Solutions Manual For

Solutions Manual For Auditing, Assurance Services and Ethics in Australia 11 th Edition By Alvin Arens, Chris Kandunias, Peter Best, Greg Shailer, Randal Elder, Mark Beasley, Chris Hogan (All Chapters 1-19, 100% Original Verified, A+ Grade)

All Chapters Arranged Reverse:

19-1 This is The Original Solutions Manual For 11 th Edition, All other Files in The Market are Fake/Old/Wrong Edition.Supplement Files Download Link at the end of PDF. 1 / 4

19.13 Describe the phases in performance auditing.

19.14 Understand the role and functions of internal auditors.

19.15 Describe the relationship between internal and external auditors.

19.16 Understand the nature of public sector financial auditing in Australia.

19.17 Describe features peculiar to public sector auditing.

19.18 Understand and describe the basis for assurance engagements for greenhouse gas (or carbon) emissions.

19.19 Understand and describe the multidisciplinary nature of greenhouse gas emission assurance engagements.

19.20 Understand the regulations and assurance standards for greenhouse gas emission assurance engagements.Review Questions 19.1An assurance engagement requires a written conclusion about a written assertion made by another party. The assertions must be: (1) capable of evaluation against reasonable and understandable criteria; and (2) capable of reasonably consistent comparison against those criteria. There are three main categories of

assurance engagements: examinations, reviews and agreed-upon procedures. See

Table 19.1 for a comparison of these types of engagements.An audit is an example of an examination where the criteria are reasonably objective and the independence of the person providing the written conclusion is greater than that required for other assurance engagements. The audit report requires an emphatic expression of opinion (positive assurance), while some assurance engagements allow for negative assurance. The assurance and evidence requirements for an audit are, therefore, high.

19.2The purpose of an engagement of specified components, accounts or items is like that of an ordinary audit, but it is limited only to certain accounts or parts of

the financial statements. Examples include:

the audit of the sales account for a retail store in a shopping centre where sales are the basis for rental payments the audit of royalty payments (such as by publishers or licensed manufactures of patented products) Copyright © 2025 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9780655713449/Arens/Auditing, Assurance Services & Ethics in Australia,11e

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the audit of distributions made under employee profit-sharing schemes debt compliance letters.These reports are usually requested as a contract-monitoring mechanism.Most pertain to the payment of moneys where the basis for payment is agreed but the amount of payment can vary. The recipient is unable to directly observe the conditions (e.g. sales) that determine the amount of the payment. Debt compliance letters are to protect the lender from an increased risk of default.

19.3When assessing materiality in the context of specified components, materiality is defined in terms of the components involved—the component itself forms the basis of determining the materiality assessment. In the case of anormal statutory audit, materiality is determined in relation to the overall financial statements. In other words, the materiality is determined by looking at all of the components contained within a set of financial statements as opposed to the components individually.

19.4An audit report on an entity’s internal control structure may cover all or part of the internal control structure, and it may relate to the structure in effect as of a specified date or during a specified period. This may be done for a regular audit client that wants such a report for its internal use, for meeting the legislated requirements, or for an entity such as an IT service centre for the use of its customers and their auditors.In the audit of financial statements, the auditor obtains an understanding of the internal control structure in accordance with ASA 315. The scope of the auditor’s study depends on the extent to which the auditor plans to reduce the assessed level of control risk for the purpose of determining the nature, timing and extent of related substantive tests. When a reduced control risk is planned, the auditor considers the structure in effect for the entire audit period. Certain areas are not studied if a reduced control risk in those areas is not planned.When the auditor is engaged to report on the internal control structure, all areas of the structure will be included in the study and evaluation, unless specifically excluded by agreement. The time period is also a matter of agreement.

19.5Compilation involves presenting, in the form of financial statements, information that is the representation of management, without undertaking to Copyright © 2025 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9780655713449/Arens/Auditing, Assurance Services & Ethics in Australia,11e

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express any assurance on the statements. Review is performing inquiry and analytical procedures that provide the accountant with a reasonable basis for expressing limited assurance that there are no material modifications that should be made to the statements in order for them to be in conformity with accounting standards.The level of assurance for compilation is extremely low. Reviews provide limited assurance, but considerably less than a typical audit.

19.6The accountant must disclose in the report any omissions or departures from generally accepted accounting principles of which the accountant is aware. This requirement does not apply to a compilation that omits substantially all disclosures.If the auditor becomes aware that the statements are not fairly presented, he or she should obtain additional information. If the client refuses to provide the information, the auditor should withdraw from the compilation engagement.

19.7The following types of procedures are emphasised for review services:

Obtain knowledge of the accounting principles and practices of the client’s industry. The level of knowledge for reviews should be somewhat higher than that for compilation.Obtain knowledge of the client. The information should be about the nature of the client’s business transactions, its accounting records and employees, and the basis, form and content of the financial statements.The level of knowledge should be higher than that for compilation.Make inquiries of management. The objective of these inquiries is to determine whether the financial statements are fairly presented, assuming that management does not intend to deceive the accountant.Inquiry is the most important of the review procedures. The following are

illustrative inquiries:

i.Inquire as to the company’s procedures for recording, classifying and summarising transactions, and disclosing information in the statements.ii.Inquire into actions taken at meetings of the stockholders and the board of directors.iii.Inquire of persons having responsibility for financial and accounting matters whether the financial statements have Copyright © 2025 Pearson Australia (a division of Pearson Australia Group Pty Ltd) – 9780655713449/Arens/Auditing, Assurance Services & Ethics in Australia,11e

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