Quiz about Kiểm toán và Đảm bảo

Question 1

Which TWO of the following are true in respect of related party transactions?

Accepted Answer

Related party transactions must be completely disclosed in the financial statements

Accepted Answer

There may be a significant control risk in relation to related party transactions

Answer

Related party transactions tend to be low-risk to the auditor

Answer

Disclosure of related party transactions is unlikely to be material to the financial statements

Question 2

In the following case, select whether inherent is higher or lower than normal: The company operates in a slow - moving, stable industry

Accepted Answer

Inherent risk lower than normal

Answer

Inherent risk higher than normal

Question 3

In each of the following case, select whether inherent risk is higher or lower than normal: Financial statements contain balances with straightforward Financial Accounting requirements

Accepted Answer

Inherent risk lower than normal

Answer

Inherent risk higher than normal

Question 4

In the following case, select whether inherent is higher or lower than normal: The company has recently listed on the local stock exchange with high profit expectations from analysts.

Accepted Answer

Inherent risk higher than normal

Answer

Inherent risk lower than normal

Question 5

For the following statements, select whether they are true or false in respect of the concept of materiality.

Accepted Answer

True

Answer

False

Question 6

In each of the following case, select whether inherent risk is higher or lower than normal: The business of the company is cash - based

Accepted Answer

Inherent risk higher than normal

Answer

Inherent risk lower than normal

Question 7

Audit risk can be a split into three components: inherent risk; control risk and detection risk. For each of the following examples, select the types of risk illustrated: The organisation is seeking to raise finance for a new venture

Accepted Answer

Inherent

Answer

Control

Answer

Detection

Question 8

Audit risk can be split into three components: inherent risk, control risk and detection risk. For the following example, select the types of risk illustrated: The organisation operates in a fast - moving, high tech environment

Accepted Answer

Inherent risk

Answer

Control risk

Answer

Detection risk

Question 9

Which two of the following would be used in understanding the entity in accordance with ISA 315?

Accepted Answer

Industry, regulatory and other external factors

Accepted Answer

A preliminary review of internal controls

Answer

The results of tests of details

Answer

The results of a review events after the date of the financial statements

Question 10

Which three of the following would increase inherent risk

Accepted Answer

A significant number of balances are based on estimates

Accepted Answer

The financial statements include complex transactions

Accepted Answer

A company is seeking to raise Finance

Answer

Sample size have been calculated incorrectly by the auditor and are too small

Answer

Audit staff are inexperienced

Question 11

In the following case, select whether inherent is higher or lower than normal: Inventory is largest balance on the statement of financial position

Accepted Answer

Inherent risk higher than normal

Answer

Inherent risk lower than normal

Question 12

ABC Ltd's quick ratio has fallen from 1.8:1 to 1.5:1. Which ONE of the following might help to explain this decline?

Accepted Answer

The entity has purchased a property for cash

Answer

The allowance for receivables has been reduced

Answer

Credit control has been poor

Answer

Inventory levels have fallen

Question 13

For each of the following situations select the most appropriate approach which should be used by the assurance firm in the given circumstances: The auditor of a client where controls have been assessed as strong

Accepted Answer

A mix of test of controls and substantive procedures

Answer

Test of controls only

Answer

Substantive procedures only

Question 14

Which of the following procedures are TESTS OF CONTROL an auditor should perform in testing the inventory cycle of their client whilst attending the inventory count?

Accepted Answer

Observe whether the client's staff are following the inventory count instructions

Accepted Answer

Inspect and review management's inventory count instructions

Answer

Review inventory present in the warehouse for evidence of damage or obsolescence

Answer

Obtain a sample of the last goods received notes and goods despatched notes and follow through to ensure inclusion in the correct accounting period

Question 15

Which TWO of the following are assertions used by the auditor about account balances at the period end?

Accepted Answer

Existence

Accepted Answer

Completeness

Answer

Accuracy

Answer

Cut-off

Question 16

One of the control objectives of the sales system of ABC Co is to ensure that goods and services are sold to credit-worthy customers. Which of the following control activities would assist ABC Co in achieving this objective?

Accepted Answer

Credit limits are checked before sales orders are accepted.

Answer

All sales orders are based on authorised price lists.

Answer

Overdue debts are chased each month by the credit controller.

Answer

The aged-debt listing is reviewed by the finance director on a monthly basis

Question 17

The level of assurance given by an assurance engagement will depend on the type of engagement. For each of the following examples, select the level of assurance you would expect to be given: Statutory audit

Accepted Answer

Reasonable

Answer

Absolute

Answer

Limited

Question 18

Which ONE of the following is NOT a test that could be used by assurance providers to provide evidence relating to a balance in the financial statement?

Accepted Answer

Walk-through test

Answer

Test of control

Answer

Test of detail

Answer

Analytical procedure

Question 19

Which THREE of the following statements are valid?

Accepted Answer

Positive assurance will be given on a statutory audit assignment

Accepted Answer

Positive assurance requires more rigorous work to be undertaken than negative assurance does

Accepted Answer

Negative assurance is assurance given in the absence of any indications to the contrary

Answer

Positive assurance will be given on a review assignment

Question 20

The draft financial statements of ABC Co show the following information:

Revenue 840

Cost of sales 540

Gross profit 300

Trade receivables 360

Trade payables 260

What is the receivables collection period?

Accepted Answer

175 days

Answer

156 days

Answer

758 days

Answer

958 days

Question 21

Which THREE of the following are assertions used by the auditor about classes of transactions?

Accepted Answer

Occurrence

Accepted Answer

Completeness

Accepted Answer

Cut-off

Answer

Existence

Answer

Rights and obligations

Question 22

Which of the following controls of a sales system ensure that all goods despatched are completely and accurately invoiced?

Accepted Answer

Good despatched notes are matched to sales invoices

Answer

Sales invoices are sequentially numbered

Answer

Sales invoices are matched to customer orders

Question 23

Two types of procedures used in gathering evidence are test of controls and substantive procedures. For each of the following examples select the type of procedure illustrated: Calculation of the gross profit margin and comparison with that of the previous accounting period

Accepted Answer

Substantive procedure

Answer

Test of controls

Question 24

For each of the following statements select whether they are true of false in respect of substantive procedures. Substantive procedures include both analytical procedures and test of details

Accepted Answer

True

Answer

False

Question 25

ISA 315 Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment sets out the five components of internal control. Which of the following is NOT set out as a component of internal control within ISA 315?

Accepted Answer

Human resource policies and practices

Answer

Control environment

Answer

The information system relevant to financial reporting

Question 26

For each of the following statements select whether they are true of false in respect of substantive procedures. The auditor must carry out substantive procedures on all material items

Accepted Answer

True

Answer

False

Question 27

Which TWO of the following describe manifestations of the expectations gap

Accepted Answer

Users blaming the auditors for a fraud discovered in a company subsequent to an audit

Answer

Users discovering that the directors refuse to cooperate in providing the auditor with the evidence he requests

Answer

Shareholders approving the appointment of the auditor at an annual general meeting

Answer

Users relying on the audited financial statements as a fair valuation of the company

Question 28

Which TWO of the following are valid comments about the quality of assurance evidence?

Accepted Answer

Evidence from external sources is more reliable than evidence obtained from the entity's records

Accepted Answer

Evidence from internal sources is more reliable when related internal controls operate effectively

Answer

Evidence from internal sources is more reliable than evidence created by the assurance provider

Answer

Photocopies are more reliable than facsimiles

Question 29

Which TWO of the following are assertions used by the auditor about presentation and disclosure?

Accepted Answer

Accuracy

Accepted Answer

Completeness

Answer

Allocation

Answer

Cut-off

Question 30

The following are types of test that might be carried out by an assurance provider. For each example select the financial statement assertion that is being tested: Tracing non- current assets which have been observed in use back to the non- current asset register

Accepted Answer

Completeness

Answer

Existence

Answer

Classification

Question 31

Two types of procedures used in gathering evidence are test of controls and substantive procedures. For each of the following examples select the type of procedure illustrated: Observation of opening the post

Accepted Answer

Test of control

Answer

Substantive procedure

Question 32

Which of the following methods of recording an accounting and controls system is a series of questions used to determine whether controls exist which meet specific control objectives?

Accepted Answer

Internal control questionnaire

Answer

Narrative

Answer

Flowchart

Question 33

For each of the following statements select whether they are true of false in respect of substantive procedures. The auditor only carry out substantive procedures if the results of test of controls are inconclusive

Accepted Answer

False

Answer

True

Question 34

Which of the following is not a test of control?

Accepted Answer

Agreement of the cost of non-current asset additions to purchase documentation

Answer

Inspection of purchase order documentation to confirm that it has been authorised

Answer

Review of monthly bank reconciliations performed by the audit client

Answer

Examination of purchase invoices for evidence of mathematical accuracy checks

Question 35

For each of the following situations select the most appropriate approach which should be used by the assurance firm in the given circumstances: The auditor of a client where controls have been assessed as deficient.

Accepted Answer

Substantive procedures only

Answer

Test of controls only

Answer

A mix of test of controls and substantive procedures

Question 36

An effective internal control system provides the auditor with absolute assurance that control objectives have been achieved

Accepted Answer

False

Answer

True

Question 37

The level of assurance given by an assurance engagement will depend on the type of engagement. For each of the following examples, select the level of assurance you would expect to be given: Report on prospective financial information

Accepted Answer

Limited

Answer

Absolute

Answer

Reasonable

Question 38

Which of the following controls helps to ensure that payroll payments are only made to bona fide employees?

Accepted Answer

Personnel records maintained for all employees

Accepted Answer

Segregation of duties between staff involved in human resources and payroll functions

Answer

Comparison of bank transfer listing with payroll

Answer

Reperformance of the calculation of a sample of payroll deductions

Question 39

Which of the following is NOT an inherent limitation of internal control systems?

Accepted Answer

Insufficient segregation of duties

Answer

Possibility that employees may collude together fraudulently

Answer

Possibility of human error in undertaking tasks

Question 40

The following are types of test that might be carried out by an assurance provider. For each example select the financial statement assertion that is being tested: Review of the financial statements using a Companies Act checklist

Accepted Answer

Classification

Answer

Existence

Answer

Completeness

Question 41

Two types of procedures used in gathering evidence are test of controls and substantive procedures. For each of the following examples select the type of procedure illustrated: Reviewing invoices paid for evidence of authorisation

Accepted Answer

Test of control

Answer

Substantive procedure

Question 42

The level of assurance given by an assurance engagement will depend on the type of engagement. For each of the following examples, select the level of assurance you would expect to be given: Report on review of interim financial information

Accepted Answer

Limited

Answer

Absolute

Answer

Reasonable

Question 43

Which TWO of the following are authorisation control activities?

Accepted Answer

A bank reconciliation signed by the finance director

Accepted Answer

A cheque payment run approved by the finance director

Answer

An appraisal of the sales ledger clerk by the finance director

Answer

A trial balance complied by the finance director

Question 44

The following are examples of computer controls which operate in the payroll system at ABC Ltd. For example, select the type of computer control which it illustrates: Password protection limiting access to data

Accepted Answer

General

Answer

Application

Question 45

For each of the following statements, select whether they are true or false in respect of the information system in a company. The information system includes the process of preparing the financial statements, such as the production of journals

Accepted Answer

True

Answer

False

Question 46

For each of the following statements select whether they are true or false in respect of business risk: Business risk is of no relevance to the auditor. The auditor is only concerned with audit risk

Accepted Answer

False

Answer

True

Question 47

Which one of the following would be the simplest way of recording a straightforward system not subject to a great deal of change annually?

Accepted Answer

Narrative notes

Answer

Flowchart

Answer

Questionnaire

Answer

Family tree

Question 48

Which TWO of the following represent inherent limitations of a system of internal control?

Accepted Answer

Lack of understanding of the purposes of controls

Accepted Answer

The possibility that staff members will collude in fraud

Answer

Lack of controls over the purchases system

Answer

Lack of staff to ensure segregation of duties

Question 49

The following are examples of internal controls which operate at ABC plc. For each example, select the type of control activity which it illustrates: The financial controller counts petty cash on a monthly basis

Accepted Answer

Physical control

Answer

Authorisation

Answer

Information processing

Question 50

For each of the following statements, select whether they are true or false in respect of the information system in a company. The information system companies only the IT system in a company

Accepted Answer

False

Answer

True

Question 51

The following are examples of computer controls which operate in the payroll system at ABC Ltd. For example, select the type of computer control which it illustrates: Manual checks to ensure that timesheets are authorised before details are processed

Accepted Answer

Application

Answer

General

Question 52

Which ONE of the following is not part of an entity's risk assessment process?

Accepted Answer

Report the process to the auditors

Answer

Identify relevant business risks

Answer

Estimate the impact of risks

Answer

Assess the likelihood of occurrence

Answer

Decide upon actions to manage the risks

Question 53

With regards to internal control systems in small entities, select whether each of the following statements is true or false: Smaller companies are more likely to be successful in the implementation of segregation of duties controls

Accepted Answer

False

Answer

True

Question 54

One of the five elements of internal controls is monitoring of controls. Which TWO of the following are activities which would be used to monitor controls?

Accepted Answer

Management's review of whether bank reconciliations are being prepared on a timely basis

Accepted Answer

Internal auditor's evaluation of whether the sales team are following company policy regarding customer discounts

Answer

Authorisation of purchase invoices before they are paid

Answer

Authorisation of purchase orders by the department manager

Question 55

The following are examples of internal controls which operate at XYZ plc. For each example, select the type of control activity which it illustrates: The controller reconciles the receivables ledger to the receivables control account monthly

Accepted Answer

Information processing

Answer

Performance review

Answer

Segregation of duties

Question 56

The following are examples of internal controls which operate at ABC Ltd. For example, select the type of control activity which it illustrates: The financial accountant signs the bank reconciliation, which has been prepared by a member of his staff.

Accepted Answer

Authorisation

Answer

Performance review

Question 57

Which ONE of the following is NOT a general control?

Accepted Answer

Procedures for resubmission of rejected data

Answer

Disaster recovery procedures

Answer

Back-up copies of programs stored at an alternative safe location

Answer

Staff training in the use of new/revised programs

Question 58

In each of the following three cases, select whether control risk is higher or lower than normal: Purchase invoices are not authorised prior to payment

Accepted Answer

Control risk is higher than normal

Answer

Control risk is lower than normal

Question 59

In each of the following three cases, select whether control risk is higher or lower than normal: The company has an established and well-resourced internal audit function

Accepted Answer

Control risk is lower than normal

Answer

Control risk is higher than normal

Question 60

An audit committee is a committee with responsibility for audit related matters. Which ONE of the following should be members of an audit committee?

Accepted Answer

Non-executive directors only

Answer

Executive directors only

Answer

Non-executive directors and internal auditors

Answer

Non-executive directors and external auditors

Question 61

Most entities make use of IT systems for financial reporting and operational purposes. Controls operating in an IT environment can be split into general controls and application controls. Which ONE of the following is an application control?

Accepted Answer

Cyclical reviews of all master files

Answer

Training staff in new IT procedures

Answer

Taking back-up copies of programs

Answer

Maintenance agreements over IT equipment

Question 62

In each of the following three cases, select whether control risk is higher or lower than normal: Entry to the inventory storeroom is only for authorised personnel

Accepted Answer

Control risk is lower than normal

Answer

Control risk is higher than normal

Question 63

The following are examples of internal controls which operate at ABC plc. For example, select the type of control activity which it illustrates: The financial controller reconciles the payables ledger to the payables ledger control account on a monthly basis

Accepted Answer

Information processing

Answer

Performance review

Question 64

Which TWO of the following will reduce password effectiveness as a means of restricting access to a computer system?

Accepted Answer

User selection of passwords

Accepted Answer

Displaying the password on screen

Answer

Frequent changes of passwords

Answer

Automatic disconnection after failed attempts to access system

Answer

Disciplinary offence if passwords revealed

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