Question 1

Public accounting firms must accept every audit engagement.

Accepted Answer

A) True 
 B)False

Question 2

ASA 220 contains:

Accepted Answer

A)  guidance regarding planning of an audit. 
B)  quality control for an audit. 
C)  audit evidence. 
D)  analytical procedures to be undertaken in an audit. 
A)  guidance regarding planning of an audit. 
B)  quality control for an audit. 
C)  audit evidence. 
D)  analytical procedures to be undertaken in an audit.

Question 3

Most auditors assess inherent risk as high for related parties and related- party transactions because:

Accepted Answer

A)  of the lack of independence between the parties. 
B)  of the accounting disclosure requirement. 
C)  both A and B 
D)  it is required by generally accepted accounting principles. 
A)  of the lack of independence between the parties. 
B)  of the accounting disclosure requirement. 
C)  both A and B 
D)  it is required by generally accepted accounting principles.

Question 4

The development of the audit program is the final stage in:

Accepted Answer

A)  documenting independence. 
B)  audit planning. 
C)  the engagement letter. 
D)  the client acceptance decision. 
A)  documenting independence. 
B)  audit planning. 
C)  the engagement letter. 
D)  the client acceptance decision.

Question 5

List the steps in planning an audit.

Accepted Answer

1. Accept clients and perform initial au

Question 6

When an auditor decides there is higher inherent risk for an account, one potential effect is that less audit evidence will be required for that account.

Accepted Answer

A) True 
 B)False

Question 7

Working papers prepared by the client for the auditor are the property of the auditor.

Accepted Answer

A) True 
 B)False

Question 8

Working papers can be viewed by different audit personnel simultaneously by using:

Accepted Answer

A)  statistical sampling software programs. 
B)  Groupshare software programs. 
C)  ACL. 
D)  IDEA. 
A)  statistical sampling software programs. 
B)  Groupshare software programs. 
C)  ACL. 
D)  IDEA.

Question 9

Which of the following would NOT be a consideration of an audit firm in deciding whether to accept a new client?

Accepted Answer

A)  Client's relation with its previous audit firm 
B)  Client's standing in the business community 
C)  Client's financial stability 
D)  Client's probability of achieving an unqualified opinion 
A)  Client's relation with its previous audit firm 
B)  Client's standing in the business community 
C)  Client's financial stability 
D)  Client's probability of achieving an unqualified opinion

Question 10

Under ASA 210, the engagement letter may state:

Accepted Answer

A)  an agreement on fees. 
B)  an agreement to provide other services. 
C)  An understanding as to the availability of reports on the Internet. 
D)  all of the above 
A)  an agreement on fees. 
B)  an agreement to provide other services. 
C)  An understanding as to the availability of reports on the Internet. 
D)  all of the above

Question 11

An auditor who accepts an audit engagement must gain an understanding of the client's industry and business. This includes knowledge of the:

Accepted Answer

A)  business operations and processes. 
B)  industry and external environment. 
C)  management and governance. 
D)  all of the above 
A)  business operations and processes. 
B)  industry and external environment. 
C)  management and governance. 
D)  all of the above

Question 12

The most likely uses of the financial statements can be determined from:

Accepted Answer

A)  previous experience with the auditee and discussions with management. 
B)  inquiries with ASIC and the ASX. 
C)  reviewing the terms of the engagement as set out in the engagement letter. 
D)  reviewing the minutes of meetings. 
A)  previous experience with the auditee and discussions with management. 
B)  inquiries with ASIC and the ASX. 
C)  reviewing the terms of the engagement as set out in the engagement letter. 
D)  reviewing the minutes of meetings.

Question 13

Distinguish between the type of data contained in auditors' permanent files compared to current files.

Accepted Answer

Permanent files contain data of a histor

Question 14

The objective of audit documentation is to provide reasonable assurance that an adequate audit was conducted.

Accepted Answer

A) True 
 B)False

Question 15

Which one of the following would you NOT expect to find in a company's constitution? Rules and procedures for:

Accepted Answer

A)  implementing internal control systems. 
B)  issuing shares. 
C)  calling general meetings. 
D)  appointment and retirement of directors. 
A)  implementing internal control systems. 
B)  issuing shares. 
C)  calling general meetings. 
D)  appointment and retirement of directors.

Question 16

Two major factors that affect acceptable audit risk are inherent risk and control risk.

Accepted Answer

A) True 
 B)False

Question 17

Which one of the following is NOT a document or record that should be examined early in the engagement?

Accepted Answer

A)  Contracts 
B)  Management letter 
C)  Corporate constitution 
D)  Minutes of board of directors' and shareholders' meetings 
A)  Contracts 
B)  Management letter 
C)  Corporate constitution 
D)  Minutes of board of directors' and shareholders' meetings

Question 18

Copies of the client's constitution and organisation chart are normally included in the permanent file of the auditor's working papers.

Accepted Answer

A) True 
 B)False

Question 19

During the course of an audit engagement, an auditor prepares and accumulates audit working papers. The audit working papers should then be kept:

Accepted Answer

A)  until the end of seven years after the date of the audit report. 
B)  until the client ceases to exist. 
C)  for a period not exceeding three years. 
D)  forever. 
A)  until the end of seven years after the date of the audit report. 
B)  until the client ceases to exist. 
C)  for a period not exceeding three years. 
D)  forever.

Question 20

The working papers are:

Accepted Answer

A)  the property of client. 
B)  the primary means of documenting that an adequate audit was conducted in accordance with auditing standards. 
C)  property of the auditor although prepared by client. 
D)  used primarily as a basis for the partners to review and reward the work of the managers, seniors and staff. 
A)  the property of client. 
B)  the primary means of documenting that an adequate audit was conducted in accordance with auditing standards. 
C)  property of the auditor although prepared by client. 
D)  used primarily as a basis for the partners to review and reward the work of the managers, seniors and staff.

Public accounting firms must accept every audit engagement.

ASA 220 contains:

Most auditors assess inherent risk as high for related parties and related- party transactions because:

The development of the audit program is the final stage in:

List the steps in planning an audit.

When an auditor decides there is higher inherent risk for an account, one potential effect is that less audit evidence will be required for that account.

Working papers prepared by the client for the auditor are the property of the auditor.

Working papers can be viewed by different audit personnel simultaneously by using:

Which of the following would NOT be a consideration of an audit firm in deciding whether to accept a new client?

Under ASA 210, the engagement letter may state:

An auditor who accepts an audit engagement must gain an understanding of the client's industry and business. This includes knowledge of the:

The most likely uses of the financial statements can be determined from:

Distinguish between the type of data contained in auditors' permanent files compared to current files.

The objective of audit documentation is to provide reasonable assurance that an adequate audit was conducted.

Which one of the following would you NOT expect to find in a company's constitution? Rules and procedures for:

Two major factors that affect acceptable audit risk are inherent risk and control risk.

Which one of the following is NOT a document or record that should be examined early in the engagement?

Copies of the client's constitution and organisation chart are normally included in the permanent file of the auditor's working papers.

During the course of an audit engagement, an auditor prepares and accumulates audit working papers. The audit working papers should then be kept:

The working papers are:

Demand for Audit and Assurance Services

Auditors Legal Environment

Audit Quality and Ethics

Audit Responsibilities and Objectives

Audit Evidence

Materiality and Risk

Internal Control and Control Risk

Fraud Auditing

The Impact of Information Technology on the Audit Process

Overall Audit Plan and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

Completing Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling

Audit of Transaction Cycles and Financial Statement Balances I

Audit of Transaction Cycles and Financial Statement Balances II

Completing the Audit

Audit Reporting

Other Auditing and Assurance Engagements

Filters

Exam 6: Audit Planning and Documentation

Public accounting firms must accept every audit engagement.

ASA 220 contains:

Most auditors assess inherent risk as high for related parties and related- party transactions because:

The development of the audit program is the final stage in:

List the steps in planning an audit.

When an auditor decides there is higher inherent risk for an account, one potential effect is that less audit evidence will be required for that account.

Working papers prepared by the client for the auditor are the property of the auditor.

Working papers can be viewed by different audit personnel simultaneously by using:

Which of the following would NOT be a consideration of an audit firm in deciding whether to accept a new client?

Under ASA 210, the engagement letter may state:

An auditor who accepts an audit engagement must gain an understanding of the client's industry and business. This includes knowledge of the:

The most likely uses of the financial statements can be determined from:

Distinguish between the type of data contained in auditors' permanent files compared to current files.

The objective of audit documentation is to provide reasonable assurance that an adequate audit was conducted.

Which one of the following would you NOT expect to find in a company's constitution? Rules and procedures for:

Two major factors that affect acceptable audit risk are inherent risk and control risk.

Which one of the following is NOT a document or record that should be examined early in the engagement?

Copies of the client's constitution and organisation chart are normally included in the permanent file of the auditor's working papers.

During the course of an audit engagement, an auditor prepares and accumulates audit working papers. The audit working papers should then be kept:

The working papers are:

Demand for Audit and Assurance Services

Auditors Legal Environment

Audit Quality and Ethics

Audit Responsibilities and Objectives

Audit Evidence

Materiality and Risk

Internal Control and Control Risk

Fraud Auditing

The Impact of Information Technology on the Audit Process

Overall Audit Plan and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

Completing Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling

Audit of Transaction Cycles and Financial Statement Balances I

Audit of Transaction Cycles and Financial Statement Balances II

Completing the Audit

Audit Reporting

Other Auditing and Assurance Engagements

Filters