Podcast
Questions and Answers
Which of the following is not a postulate of auditing?
Which of the following is not a postulate of auditing?
- Economic assertions can be verified
- No long-term conflict exists between the auditor and the management of the enterprise under audit
- An audit has a benefit only to the owners (correct)
- The auditor acts exclusively as an auditor
In all cases, audit reports must
In all cases, audit reports must
- Be signed by the individual who performed the audit procedures (correct)
- Certify the accuracy of the quantitative information which was audited
- Communicate the auditor’s findings to the general public
- Inform readers of the degree of correspondence between the quantifiable information and the established criteria (correct)
The auditor communicates the results of his or her work through the medium of the
The auditor communicates the results of his or her work through the medium of the
- Audit report (correct)
- Financial statements
- Management letter
- Engagement letter
As used in auditing, which of the following statements best describes 'assertions'?
As used in auditing, which of the following statements best describes 'assertions'?
The expertise that distinguishes auditors from accountants is in the
The expertise that distinguishes auditors from accountants is in the
The framework for auditing and related services as addressed by PSA excludes
The framework for auditing and related services as addressed by PSA excludes
It refers to the level of auditor’s satisfaction as to the reliability of an assertion being made by one party for use by another party.
It refers to the level of auditor’s satisfaction as to the reliability of an assertion being made by one party for use by another party.
Indicate the level of assurance provided by audit and related services.
Indicate the level of assurance provided by audit and related services.
Which of the following is true of the report based on agreed-upon procedures?
Which of the following is true of the report based on agreed-upon procedures?
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Study Notes
Overview of Auditing
- Fundamental beliefs, known as "postulates," underpin auditing theory.
- Audit reports must communicate the degree of correspondence between quantitative information and established criteria.
- Audit results are conveyed through audit reports.
Assertions in Auditing
- Assertions refer to management's representations regarding the fairness of financial statements.
- They relate to the reliability of information presented in audit processes.
Skills of Auditors
- Auditors differentiate from accountants through their expertise in the accumulation and interpretation of evidence.
- Education requirements for auditors typically exceed a Bachelor’s degree.
Framework of Auditing Services
- The Framework for auditing, as per PSA, excludes tax services but includes reviews and compilations.
- Assurance levels vary across different audit types including audit, review, agreed-upon procedures, and compilation.
Levels of Assurance
- Audits provide high assurance, while reviews provide moderate assurance.
- Agreed-upon procedures offer limited assurance, and compilations provide no assurance.
Agreed-upon Procedures Report
- Reports based on agreed-upon procedures are for specific parties and should not suggest revisions to financial statements unless necessary.
- The CPA’s role in these reports focuses on limited assurance regarding the reasonableness of the assertions provided.
Objectives of Review Engagements
- Review engagements have specific objectives that distinguish them from audits and other assurance services.
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