auditting - QUESTION 1 Explain the relationships among...

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QUESTION 1 Explain the relationships among audit services and assurance services, and give examples of each. Audit services are a form of attestation service in which the auditor expresses a written conclusion about the degree of correspondence between information and established criteria. The most common form of audit service is an audit of historical financial statements, in which the auditor expresses a conclusion as to whether the financial statements are presented in conformity with generally accepted accounting principles. An assurance service is an independent professional service to improve the quality of information for decision makers. There are many possible forms of assurance services, including services related to business performance measurement, health care performance, and information system reliability. QUESTION 2
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Discuss the major factors in today’s society that have made the need for independent audits much greater than it was 50 years ago. An independent audit is a means of satisfying the need for reliable information on the part of decision makers. Factors of a complex society which contribute to this need are: 1. Remoteness of information Owners (stockholders) divorced from management Directors not involved in day-to-day operations or decisions Dispersion of the business among numerous geographic locations and complex corporate structures 2. Biases and motives of provider Information will be biased in favor of the provider when his or her goals are inconsistent with the decision maker's goals 3. Voluminous data Possibly millions of transactions processed daily via sophisticated computerized systems Multiple product lines Multiple transaction locations 4. Complex exchange transactions New and changing business relationships lead to innovative accounting and reporting problems Potential impact of transactions not quantifiable, leading to increased disclosures QUESTION 3
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Distinguish among the following three risks: risk-free interest rate, business risk, and information risk. Which one(s) does the auditor reduce by performing an audit? i. Risk-free interest rate This is approximately the rate the bank could earn by investing in U.S. treasury notes for the same length of time as the business loan. ii.
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auditting - QUESTION 1 Explain the relationships among...

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