Module 7

Question 1

What is an assurance engagement?

Answer 1

practitioner aims to obtain sufficient appropriate evidence to express a conclusion to enhance the degree of confidence of the intended user.

Question 2

What are the key elements of an assurance engagement?

Answer 2

CUTER
criteria
underlying subject matter
three-party relationship 
evidence 
assurance Report

Question 3

What is reasonable assurance?

Answer 3

Practitioner reduces risk to acceptably low level

Opinion expressed in a positive way

Question 4

What is limited assurance

Answer 4

level of risk higher than reasonable assurance

opinion given in the negative form

Question 5

What are the commercial risks due to taking on an assurance engagement?

Answer 5

Financial and Reputational

Question 6

What are the professional risks due to taking on an assurance engagement?

Answer 6

Ethical and Legal

Question 7

What is an acceptance decision?

Answer 7

taking on a new client that a practitioner did not provide assurance services for in the prior year.

Question 8

What forms the acceptance checklist?

Answer 8

who are the users and what is the nature of the engagement
legal and financial stability if the client
integrity of those controlling the company
firm’s ethical and practical ability to complete engagement
client identification procedures
agree the basis for performance

Question 9

What is an audit?

Answer 9

examination of the company’s financial statements by an independent expert that results in an opinion on whether they give a true and fair view to shareholders.

Question 10

what are the elements to the audit process?

Answer 10

during the audit process -
acceptance 
planning
systems controls and analysis 
substantive testing
completion
risk assessment -ongoing
engagement and client management -ongoing

Question 11

What are the procedures for accepting a new audit engagement?

Answer 11

same as assurance engagement but must ALSO communicate with the previous auditor

Question 12

when does the planning stage of an audit occur?

Answer 12

Before year end

Question 13

when does the systems and control stage of an audit occur?

Answer 13

Commonly before year end

Question 14

when does the substantive testing stage of an audit occur?

Answer 14

After year end

Question 15

What is an engagement letter?

Answer 15

Acts as a contract between client and practitioner detailing the terms of the engagement