Quality Control Procedures Quiz

Which of the following is not a fundamental principle of the ACCA Code of Ethics and Conduct?

• Confidentiality

• Independence

• Objectivity

• Professional behavior

Tallva & Co is the external auditor of Huntley Co. Huntley Co is planning to implement a new sales system. The board has asked Tallva & Co to evaluate several possible systems, advise on which system to choose, and oversee the implementation of the new system. If the project is accepted by Tallva & Co, which of the following threats may arise?

• Advocacy threat

• Familiarity threat

• Self-review threat

• Intimidation threat

Helena & Co has been invited to audit two separate companies: 1. Titania Co, a listed company, requires the audit firm to prepare financial statements as well as conduct the audit. 2. Puck Co, the finance director of an unlisted company, is the brother of one of the audit firm's partners. How should Helena & Co respond to these invitations?

• Accept both companies

• Reject both companies

• Accept Titania Co with safeguards and reject Puck Co

• Accept Puck Co with safeguards and reject Titania Co

Which of the following statements correctly expresses the auditor's obligation to maintain confidentiality regarding information obtained during professional activities with a client?

• The auditor should disclose the client's confidential information only with the consent of the board of directors.

• The auditor must provide any client information requested by a shareholder at the annual general meeting.

• The auditor should never disclose the client's confidential information unless necessary to understand a modified audit opinion.

• If there is a legal right or obligation, the auditor may disclose certain confidential information of the client.

Which of the following two statements about professional ethics codes is correct? 1. The professional ethics code is a set of ethical rules that professional accountants must consider in any situation. 2. The professional ethics code allows the professional accountant to apply fundamental ethical principles to a specific situation. 3. The professional ethics code encourages professional accountants to think beyond mere compliance with the law. 4. Compliance with the professional ethics code is a legal requirement for professional accountants.

• 1 and 2

• 1 and 3

• 2 and 3

• 3 and 4

Which of the following is not identified as a separate category of threats to compliance with the fundamental principles in the ACCA Code of Ethics and Conduct?

• Management threat

• Intimidation threat

• Familiarity threat

• Advocacy threat

Damson Co is an audit manager. He is negotiating for the position of finance director with Damson Co. What threat does this pose to independence?

• Advocacy threat

• Intimidation threat

• Self-interest threat

• Self-review threat

In which of the following situations is the auditor required to obtain the client's consent to disclose confidential information to a third party? 1. The client is involved in tax evasion. 2. The client's credit supervisor has stolen cash through 'collecting and loading'.

• Only 1

• Only 2

• 1 and 2

• Neither answer

According to the UK Corporate Governance Code, which statement regarding the composition of the audit committee is correct?

• All directors must be executive.

• All directors must be non-executive.

• Some directors may be executive if three are non-executive.

• All non-executive staff must have recent and relevant financial experience.

Which of the following does not fall under the principles of corporate governance?

• Shareholder rights

• Board responsibilities

• Auditor's accountability and remuneration

• Risk management and internal control