Tute 1 Solutions

Tute 1 Solutions - Tutorial 1(Chapters 1 and 2 1.14(i NO...

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Tutorial 1 (Chapters 1 and 2) 1.14 (i) NO. Identifying new risks that arise from a changing business environment is a separate service and is NOT an assurance service. As a separate engagement this does not have the characteristics of an assurance engagement. There is no three-party relationship, nor is it clear that there are suitable criteria. It should be noted that in accordance with ASA 315/ISA 315, this would be one of the steps in an audit of a financial report. (ii) YES. There is a three party relationship, with suitable underlying subject matter and appropriate criteria. Checking compliance with legislative requirements is a compliance engagement. (iii) NO. Assisting management to achieve goals and objectives is NOT an assurance service. There is no three party relationship and it is not clear that there are suitable criteria. Such assistance would be a consulting activity. (iv) NO. Assisting in establishing and training internal control teams is NOT an assurance engagement. There is no three party relationship, no underlying subject matter and it is not clear that there are suitable criteria. Such assistance would be a consulting activity. (v) NO. Carrying out procedures as directed by the client is NOT an assurance engagement. The client, not the auditor is determining what evidence needs to be gathered by indicating which locations to attend and what to do at those locations. This would be an agreed-upon-procedures engagement. (vi) NO. Providing advice on accounting policies and accounting standards is NOT an assurance engagement. There is no three party relationship, nor is it clear that there are suitable criteria. Such assistance would be a consulting activity. (vii) YES. A financial report audit is an assurance engagement. 1.22 It is unreasonable for Daisy to expect absolute assurance from an audit. This is due to the inherent limitations of the audit process, such as the need to apply professional judgment in determining the nature, timing and scope of tests, the use of sampling
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