Chapter 1 - Audit regulatory and framework

"Based on our review, nothing has come to our attention that causes us to believe that the accompanying financial statements do not present fairly, in all material respects … in accordance with International Financial Reporting Standards.”

Which of the following BEST describes the type of assurance provided by this statement?

• Positive assurance expressed negatively

• Negative assurance expressed positively

• High level of assurance expressed negatively

• Limited level of assurance expressed negatively

The level of assurance given by an assurance engagement will depend on the type of engagement. What level of assurance would normally be given to an audit of financial statements?

• Absolute

• Reasonable

• Limited

• Zero

Which of the following is the most appropriate definition of the external audit?

• The external audit is an exercise carried out by auditors in order to give an opinion on whether the financial statements of a company are materially misstated.

• The external audit is an exercise carried out in order to give an opinion on the effectiveness of a company's internal control system.

• The external audit is an exercise carried out in order to give an opinion on the effectiveness of a company's internal control system.

• The external audit provides negative assurance on the truth and fairness of a company's financial statements

Is the following statement regarding stewardship true or false? 

"Directors are stewards of the investment made by shareholders in a company"

• True

• False

1.       Which two of the following are elements of an assurance engagement?

(1) A three-party relationship

(2) report

(3) Determination of materiality

(4) An engagement letter

• (1) and (2) only 

• (1) and (3) only 

• (2) and (3) only 

• (1) and (4) only

The person who has responsible for subject matters is

• Intended user

• Responsible party

• Practitioner

• Auditor

Which body has responsible for issuing ISAs?

• IASB

• IAASB

• IESBA

• IASC

Which of the following is limitation of the provision of audit engagement

• Unqualified staff may be used on audit engagements.

• Sampling is used in assurance work.

• Audit work is carried out by people independent of the entity.

• The level of assurance provided by an external audit is reasonable assurance but not absolute assurance.

Which one of the following statements best describes the evidence obtained and the opinion given in a reasonable assurance engagement?

• Sufficient appropriate evidence and a negatively worded opinion

• Sufficient appropriate evidence and a positively worded opinion

• A lower level of evidence and a negatively worded opinion

• A lower level of evidence and a positively worded opinion

Which of the following statements is TRUE regarding assurance: (1) Auditors are required to express an opinion as to whether the financial statements give a true and fair view; (2) An audit is a type of reasonable assurance engagement.

• Both statements are true

• Both statements are false

• Statement 1 is false

• Statement 2 is false