Solution to Auditing and Assurance Service: 1,12,B, 3
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SOLUTIONS FOR REVIEW CHECKPOINTS
1.1 Business risk is the collective risk faced by a company that engages in business. It encompasses all threats to and organization’s goals and objectives. It includes the chance that customers will buy from competitors, that product lines will become obsolete, that taxes will increase, that government contracts will be lost, or that employees will go on strike.
1.2 The conditions of complexity, remoteness, time-sensitivity, and consequences increase demands by outside users for relevant, reliable (useful) information. They cannot produce the information for themselves because of these conditions. Company managers and accountants produce the information.
1.3 Information risk, in contrast to…show more content… Professional Services. Virtually all work performed by CPAs is defined as “professional services” as long as it involves some element of judgment based in education and experience.
Improving the Quality of Information or its Context. The emphasis is on “information”-- CPAs’ traditional stock in trade. CPAs can enhance quality by assuring users about the reliability and relevance of information, and these two features are closely related to the familiar credibility-lending products of attestation and audit services. “Context” is relevance in a different light. For assurance services, improving the context of information refers to improving its usefulness when targeted to particular decision makers in the surroundings of particular decision problems.
For Decision Makers. They are the “consumers” for assurance services, and they personify the consumer focus of new and different professional work. They may or may not be the “client” that pays the fee, and they may or may not be one of the parties to an assertion or other information. The decision makers are the beneficiaries of the assurance services.
1.9 Accountants record, classify, and summarize (report) a company’s assets, liabilities, capital, revenue, and expense in financial statements. Auditors gather evidence related to the assertions management makes in financial statements and render a report. Accountants produce the financial statements; auditors audit them.