Assurance-Based vs Direct Reporting Engagements Quiz
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Questions and Answers

In an assurance-based engagement, what is one of the elements according to the 3SECC framework?

  • Compliance with the Code of Ethics for Professional Accountants
  • Effective internal control system
  • Consistent application of the applicable financial reporting framework
  • Three-party relationship (correct)

    • What is a general principle of a financial statement audit according to the text?

  • Comply with the Code of Ethics for Professional Accountants
  • Maintain an attitude of professional skepticism (correct)
  • All financial data are verifiable
  • Audit benefits the public

    • According to the theoretical framework of auditing, what does the consistent application of the applicable financial reporting framework result in?

  • Reduction in fraud and error
  • Long term conflict between auditor and client management
  • Fair presentation of the financial statements (correct)
  • Verifiability of all financial data

    • What does the auditor need to obtain in an audit, as per the general principles mentioned in the text?

    <p>Professional judgment</p> Signup and view all the answers

    What is a benefit of an effective internal control system in auditing?

    <p>Reduction in fraud and error</p> Signup and view all the answers

    What are the inherent limitations of audit related to?

    <p>Management's representation or assertion</p> Signup and view all the answers

    What is the threshold for total assets or total liabilities that would require an entity to submit audited financial statements as a non-stock corporation?

    <p>$600,000 or more</p> Signup and view all the answers

    What type of opinion would be given if financial statements contain material misstatements?

    <p>Adverse</p> Signup and view all the answers

    What are the factors to consider when deciding whether to send a separate engagement letter to a component?

    <p>Degree of independence of the component’s management from the parent entity</p> Signup and view all the answers

    What are the considerations in accepting an audit?

    <p>The use by management of an acceptable financial reporting framework in the preparation of the financial statement</p> Signup and view all the answers

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