Chapter Summary 1

  1. What is an audit?
    An audit is an engagement where evidence collection and evaluation are used to assess client information, such as a financial statement, using specific criteria, such as GAAP (generally accepted accounting principles). The results are reported by independent professionals.
  2. Why is there continued demand for audits?
    Audits provide added value to information since they provide independent assurance where the user of the report is remote from the provider, where the provider may be biased, or where data audited are voluminous or complex.
  3. What is the difference between accounting and auditing?
    Accounting involves the actual preparation of underlying records, whereas auditing helps determine whether that recorded information reflects actual economic events.
  4. What are the different types of engagements completed by auditors?
    An audit is an attest engagement, a subset of assurance engagements. For an attest engagement, the client prepares the materials (such as the financial statements), and the auditor provides a written report on them, whereas for an assurance engagement, the auditor may actually prepare the report (such as comments on lottery processes).
  5. What type of work do accountants complete?
    Audits and assurance engagements are conducted by accountants and other professionals. Public accountants (PAs), who audit financial statements as well as conducting these other engagements, can be either CGAs, CMAs, or CAs in Canada. Although some CMAs provide assurance services, most CMAs are financial management professionals. CIAs and internal auditors often do operational audits and help management assess risks. There are also many specialist designations, such as the CISA.
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Chapter Summary 1
The Demand for an Auditing an Assurance Profession