Revision session 01

Introduction to assurance
Chapter 01
Question 01

Answer (B)
Question 02
Benefits of an audit – statutory audit
• It improves the quality and reliability of information, giving investors faith in
and improving the reputation of the market.
• Independent scrutiny and verification may be valuable to management.
• It may reduce the risk of management bias, fraud and error by acting as a
deterrent.
• It may detect bias, fraud and error.
• It enhances the credibility of the financial statements.
• Deficiencies in the internal control systems may be detected.
Question 03
Two types of assurance engagements
1. A reasonable assurance engagement such as an audit:
• Gathers sufficient appropriate evidence to be able to draw reasonable
conclusion.
• Gives a positively worded assurance opinion.
• Gives a high level of assurance.
2. A limited assurance engagement such as the examination of a cash flow
forecast:
• Gathers sufficient appropriate evidence to be able to draw limited
conclusions.
• Gives a negatively worded assurance opinion.
• Gives a moderate / lower level of assurance than an audit.
Question 04
Question 05
1. Reasonable assurance
2. Limited assurance 3. Limited assurance 4. Limited assurance
5. No opinion 6. Limited assurance 7. Limited assurance
Question 06
Question 07