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Auditing and Assurance C11

The document provides review questions and answers about auditing accounting estimates, fair value measurements, the role of internal auditing in an external audit, and differences between internal and external audit functions. It also includes fill-in-the-blank questions about topics like the use of experts, audit programs, components, and maintaining professional competence.

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Paulo Timothy Aguila
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34 views3 pages

Auditing and Assurance C11

The document provides review questions and answers about auditing accounting estimates, fair value measurements, the role of internal auditing in an external audit, and differences between internal and external audit functions. It also includes fill-in-the-blank questions about topics like the use of experts, audit programs, components, and maintaining professional competence.

Uploaded by

Paulo Timothy Aguila
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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AGUILA, PAULO TIMOTHY

III – BSA

AUDITING AND ASSURANCE – CHAPTER 11

REVIEW QUESTIONS:

6. In the audit of accounting estimate, the auditor adopts these approaches:

• review and test the process used by management to develop the estimate,

• use an independent estimate for comparison with that prepared by


management, or

• review subsequent events which confirm the estimate made.

7. •The auditor should obtain sufficient appropriate evidence that the fair value
measurements and disclosures are in accordance with the entity's identified
financial reporting framework.

•The auditor should obtain an understanding of the entity's process for


determining fair value measurements and disclosures, as well as the relevant
control procedures sufficient to develop an effective audit approach.

•The auditor should assess inherent and control risk related to the fair value
measurements and disclosures in the financial statements, to determine the
nature, timing and extent of the audit procedures.

•The auditor should obtain evidence about management's intent to carry out
specific courses of action, and consider its ability to do so, when relevant to
the fair value measurements and disclosures under its financial reporting
framework.
10. Internal auditing is an independent, objective assurance and consulting activity
designed to add value and improve an organization's operations. It helps an
organization accomplish its objectives by bringing a systematic, disciplined
approach to evaluate and improve the effectiveness of risk management, control,
and governance processes. The main activities in internal audits that an external
auditor may finds useful are:

a. Evaluating the internal controls

b. Evaluating risks

c. Analyzing operations and confirm the effectiveness.

d. Review compliance.

11. The auditor should ascertain that the scope of the expert’s work is adequate for the
purpose of an audit.

• a general outline as to the specific matters that the auditor expects report to
cover.
• the extent of the expert's access to appropriate records and files
 clarification of the expert's relationship with the entity if any,
• confidentiality of the entity's information and
 information regarding the assumptions and methods intended to be used by the
expert and their consistency with those used in prior periods.

13) There are multiple differences between the internal audit and external audit
functions, which are as follows:

• *Internal auditors are company employees, while external auditors work for an
outside audit firm.

• *Internal auditors are hired by the company, while external auditors are
appointed by a shareholder vote.

• *Internal auditors do not have to be CPAs, while a CPA must direct the activities
of the external auditors.

• *Internal auditors are responsible to management, while external auditors are


responsible to the shareholders.
True or False:

1. F
2. T
3. F
4. T
5. F
6. F
7. T
8. T
9. T
10. T

Fill in the blanks

1. Expert
2. Audit Program
3. Accounting Estimate
4. Fair Value
5. Component
6. Internal audit function
7. financial statement audit
8. Audit matters of government interest
9. Management
10. Professional competence expert.

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