Exam 1: Introduction and Review of Audit and Assurance

The following can be said about an emphasis of matter:

Ming Yao reviewed the operations of a basketball academy. His objectives were to determine how effectively the academy delivered its many programs. What kind of an audit Did he perform?

Michael Stiller performed work for a client in the real estate business and issued a Notice to Reader. What degree of assurance does a Notice to Reader provide to the user of the Statements?

A no assurance engagement is of little use as no assurance is given to the client.

In a review engagement, which of the following is least likely to occur during the engagement?

Under the Canada Business Corporations Act, the auditor has a responsibility to form an opinion on the company's

When conducting an audit, an auditor should use

Which of the following is not true in relation to comparability?

An example of the three parties in an assurance engagement would be:

It is the auditor's responsibility to prepare the financial statements.

In addition to the preparation of financial statements, it is also the responsibility of those charged with governance to

The audit expectation gap is the difference in the expectations of the

Which of the following groups would be considered users of the financial statements?

An unqualified opinion is also known as a(n)

A financial statement auditor is required to audit all of the following, except

An auditor can provide a reasonable level of assurance on information other than historical financial information.

Vince Deroy owns Val D'Or Vineyards, a successful winery in the Thousand Islands region. Annual sales are $3,500,000 and he has a $1,200,000 loan with a local bank. Sales are split between wine sales (88%) and wine tasting and catering (12%). Vince has excellent personal relationships with his suppliers and has been provided with special contractual terms which allow him delays of up to 120 days to make invoice payments. These arrangements run out this year and he will have 30 days to pay after being invoiced. The bank has made the $1,200,000 loan to Val D'Or Vineyards based on an understanding that the company will undergo audits of its financial statements. Vince is an astute entrepreneur and has set up an advisory board which consists of his bank manager, another wine grower in the region, his old high school ethics instructor and track coach, himself, and his accountant. The board has discussed certain issues including the following: • The need for assurance service providers to audit his financial statements so that users can be provided with assurance that his statements are relevant and reliable. • Non-audit services that would provide advice on special projects he may be considering in the future. • A proper accounting firm to conduct an audit mandate. Required: a) What is the objective of a financial statement audit and how does it relate to Val D'Or Vineyards? b) Vince Deroy's financial statements must be relevant and reliable. What do these two terms mean in the context of this case? c) What three characteristics should Val D'Or Vineyards' auditors possess when conducting an audit? Explain them briefly. d) What are non-audit services? Can you describe possible non-audit services that Val D'Or Vineyards might employ?

An engagement performed by an auditor or consultant to enhance the reliability of the subject matter can best be described as a(n)

Martha Minnati was reviewing the previous year's audited financial statements of a clothing manufacturer. Her manager explained to her that for a financial statement audit, the clothing company was the accountable party, its shareholders were the users, and the subject matter was the financial statements. What kind of audit engagement was her manager describing?

Which of the following is not a type of opinion?