Solutions manual For Auditing: a practical approach 4 th edition by Moroney, Campbell and Hamilton (Complete And Verified Study material) (429pages) LEARNEXAMS

Chapter 1: Introduction and overview of audit and assurance Review questions 1.11 What does ‘assurance’ mean in the financial reporting context? An assurance engagement (or service) is defined as ‘an engagement in which an assurance practitioner expresses a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the outcome of the evaluation or measurement of a subject matter against criteria’ (Framework for Assurance Engagements, para. 8; International Framework for Assurance Engagements, para. 7). In the financial reporting context ‘assurance’ relates to the audit or review of an entity’s financial report. An audit provides reasonable assurance about the true and fair nature of the financial reports, and a review provides limited assurance. The audit contains a positive expression of opinion (e.g. ‘in our opinion the financial reports are in accordance with (the Act) including giving a true and fair view…), while the review contains a negative expression of opinion (e.g., ‘we have not become aware of any matter that makes us believe that…the financial reports are not in accordance with (the Act)... including giving a true and fair view..’). An auditor may also perform agreed upon procedures for a client, but these do not provide any assurance. The client determines the nature, timing and extent of procedures and no opinion is provided to a third-party user. 1.12 Explain the difference between a financial report audit and an assurance engagement. An assurance engagement is an engagement in which an assurance practitioner expresses a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the outcome of the evaluation or