If the Auditor's Assessment of Audit Risk Is Low (E

question 77

Multiple Choice

If the auditor's assessment of audit risk is low (e.g., 1% rather than 5%) , what is the effect on the amount of direct testing performed by the auditor?

• A) Increase in direct testing.
• B) Decrease in direct testing
• C) No change in direct testing.
• D) Direct testing is not needed.

Recognize the factors influencing a private company's decision to report under IFRS in Canada.

Distinguish between the financial reporting choices available to private enterprises in Canada.

Understand the assumptions underlying accounting principles such as the Historical Cost Principle.

Comprehend the definition and classification of different entities (public, private) under Canadian GAAP and their reporting requirements.

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Definitions:

Date of Acquisition

The specific date on which control of assets and liabilities transfers from one entity to another in a business combination.

Investment

An investment refers to an asset or item acquired with the goal of generating income or appreciation in value over time.

Impaired

Refers to assets that are recognized at a value higher than their recoverable amount, leading to an impairment loss that must be recorded.

Impairment Losses

Financial accounting losses recognized when the carrying amount of an asset exceeds its recoverable amount, indicating the asset has suffered a decline in value.