a. Answer the following questions in your words (DO NOT copy verbatim from the text reference)
- Differentiate assurance from non-assurance engagements. (4 pts.)
- Research on one of the Big Four global accounting firms. Classify the services it offers according to the following categories, where applicable (15 pts):
- Assurance services
- Non-assurance services
- Related services
3. Discuss the objective, key features, and general principles relative to financial statement auditing (10 pts.)
4. Describe the role of the various stakeholders in a financial statement audit (6 pts.)
Reference:
10:49 - fo ... Introduction-to-Aud..AuditEngagements - Saved Consideration of internal control involves obtaining understanding of the entity's control systems and assessing the level of control risk - that is, the risk that the client's internal control may not prevent or detect material misstatements in the financial statements. If the auditor wants to assess control risk at less than high level, sufficient evidence must be obtained to prove that the internal control is functioning effectively and that it can be relied upon. This evidence can be obtained by performing tests of controls. Performing Substantive Tests Using the information obtained in audit planning and consideration of internal control, the auditor performs substantive tests to determine whether the entity's financial statements are presented fairly accordance with financial reporting standards. These procedures would involve examination of the documents and evidence supporting the amounts and disclosures in the financial statements. The extent of the substantive tests is highly dependent on the results of the auditor's consideration of internal control. If based on the evaluation of internal control, the auditor has obtained evidence that the internal control is functioning effectively, the scopoe of the auditor's substantive tests can be reduced. On the other hand, if the results of tests of control prove that the internal control is weak, the auditor will have to compensate for this weakness by performing more extensive substantive procedures. Completing the Audit The auditor must have sufficient appropriate evidence in order to reach a conclusion on the fairness of the financial statements. After the auditor has completed testing the account balances, the auditor performs additional audit procedures to complete the audit and become satisfied that the evidence gathered is consistent with the auditor's report. These procedures include review of subsequent events and contingencies, assessing the going concern assumption, performing overall analytical review procedures, and obtaining written representations from the client's management. Issuing a Report Based on the evidence gathered and evaluated, the auditor forms a conclusion about the financial statements. This conclusion (in the form of opinion) is communicated to various interested users through an audit report. General Principles Governing a Financial Statement Audit The procedures required to conduct an audit in accordance with PSAs should be determined by the auditor having regard to the requirements of PSAs, relevant professional bodies, legislations, regulations, and where appropriate, the terms of the engagement and the reporting requirements. PSA 200 provides the following guidelines when auditing financial statements: 1. The auditor must comply with the Code of Ethics for CPAs promulgated by the Board of Accountancy (BOA). In order to retain public confidence in the credibility of the auditor's work, auditors must adhere to standards of ethical conduct that embody and demonstrate integrity. objectivity, and concern for the public rather than self-interest. O
