AUD_QUIZ

Audit procedures may be performed:

• throughout the period being audited with emphasis on the transactions near the end.

• shortly after the close of the period being audited.

• early in the accounting period being audited.

• during all three of the above periods.

Is the following statement regarding key audit matters true or false?

Where the auditor disclaims an opinion on the financial statements, the auditor's report must not include a key audit matters section.

• True

• False

C Co has a substantial bank loan which is due to mature in 20X7, and the company plans to negotiate for a new loan in March 20X7. The auditors concluded that the company's use of the going concern assumption in the financial statements for the year ended 31 December 20X6 is appropriate. However, they believe there is a material uncertainty related to going concern, which has been appropriately disclosed in the financial statements.

What action should the auditor take with regards to going concern in the auditor's report?

• Express an unmodified opinion and describe the material uncertainty in the other matter paragraph

• Express an unmodified opinion and describe the material uncertainty in the material uncertainty related to going concern paragraph

• Express a modified opinion and describe the material uncertainty in the emphasis of matter paragraph

• Express a qualified opinion and describe the material uncertainty in the basis for qualified opinion paragraph

Which of the following is likely to be carried out as part of an engagement quality control review for a listed entity?

(1) Review of audit working paper files to ensure that the audit has been performed in accordance with professional standards and regulatory and legal requirements

(2) Review of selected audit documentation relating to significant audit judgements

(3) Review of the engagement team's evaluation of the firm's independence towards the audit

(4) Consideration of whether appropriate consultations have taken place on differences of opinion/contentious matters

• (1) and (3)

• (2) and (4)

• (1), (2) and (4)

• (2), (3) and (4)

Due to disruptions caused by the recent transition to a new accounting system, one month of H Co's inventory records have been lost. The auditors performing the statutory audit for the twelve- month period have determined that the possible effects of undetected misstatements could be material, but not pervasive.

What form of audit opinion would the auditor give?

• Unmodified opinion with an emphasis of matter paragraph

• Qualified opinion

• Adverse opinion

• Disclaimer of opinion

The statement of financial position of R Co includes a material amount of $200,000 in respect of costs capitalised in the year as development expenditure. The auditor has concluded that these costs are research expenditure.

If the auditor is to issue an unmodified opinion which financial statements will require adjustment?

• Statement of financial position only

• Statement of profit or loss only

• Statement of financial position and statement of profit or loss

• Neither the statement of financial position nor the statement of profit or loss

ISA 700 Forming an Opinion and Reporting on Financial Statements sets out the basic elements of an auditor's report.

Which of the following is not included in an unmodified auditor's report?

• Management's responsibility for the financial statements

• Auditors' responsibilities

• Audit opinion

• Deficiencies of internal controls

Misstatements can arise from error or fraud.

Which of the following statements is correct regarding the auditor's accumulation of identified misstatements?

• The auditor must accumulate all misstatements identified during the audit.

• The auditor must only accumulate individually material misstatements identified during the audit.

• The auditor must accumulate misstatements identified during the audit, other than those that are clearly trivial

1 Is the following statement regarding written representations true or false?

Written representations by management regarding specific assertions in the financial statements provide sufficient appropriate audit evidence in their own right.

• True

• False

M Co has a year end of 31 December 20X4. The auditor has identified that management's assessment of M Co's ability to continue as a going concern covers the period to 30 June 20X5.

What action should the auditor take?

• Request that management extends the assessment period to 30 September 20X5

• Request that management extends the assessment period to 31 December 20X5

• Request that management extends the assessment period to 31 December 20X6

• No action is required provided the auditor is satisfied with management's assessment to 30 June 20X5