MCQ2

Question 1 of 27

1

Which of the following is not one of the major categories of auditor's services?

Select one of the following:

Assurance engagements dealing with subject matters other than historical financial information
Related service engagements
Compilation engagement
The audit or review of historical financial information

Explanation

Question 2 of 27

1

Which of the following is not one of five elements exhibited by all assurance engagements?

Select one of the following:

Suitable criteria
A multi-party relationship involving a practitioner, a responsible party, those in charge of governance and the intended users
A subject matter
Evidence

Explanation

Question 3 of 27

1

Which of the following is one of the basic elements required to be included in the assurance report according to International Standards on Assurance Engagements 2000?

Select one of the following:

A paragraph explaining the intention to the engagement
Summarization of work undertaken
Identification of the intended user
The results of the internal control tests

Explanation

Question 4 of 27

1

What is the type of assurance engagement that has as its subject matter non-historical financial information?

Select one of the following:

Prospective financial information
Review of financial statements
Special purpose engagement
Agreed-upon procedures

Explanation

Question 5 of 27

1

Under what circumstances will a company get a qualified opinion in a review engagement?

Select one of the following:

If matters that impair a true and fair view have come to the auditor's attention
If the auditor can only offer limited assurance
If matters that impair a true and fair view have not come to the auditor's attention
When the effect of the matter is so material and pervasive to the financial statements that a qualification is not adequate

Explanation

Question 6 of 27

1

How does the related services framework differ from the assurance framework?

Select one of the following:

Related services claim compliance with ISAEs
Related services engagements do not result in an opinion
Related services enhance the degree of confidence intended users can have
Related services claim compliance with ISAs

Explanation

Question 7 of 27

1

In an agreed-upon procedures engagement what matters generally have to be agreed between auditor and management?

Select one of the following:

Nature, timing and extent of the specific procedures to be applied
Identification of the corporate governance framework
The skills of the audit team
The intended user of the report

Explanation

Question 8 of 27

1

An auditor makes inquiries of inventory control and sales personnel concerning possible obsolete or slow moving inventory to support management's financial statement assertion:

Select one of the following:

Rights and obligations
Valuation
Occurrence
Existence

Explanation

Question 9 of 27

1

Which of the following considerations of fraud and error by the auditor is not required by ISA 240?

Select one of the following:

When the auditor encounters circumstances that may indicate that there is a material misstatement in the financial statements resulting from fraud or error, the auditor should inform regulatory institutions
Based on the risk assessment the auditor should design audit procedures to obtain reasonable assurance that material misstatements arising from fraud and error are detected
The auditor should be satisfied that those charged with governance have been informed of any material weaknesses in internal control related to the prevention and detection of fraud
The auditor should communicate to management any material weaknesses in internal control related to the prevention or detection of fraud and error

Explanation

Question 10 of 27

1

Which of the following is not a benefit of international auditing standards?

Select one of the following:

Foreign investors are more likely to channel funds into a developing country
Encourage and assist developing nations to adopt national standards
Financial statement disclosure is more consistent
Investors can more readily comprehend a set of financial statements drawn up in another country

Explanation

Question 11 of 27

1

Which of the following standards are not issued by the International Auditing and Assurance Standards Board?

Select one of the following:

International Standards on Quality Control
International Auditing Practice Statements
International Standard on Assurance Engagements
International Financial Reporting Standards

Explanation

Question 12 of 27

1

Financial involvement with a client will affect independence and may lead a reasonable observer to conclude that independence has been impaired. Which of the following is not a form of financial involvement with a client?

Select one of the following:

Loans to or from the client
Financial interest resulting from being an administrator of any trust with a financial interest in the client
Financial interest in a joint venture with a client
Fees paid for audit engagement

Explanation

Question 13 of 27

1

Which of the following might be a commonly used guideline related to a financial statement materiality base?

Select one of the following:

2 % to 4 % of net income before taxes
15 % to 20% of current assets
5 % to 10% of long-term liabilities
1/2 % to 2% of total assets

Explanation

Question 14 of 27

1

The auditor with the responsibility for reporting is:

Select one of the following:

The external auditor
The internal auditor
The group auditor
The other auditor

Explanation

Question 15 of 27

1

All of the following factors influence the continuance of an existing auditor-client relationship except:

Select one of the following:

The balance of client fees owed
Excessive risk
Pending litigation between client and auditor
Inability to obtain a management representations letter

Explanation

Question 16 of 27

1

Which of the following matters is not ordinarily included in a management representation letter?

Select one of the following:

Amount of potential loss from litigation, including court costs
Management's acknowledgment of its responsibility for the fair presentation of financial statements
Disclosure of compensating balances and other arrangements involving restrictions on cash balances
Plans or intentions that may affect the carrying value or classification of assets

Explanation

Question 17 of 27

1

When a principal auditor uses the work of another auditor he must document:

Select one of the following:

The professional qualifications, independence and professional competence of the other auditor
Procedures to obtain sufficient appropriate audit evidence that the work of the other auditor is adequate is all the consideration necessary
The impact of internal controls on the work of the other auditor
The audit area in which the work was performed by the other auditor

Explanation

Question 18 of 27

1

Which of the following would be considered a 'self-interest threat'?

Select one of the following:

Potential employment with an assurance client
Acting as the client's advocate in a legal proceeding
When a member of the assurance team was previously a director or officer of the assurance client
A member of the assurance team has a close family member who is a director or officer of the assurance client

Explanation

Question 19 of 27

1

Financial involvement with a client will affect independence and may lead a reasonable observer to conclude that independence has been impaired. Which of the following is not a form of financial involvement with a client?

Select one of the following:

Loans to or from the client
Financial interest resulting from being an administrator of any trust with a financial interest in the client
Financial interest in a joint venture with a client
Fees paid for audit engagement

Explanation

Question 20 of 27

1

Important determinants of audit fees all of the following except:

Select one of the following:

The size of the audit firm
The type of client - whether the auditee is an existing client or not
The size of the auditee and the geographical dispersion
The quality of the auditee's internal control system

Explanation

Question 21 of 27

1

According to the profession's ethical standards, an auditor would be considered independent in which of the following instances?

Select one of the following:

The auditor's savings account, which is fully insured by the Financial Services Compensation Scheme (FSCS), is held at a client financial institution
The auditor is also the lawyer who advises the client as its general counsel.
An employee of the auditor serves as treasurer of a charitable organization that is a client.
The client owes the auditor fees for two consecutive annual audits.

Explanation

Question 22 of 27

1

The risk that audit evidence for a segment will fail to detect misstatements exceeding performance materiality levels is:

Select one of the following:

Audit risk.
Control risk.
Inherent risk.
Planned detection risk

Explanation

Question 23 of 27

1

In an assurance engagement, the responsible party can also be an intended user.

Select one of the following:

Never
If there is more than one intended user
If there are more than ten intended users
In exceptional circumstances

Explanation

Question 24 of 27

1

Which of the following is NOT a duty of the audit committee?

Select one of the following:

Special Investigations
Review of internal controls
Monitor the effectiveness of external auditor
Liaison with external controls

Explanation

Question 25 of 27

1

It is the responsibility of the………..to ensure a client’s operations are conducted in accordance with laws and regulations

Select one of the following:

The external auditor
Management
Audit committee members
The component auditor

Explanation

Question 26 of 27

1

The materiality level for a component is determined by

Select one of the following:

The internal auditor
The component auditor
The group engagement team
The external auditor

Explanation

Question 27 of 27

1

The group engagement partner is responsible for the:

Select one of the following:

A. Direction and supervision of the audit group
B. Provision of essential technical information
C. Participation in the policy making process
A and B
A and C
B and C

	Created by clara.azurmendi over 8 years ago

Advanced Audit Principles and Practice

Question 1 of 27

Which of the following is not one of the major categories of auditor's services?

Select one of the following:

Explanation

Question 2 of 27

Which of the following is not one of five elements exhibited by all assurance engagements?

Select one of the following:

Explanation

Question 3 of 27

Which of the following is one of the basic elements required to be included in the assurance report according to International Standards on Assurance Engagements 2000?

Select one of the following:

Explanation

Question 4 of 27

What is the type of assurance engagement that has as its subject matter non-historical financial information?

Select one of the following:

Explanation

Question 5 of 27

Under what circumstances will a company get a qualified opinion in a review engagement?

Select one of the following:

Explanation

Question 6 of 27

How does the related services framework differ from the assurance framework?

Select one of the following:

Explanation

Question 7 of 27

In an agreed-upon procedures engagement what matters generally have to be agreed between auditor and management?

Select one of the following:

Explanation

Question 8 of 27

An auditor makes inquiries of inventory control and sales personnel concerning possible obsolete or slow moving inventory to support management's financial statement assertion:

Select one of the following:

Explanation

Question 9 of 27

Which of the following considerations of fraud and error by the auditor is not required by ISA 240?

Select one of the following:

Explanation

Question 10 of 27

Which of the following is not a benefit of international auditing standards?

Select one of the following:

Explanation

Question 11 of 27

Which of the following standards are not issued by the International Auditing and Assurance Standards Board?

Select one of the following:

Explanation

Question 12 of 27

Financial involvement with a client will affect independence and may lead a reasonable observer to conclude that independence has been impaired. Which of the following is not a form of financial involvement with a client?

Select one of the following:

Explanation

Question 13 of 27

Which of the following might be a commonly used guideline related to a financial statement materiality base?

Select one of the following:

Explanation

Question 14 of 27

The auditor with the responsibility for reporting is:

Select one of the following:

Explanation

Question 15 of 27

All of the following factors influence the continuance of an existing auditor-client relationship except:

Select one of the following:

Explanation

Question 16 of 27

Which of the following matters is not ordinarily included in a management representation letter?

Select one of the following:

Explanation

Question 17 of 27

When a principal auditor uses the work of another auditor he must document:

Select one of the following:

Explanation

Question 18 of 27

Which of the following would be considered a 'self-interest threat'?

Select one of the following:

Explanation

Question 19 of 27

Financial involvement with a client will affect independence and may lead a reasonable observer to conclude that independence has been impaired. Which of the following is not a form of financial involvement with a client?

Select one of the following:

Explanation

Question 20 of 27

Important determinants of audit fees all of the following except: