FNSACC602 Audit and report on financial systems and records
FNSACC604 Monitor corporate governance activities
Auditors perform audit attestation to enhance the credibility of the financial statements. However, it is quite impossible for the auditors to provide an absolute assurance regarding the subject matter on which they express their opinion.
a) Why is it impossible for an auditor to provide absolute assurance regarding subject matter on which they express their opinion?
b) Explain what type of assurance an auditor should provide in a financial statements audit
You are an audit senior in an accounting firm and you asked the audit partner about the 'audit expectation gap’. The audit partner provided his opinion on the issue as follows: There is a so called 'audit expectation gap', and it is associated with unreasonable expectations of users. They want all fraud found, and a guarantee that the company will continue forever. This is quite unreasonable and not what the audit is designed to do! Perhaps we could do more on these issues, but it would be more work, cost more, and I doubt whether the companies would be prepared to pay anyway. Discuss the views of the audit partner.
A firm provides the following service for its clients:
1. Preparation of a report giving advice to a client on the introduction of a new system of internal controls.
2. A report giving an opinion on a school's responses to a questionnaire required by the auditor-general.
3. Preparation of the company's tax returns.
4. A report to management about the success of a marketing campaign.
5. A report to directors in relation to half-year financial report for a listed company.
6. An audit of a management report into the effectiveness of a company's internal control system.
7. A statement of findings to management in relation to the completeness and accuracy of its purchase ledger balances.
For each of the above identify whether assurance services are being provided, give explanations justify your answer. For each assurance service identify what level of assurance will be provided and what form the opinion will take.