Unit 1

Question 1

An engagement performed by an auditor or consultant to enhance the reliability of the subject matter.

Answer 1

Assurance engegment

Question 2

1. Reasonable Assurance
2. Limited Assurance
3. No Assurance

Answer 2

Levels of Assurance

Question 3

Assurance that provides HIGH but not absolute assurance on the relliability of the subject matter.
Most time-consumiing, high cost

Answer 3

Reasonable Assurance

Question 4

The level of assurance obtained where engagement risk is reduced to an acceptable level and the evidence gathered is at least sufficent for the practitioner to conclude and provide a level of assurance that is likely to enhance the intended users’confidence about the F/S

Answer 4

Limited Assurance

Question 5

Level of assurance = High
Report = Independent Auditor’s Report

Answer 5

Audit Engagement

Question 5

What results when a practitioner completes a set of tasks requested by the client and reports factually in the results of that work to the client

Answer 5

No Assurance

Question 6

Level of assurance = Limited
Report = Independent Practitioner’s Review Report

Answer 6

Review Engagement

Question 7

Level of assurance = No
Report = Compilation Engagement Report

Answer 7

Compilation Engagement

Question 8

1. Unmodified/Unqualified Opinion
2. Qualified Opinion
3. Adverse Opinion
4. Disclaimer of Opinion

Answer 8

Different Audit Opinion

Question 9

Also known as clean opinion ; the auditor concludes that the financial statements are fairly presented. Also a common opinion

Answer 9

Unmodified/Unqualified Opinion

Question 10

An “expect for” opinion provided where there is a material scope limitation or a material (significant) misstatement but not pervasive to the overall financial statements. Occurs Occasionally

Answer 10

Qualified Opinion

Question 11

Opinion provided when the auditor concludes that there is a pervasive material mistatement in the financial statement.
Very Serious

Answer 11

Adversive Opinion

Question 12

Opinion provided when the impact of a scope of limitation is so extreme that an auditor is unable to obtain sufficient appropriate evidence to base an opinion.
Very Serious

Answer 12

Disclaimer of Opinion

Question 13

What results when an auditor issues an unmodified audit opinion where there is a significant issue that is adequatley disclosed and there is a need to draw the attention of the users to it in the audit report.

Answer 13

Unmodified Opinion with emphasis of matter included

Question 14

Audit Expectation Gap

Answer 14

The audit expectation gap occurs when there is a difference between the expectations of assurance providers and financial statement or other users. The gap occurs when the users beliefs do not align with what an auditor has actually done.