Audit and assurance

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

• Related party transactions must be completely disclosed in the financial statement

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

• There maybe a significant control risk in relation to related party transaction

• Disclosure of related transaction is unlikely to be material to the financial statements

Which TWO of the following statements regarding the test of controls is true?

• Tests of control are designed to detect material misstatement in the financial statements

• When the auditor believes controls are operating effectively,...

• Tests of control are used to collect audit evidence about effectiveness of the internal control

• Tests of control must be included in auditing financial statements of all clients

Auditors obtain evidence using procedures set out in ISA (UK) 500, Audit Evidence. When auditing the financial statements of Blue Ltd, the auditor is present while a sales order is being processed to test if the controls are carried out. Which ONE of the following procedures is being used?

• Inspection

• Observation

• Inquiry

• Re-performance

The auditor of Blue Co has concluded that the use of the going concern assumption is appropriate and that the material uncertainty has been adequately disclosed. What is the impact of this conclusion on the auditor’s report?

• Qualified opinion

• Adverse opinion

• Unmodified opinion without an emphasis of matter paragraph

• Unmodified opinion with an emphasis of matter paragraph

ISA 705 Modification to the opinion in the independent auditor’s report identified three possible types of modification, in which of the following circumstances would a disclaimer of opinion be issued?

• The auditor has not been able to obtain sufficient appropriate audit evidence on which to base an opinion...

• The auditor concludes that the financial statements include misstatements which are both material and...

• The auditor concludes that the financial statements include misstatements which are material but not pe...

• The auditor has not been able to obtain sufficient appropriate audit evidence on which to base an opinion...

Which ONE of the following best describes the concept of assurance?

• An assurance firm’s high level of satisfaction as to the reliability of an assertion being made by one party for the use of another party

• A user’s satisfaction as to the reliability of an assertion being made by another party

• An assurance firm’s satisfaction as to the reliability of an assertion being made by one party for the use of another party

• An assurance firm’s limited level of satisfaction as to the reliability of an assertion being made by one party for the use of another party

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 THREE of the following are benefits of an assurance report on financial information?

• An assurance report enhances the credibility of the information being reported on

• An assurance report reduces the risk of management bias in the information being reported on

• An assurance report draws the attention of the user to deficiencies in the information being reported on

• An assurance report attests to the correctness of the information being reported on

Which ONE of the following statements is true?

• A negative assurance conclusions gives a reasonable level of assurance

• Reasonable assurance is absolute assurance of the correctness of the subject matter

• A positive assurance conclusions gives a limited level of assurance

• A statutory audit gives reasonable assurance that the financial statements give a true and fair view

Which TWO of the following are benefits of an engagement letter in respect of assurance services?

• Facilitate review of work

• Ensure that the audit is properly organized and managed

• Defines the extent of the assurance provider’s responsibilities

• Provides written confirmation of the acceptance of the engagement