Exam 1: Introduction and Overview of Audit and Assurance

The purpose of audit services is to provide ________.

Briefly describe the focus of each of the following professional engagements:

Below is a sample of the auditor's responsibility section of a standard audit report for Gawronski's Hockey Manufacturing Company, a private company.There are two errors in this report.Describe the errors. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audits.We conducted our audits in accordance with generally accepted accounting principles.Those standards require that we plan and perform the audit to obtain absolute assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control.Accordingly, we express no such opinion.An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Any group that will be using the financial statements to make decisions, such as investors and creditors, is known as ________.

A financial statement user's expectations are only impacted by legislation.

The audit expectation gap is caused by user expectations such as: The auditor will catch all instances of fraud.

_______ relates to the application of relevant training, knowledge, and experience that auditors use while making informed audit decisions in conducting an audit.

What type of audit involves gathering evidence to determine whether the person or entity under review has followed the rules?

In an unqualified audit report on the financial statements of a public company, what does the first statement of the opinion paragraph state?

What services are defined as independent professional services that improve the quality of information, or its context, for decision makers?

A key similarity between assurance, attestation, and auditing services is ________.

The set of standards used in preparing the historical financial statements, such as GAAP or IFRS, is referred to as ________.

The audit expectation gap is narrowed by realistic user expectations such as that the auditor ________.

You are a staff auditor at Broman, LLP.You have been assigned to an audit engagement with a new intern.The intern mentions the client stated, "he was glad the auditors were there to guarantee the future success of the business so that his lousy banker would get off his back".You explain that the audit firm does not guarantee anything.Explain the audit expectation gap to the intern and provide several ways that the audit expectation gap can be reduced.

Within a U.S.context, the applicable financial reporting framework is typically Generally Accepted Accounting Principles (GAAP).

The limitations of an audit are NOT caused by ________.

In an attestation engagement, what is a CPA is engaged to provide?

In an audit report on the effectiveness of ICFR for a public company, report _______ indicates that the firm is registered with the PCAOB.

What type of audit provides an opinion by the auditor about whether the financial statements are presented fairly in accordance with an applicable financial reporting framework?

Briefly describe the similarities between assurance, attestation, and audit services.