SOLUTIONS MANUAL

to accompany

MODERN AUDITING &

ASSURANCE SERVICES

3rd edition

Prepared by

Philomena Leung, Paul Coram and Barry Cooper

© John Wiley & Sons Australia, Ltd 2007

Chapter 1
Auditing, assurance and the public accounting profession

Review questions

1.1 How does an expanded role of professional accountants affect the accounting profession?

The expanded role of professional accountants has affected the accounting profession, in that new opportunities have been created for the profession to extend the range of services it offers to business organisations and the public. With the enhancements of technology, global transactions and competition between accountancy firms, …show more content…

A performance audit is an audit of all or part of an entity’s or entities’ activities to assess economy and/or efficiency and/or effectiveness. It involves obtaining and evaluating evidence about the efficiency, economy and effectiveness of an entity’s operating activities in relation to specified objectives. This type of audit activity can be undertaken in the private or public sector, by an internal or external auditor, or as an one-off project or an ongoing engagement. Sometimes performance audit may also be referred to as a value-for-money (VFM), operational or management audit. The term ‘performance audit’ is usually applied in the public sector, with some application in the private sector; the other terms are common to both private and public sectors. The Australian National Audit Office (ANAO) defines a performance audit as:
 an independent and systematic examination of an organisation, program or function for the purposes of:
• forming an opinion about:
– whether the organisation, program or function is being managed in an economical, efficient and effective manner; and
– the adequacy of internal procedures for promoting and monitoring economy, efficiency and effectiveness; and
• suggesting ways by which management practices, including procedures for monitoring performance, might be improved.

Comprehensive auditing occurs when an auditor