. Reasonable assurance FINANCIAL STATEMENTS free from material misstatement
2. Opinion FS prepared within applicable financial reporting FRAMEWORK

Question 15

Professional judgement

Answer 15

Relevant training, knowledge and experience

Question 16

CA06 exemptions for statutory audit

Answer 16

2 criteria
This and last financial year
(Beginning on or after 1/1/16)

1. Employees: Av. 50 or less
2. Assets: Less than £5.1m
3. Turnover: Less than £10.2m

Question 17

2 things an auditor must be to audit a particular company

Answer 17

1. Member of recognised supervisory body (RSB)
2. Not ineligible

Question 18

RSB requirements

Answer 18

Must have rules about auditors:

1. Appropriate QUALIFICATION
2. Part of firm controlled by QUALIFIED PERSONS

Question 19

CA06 the factor making an auditor ineligible

Answer 19

1. Officer
2. Employee
3. Or Partner

Of the company

Question 20

Does the auditor verify the accuracy of the financial statements?

Answer 20

No

Question 21

Is a company guaranteed to continue the trade for the foreseeable future if a true and fair opinion is issued?

Answer 21

No

Question 22

Does the SFP show the true value of the company?

Answer 22

No