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

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

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

Defines the extent of the assurance provider’s responsibilities

Provides written confirmation of the acceptance of the engagement

Ensure that the audit is properly organized and managed

Which THREE of the following procedures should be carried out after the audit firm has decided to accept appointment as auditor?

Set up and submit a letter of engagement to the directors of the company

Ensure that a resolution has been passed at the general meeting to appoint the new auditors

Ensure that the outgoing auditors’ removal/ resignation has been properly conducted

Communicate with the predecessor auditors to discover any reasons they should not accept appointment

Audit risk can be split into three components: Inherent risk, control risk and detection risk. For each of the following examples, select one example which illustrated for control risk

Management fails to meet up regularly for board meetings

The organization is seeking to raise finance for a new venture

The auditor will be using samples in testing

Inventory balance is the largest balance in the account

When gaining an understanding of the investment operations of an audit client which ONE of the following matters would an auditor need to consider?

Acquisitions or disposals of the client’s business activities

Products or services and markets of the client's business

Leasing of property, plant or equipment for use in the client's business

Accounting principles and industry specific practices relevant to the client's business

Which ONE of the following correctly describes the period for which client identification documents must be kept under money laundering regulations?

For a minimum of five years and until six years have elapsed since the relationship with the client has ceased

For a minimum of six years and until five years have elapsed since the relationship with the client has ceased

For a minimum of seven years and until five years have elapsed since the relationship with the client has ceased

For a minimum of five years and until five years have elapsed since the relationship with the client has ceased

Which ONE of the following statements is correct with regard to the relationship between the audit plan and the audit strategy for an external audit engagement?

The audit strategy should be established before the audit plan is developed

The audit plan should be developed before the audit strategy is established

The audit plan and the audit strategy should be established and developed at the same time.

The overall audit strategy should be more detailed than the audit plan.

Which TWO of the following statements correctly describe the auditors' responsibilities in accordance with ISA 240 The auditor's responsibilities relating to fraud in an audit of financial statements?

The auditor is responsible for obtaining reasonable assurance that the financial statements are free from material misstatement whether caused by fraud or error

The auditor is not responsible for the prevention and detection of fraud and error

The auditor performs the audit with the aim of deterring fraud

The auditor must only obtain evidence regarding the risks of material misstatement due to error

Grey Ltd’s quick ratio has fallen from 1.9:1 to 1.6:1. Which TWO of the following might help to explain this decline?

The entity has purchased a property for cash

The entity has purchased a batch of inventory for cash

The allowance for receivables has been reduced

The auditor of Blue Co has identified an unexpectedly high deviation rate when carrying out tests of control on a sample of sales invoices. Which TWO of the following would be a satisfactory course of action?

Perform alternative substantive procedure

Ignore the deviations as they only affect some of the items tested

The following are examples of computer controls which operate in the payroll system at Hana Ltd. Which TWO of the following examples are the types of computer control which illustrate application control?

Manual checks to ensure that timesheets are authorized before details are processed

Range check on payroll processing

Approval of new applications by a sample of users and by management

Password protection limiting access to data

Which of the following is not a benefit of establishing an audit committee?

Reduced external audit fees, as the presence of the audit committee reduces audit risk and consequently, the amount of audit procedures required

Greater external audit independence, as the audit committee can be responsible for appointing the external auditors

Monitor and review the effectiveness of the company’s internal audit function.

Reduced opportunity of fraud, as the audit committee can advise the ex

Application controls relate to procedures used to initiate, record, process and report transactions and other financial data. Which two of the following are application controls?

Approval of changes by computer users and management

Which ONE of the following statements is true regarding the audit committee?

Where there is no internal audit function the audit committee should consider the need for one on an annual basis

An audit committee must comprise non-executive directors and executive directors

All companies are required to have an audit committee

The role and responsibilities of the audit committee are set out in statute

Which THREE of the following statements are true in relation to guidance on professional ethics?

It is in the public interest for accountants to follow a professional ethics framework

Rules - based codes offer a more straightforward ethical framework, as they cover specific situations

Principles - based guidance is more flexible than rules - based guidance

Ethical guidance from ICAEW is in the form of rules rather than principles

Which TWO of the following statements are true regarding the two main approaches to a code of professional ethics?

Principles - based guidance may permit multiple correct responses in a given situation

Rules - based codes offer a more straightforward ethical framework, as they cover specific situations

Ethical guidance from ICAEW is in the form of rules rather than principles

A rules-based code requires a professional accountant to identify, evaluate and address threats to compliance with fundamental ethical principles

In respect of conflicts of interest, Which TWO of the following statements are true?

If the effects of a conflict of interest can be mitigated by safeguards these should be recorded

Where a conflict of interest exists between two audit clients, the auditor can consider to cease to act for one party

Where adequate safeguards are available the parties involved do not need to be informed of the conflict of interest

Where a conflict of interest exists between two audit clients, the auditor must cease to act for one party

Callinicos LLP is a 12-partner assurance firm which has been asked to consider taking on the audit of the financial statements of two separate companies. The following potential issues have been identified before acceptance of any such appointments. Which ONE of the following clients must not be accepted?

Cliff plc, a listed company which will also require you to provide routine bookkeeping work

Luxemburg Ltd, which will also require Callinicos LLP to provide a valuation service in relation to some immaterial financial assets

Blue Ltd, which will also require Callinicos LLP to provide a training service in relation to accounting standards

White Ltd, which will also require Callinicos LLP to provide a corporate governance consulting services

ATC & Co is the statutory (quy chế) auditor of Blue Co, a public interest entity. Which of the following services is ATC & Co prohibited from providing to Blue Co under any circumstances?

Preparing accounting records and financial statement

Assistance in the resolution of tax disputes

Which TWO of the following are limitations of the provision of assurance?

Sampling is used in assurance work

Client systems have inherent limitations

Assurance work is carried out by people independent of the entity

Unqualified staff may be used on assurance engagements

When gaining an understanding of the investment operations of an audit client which ONE of the following matters would an auditor need to consider?

Acquisitions or disposals of the client's business activities

Products or services and markets of the client's business

Leasing of property, plant or equipment for use in the client's business

Accounting principles and industry specific practices relevant to the client's business

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

Tests of controls are designed to detect material misstatements in the financial statements

Tests of controls must be used in auditing financial statements of all clients

The auditor may wish to draw the users' attention to a matter which is not presented or disclosed in the financial statements but which is relevant to the users' understanding of the auditor's report. How would this affect the auditor's report?

The audit opinion would be qualified

The auditor's report would not be affected as the auditor's report only refers to matters presented or disclosed in the financial statements

An emphasis of matter paragraph would be included

An other matters paragraph would be included

The auditor of White Co is performing audit procedures to confirm the completeness of recording the motor vehicles. Which ONE of the following would provide the most persuasive evidence of this?

Checking that the motor vehicles are recorded in the non-current asset register

Inspection of vehicle registration documents

Review of vehicle insurance documentation

Physical inspection of the motor vehicles

Which TWO of the following represent weakness of a system of internal controls?

Lack of controls over the purchases system

Lack of staff to ensure segregation of duties

Lack of understanding of the purposes of controls

The possibility that staff members will collude in fraud.

Which THREE of the following should an auditor consider if there is a threat to independence?

Making disclosures to the client

Withdrawing from the engagement

Which TWO of the following are the principal reasons why confidentiality is so important to accountants?

Accountants need their clients to be comfortable to make full disclosure of company affairs to them

It is a fundamental principle of all the major ethical code

It means that accountants can work for competitors

Failure to keep information confidential reflects badly on the account

Which of the following statements best reflects the auditor's duty of confidentiality?

Auditors may disclose matters to third parties without their client's consent if it is in the public interest, and they must do so if there is a statutory duty to do so.

Auditors may disclose any matters in relation to criminal activities to the police or taxation authorities, if requested to do so by the police or a tax inspector

Auditors may only disclose matters to third parties without their client's consent if the public interest or national security is involved

Auditors must never, under any circumstances, disclose any matters of which they become aware during the course of the audit to third parties, without the permission of the client.

Which THREE of the following statements in respect of risk are true?

Auditors cannot impact on inherent risk to bring audit risk to an acceptable audit risk

Identifying business risks is part of the company's risk assessment processes

Inherent and control risks are components of audit risk.

Auditors can impact on inherent risk to bring audit risk to an acceptable audit risk

Which ONE of the following statements regarding analytical procedures is correct?

Analytical procedures must be used as part of the overall review of the financial statements

Analytical procedures are only used as risk assessment procedures

Analytical procedures may be used as part of the overall review of the financial statements

Analytical procedures must be used at the implementing phase

Analytical procedures must be used as part of the overall review of the financial statements. In the financial statement audit of an independent auditor, which TWO of the following would ordinarily be contained in the overall audit strategy?

The results of audit risk assessment

List of staff to be involved with the audit

The contract between the audit firm and the client

Detailed plan of audit procedures to be carried out

For each of the following statements in relation to guidance on professional ethics. Which THREE of the following statements are true?

It is in the public interest for accountants to follow a professional ethics framework

Rules-based codes offer a more straightforward ethical framework, as they cover specific situations

Principles-based guidance is more flexible than rules-based guidance.

Ethical guidance from ICAEW is in the form of rules rather than principles

Which THREE of the following would be found in the overall audit strategy document?

Calculation of preliminary materiality thresholds

Detailed plan of audit procedures

When audit inventory, auditor detected that inventory is overstated. The overstatement is material but not pervasive to the financial statements. Management has refused to make an adjustment to the financial statements. What form of modified opinion should the auditor issue?

Qualified opinion due to a material misstatement

Qualified opinion due to insufficient appropriate evidence on which to base an opinion

Audit and assurance

Authored by ly hinh

Mathematics

7th Grade

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MULTIPLE SELECT QUESTION

30 sec • 1 pt

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

MULTIPLE SELECT QUESTION

30 sec • 1 pt

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

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

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

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

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

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

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...

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

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

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

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

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