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Kaplan’s tips for June 2014 F8 (int) include this phrase “expectation gap”. Which topic in the syllabus cover this? What’s the expectation gap? What does it relate to. Furthermore, their tips have:
Audit Evidence: Purchases; payroll; inventory, review engagements
I understand the first three of the above, she could test on the various assertions of purchases, payroll and inventory but what is this “review engagements”? Does it relate to positive, negative assurance?
Thanks,
Gabriel
Expectations gap is the difference between what the public think auditors do (eg 100% testing, guarantee no fraud, preparation of the financial statements) and what is actually accomplished in an audit.
Review engagement is examining FS but with less work than an audit. Smaller companies might be exempt audit but want some sort of independent assurance about their FS. It provides negative assurance.
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