Auditing & Assurance: Review of International Insurance Inc.

This auditing and assurance report provides an analysis of audit committee practices at International Insurance Inc. (III). It begins by defining auditing components and then compares III’s audit committee practices to published best practices based on internal control frameworks from CPA Canada and the Institute of Internal Auditors (IIA). The report assesses specific aspects of III's practices, including established criteria, reflection of reality, objectivity, independence, and competence. It further evaluates potential violations of Canadian Auditing Standards (CAS), particularly concerning advertising practices, fee quotations, and handling of misstatements. The report also examines the quality of audit evidence obtained through various procedures, such as re-performance of payroll calculations, physical examination of equipment, and inquiries of management, categorizing the evidence as high, moderate, or low based on its reliability and relevance.

Running head: AUDITING & ASSURANCE
Auditing & Assurance
Name of Student:
Name of University:
Author’s Note:

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Table of Contents
Answer to Question 1......................................................................................................................2
Answer to Question 2......................................................................................................................2
Answer to Question 3......................................................................................................................4
References........................................................................................................................................6

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Answer to Question 1
Description
of definition
of auditing
components
Specific Aspect of the narrative above that fits the definition
Established
Criteria
The auditor is considered to be having the best practices for the internal
control framework based on the publication by CPA “Canada (Chartered
Professional Accountants Canada) and (IIA) Institute of Internal
Auditors” (Lieberman et al. 2017).
Reflects
Reality
The necessary information such as corporate audit committee charter,
minutes of the board meetings for both audit team and board in the last
two years is agreed with the scope of work of audit committee. This
scope is also depicted with interviews of the individual audit of the
committee members, executive management and audit partner who is
responsible for auditing of financial statement for “International
Insurance Inc.”.
Objective The primary objective is discerned with comparing the III’s audit
committee to adhere to the best practices of audit committees.
Independent As the auditor is an employee of another consulting organization, he is
seen to be independent in nature.
Competent The hired personnel are considered as certified internal auditor.
Answer to Question 2
The “Canadian Auditing Standard (CAS)” considers the responsibilities of the
independent auditors while conducting the audit of the financial statements which are as per the
guidelines prescribed with CAS. It sets out the objectives to the independent auditor and also

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explains the scope and nature of the audit designed for the independent auditors to adhere to
those objectives. This has also evaluated the overall structure of the authority and the scope of
the CAS which takes into account the general responsibilities of the independent auditors which
is compliant to CASs. The CAS was introduced in September 2012 and Paragraph C20A
clarified with the authority of the assurance associated to the related services guidelines are
relevant to the appropriate engagement. The Paragraph C20 is depicted to be effective for the
financial statements generated periods “ending on or after September 1, 2012” (Frascanada.ca.
2018).
As per the given case Jarvis & Co., Chartered Professional Accountants is seen to violate
many rules of the professional conduct. The Rule 217.1 is seen to prohibit advertising in a way
which is false or misleading in nature. In addition to this, Rule 217.1 contravenes professional
good taste and often provides unfavourable reflections on the other Chartered Accountants or
generates unsubstantial statements (Etchell et al. 2018). The CA’s poor performance is evident
with advertising that the accountants deliver superior work. The Rule 214 restricts the firm to
quote a fee before the information is procured before the engagement. In such cases, the firm
guarantees a fixed fee from the client and is not considering the scope of their work (Moroney
and Trotman 2016).
The depictions made in the given situation clearly illustrates that during the inventory test
there had been several incidences of overstatement pertaining to the pricing errors along with the
combination of the errors which were immaterial in nature. Based on “CAS 210 paragraph 6” the
auditor is required to prepare financial statements which are free from material misstatements
due to fraud and error. In addition to this, the section 5110 under CAS 210, requires the
submission of a written agreement along with the limitations in which CAS 210 does not contain
any similar explanatory material (“as per paragraph 23 of CAS 210”) (Favere-Marchesi and
Emby 2017). The violation of the auditing practicing based on CAS 210 paragraph 6 and CAS
210 paragraph 23 is considered to be evident in form of the overstatement due to the errors
pertaining to obsolescence and combination of errors which were considered to be immaterial in
nature. Furthermore, there was no attempt to document the controls or test those controls. This
shows significant areas of violation of other CAS standards (Moroney 2015).

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Answer to Question 3
Audit
Procedure
Assertion Type of audit
evidence
Quality of audit
evidence (high,
moderate, or low) and
WHY
#1
The main assertion is
associated to ensure total
managerial payroll is up to
date. This will confirm the
actual expense incurred is
matched with the estimated
payroll.
Some of the other changes in
the ledger accounts would
include accuracy in “gross
wages, salaries, payroll taxes
and accrued payroll expenses”.
This type of audit
evidence is known as
reperformance.
High- The following
procedure involves
the auditors
independent testing of
clients accounting
procedures which
were originally done
as a part of internal
control system and
entity’s accounting.
This also involves re-
calculation of
performance with
other procedures,
thereby ensuring high
quality of accuracy
and audit evidence.
#2
That assertions based on
sample of equipment listed on
capital asset master files will
confirm that the company is
able to estimate the expected
useful life of the equipment
precisely. Henceforth, the main
ledger account impact will be
observed in “property plant
and equipment”.
The audit evidence is
identified as physical
examination.
Moderate- The
following audit
evidence is considered
to be moderate in
nature as the auditor is
physically verifying
the condition of
equipment listed on
capital asset master
files. Despite of an
overall verification of
the physical
equipment, the impact
of external factors
such as declining
market value of
assets, changes in
technological aspects,
legal or economic
environment of the

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Audit
Procedure
Assertion Type of audit
evidence
Quality of audit
evidence (high,
moderate, or low) and
WHY
operating entity
cannot be determined
along with
considerations for
impairment.
Henceforth, this acts
as a moderate audit
evidence (Deloitte
Nigeria 2018).
#3
The discussion with
management on the payroll
liabilities which might occur in
the prior year’s financial
statements will have a
significant impact on the
payroll provided by the
company along with changes
in liabilities. The ledger
account impact is discerned
with total liabilities.
The following audit
procedure is identified
as inquiries of the
client
Low- This particular
evidence is gathered
by taking either
written or oral
information from the
client in response of
the questions made by
the auditor. The
dependence on such
type of evidence is not
reliable as these are
not conclusive in
nature. Additionally,
the auditor need to
depend on other
procedures for further
analysis on a
particular matter
(In.kpmg.com 2018).

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References
Deloitte Nigeria. (2018). Audit Readiness (4) - Property, Plant and Equipment. [online]
Available at: https://www2.deloitte.com/ng/en/pages/audit/articles/financial-reporting/audit-
readiness-4-property-plant-and-equipment.html [Accessed 6 Feb. 2018].
Etchells, M., Spradbrow, J., Cohen, R., Lin, Y., Armali, C., Lieberman, L., Cserti‐Gazdewich,
C., Pendergrast, J. and Callum, J., 2018. Audit of appropriate use of platelet transfusions:
validation of adjudication criteria. Vox sanguinis, 113(1), pp.40-50.
Favere-Marchesi, M. and Emby, C.E., 2017. The Alumni Effect & Professional Skepticism: An
Experimental Investigation. Accounting Horizons.
Frascanada.ca. (2018). [online] Available at: http://www.frascanada.ca/canadian-auditing-
standards/resources/reference-material/item31008.pdf [Accessed 6 Feb. 2018].
In.kpmg.com. (2018). [online] Available at: http://in.kpmg.com/knowledge_update/Guidance-
Note-Audit.pdf [Accessed 6 Feb. 2018].
Lieberman, L., Lin, Y., Cserti‐Gazdewich, C., Yi, Q.L., Pendergrast, J., Lau, W. and Callum, J.,
2017. Utilization of frozen plasma, cryoprecipitate, and recombinant factor VIIa for children
with hemostatic impairments: An audit of transfusion appropriateness. Pediatric blood & cancer.
Moroney, R. and Trotman, K.T., 2016. Differences in Auditors' Materiality Assessments When
Auditing Financial Statements and Sustainability Reports. Contemporary Accounting Research,
33(2), pp.551-575.
Moroney, R., 2015. Auditing: A Practical Approach. Wiley Global Education.