Question 1

ASCQC1 requires:

Accepted Answer

A)  the audit firm to establish procedures to assess the integrity of the audit client. 
B)  the audit team to be independent. 
C)  the audit firm to establish policies and procedures to provide reasonable assurance to maintain an appropriate level of independence. 
D)  the audit firm to not receive fees totalling more than 15% of total fees from one audit client. 
A)  the audit firm to establish procedures to assess the integrity of the audit client. 
B)  the audit team to be independent. 
C)  the audit firm to establish policies and procedures to provide reasonable assurance to maintain an appropriate level of independence. 
D)  the audit firm to not receive fees totalling more than 15% of total fees from one audit client. C

Question 2

To emphasise auditor independence from management, many companies:

Accepted Answer

A)  establish a policy of discouraging social conduct between company employees and the staff of the audit firm. 
B)  have the independent auditor report to an audit committee of outside members of the board of directors. 
C)  request that a representative of the auditor be present at the annual general meeting. 
D)  appoint a member of the audit firm to the company's audit committee. 
A)  establish a policy of discouraging social conduct between company employees and the staff of the audit firm. 
B)  have the independent auditor report to an audit committee of outside members of the board of directors. 
C)  request that a representative of the auditor be present at the annual general meeting. 
D)  appoint a member of the audit firm to the company's audit committee. B

Question 3

Many accounting firms have adopted policies known as improved business practices. Which of the following is NOT one of the above?

Accepted Answer

A)  Improved recruiting practices 
B)  Developing more sophisticated use of technology 
C)  More effective advertising 
D)  Increased professional indemnity insurance cover 
A)  Improved recruiting practices 
B)  Developing more sophisticated use of technology 
C)  More effective advertising 
D)  Increased professional indemnity insurance cover D

Question 4

Where the fees from an audit client are more than 15% of total fees, the public accounting firm should:

Accepted Answer

A)  ensure that adequate quality control procedures are in place. 
B)  ensure that the audit work is reviewed by an accountant, not a member of the audit team. 
C)  ensure that all members of the audit team are independent, both in fact and in appearance. 
D)  ensure adequate quality control procedures are in place and that the audit work is reviewed by an accountant, not a member of the audit team. 
A)  ensure that adequate quality control procedures are in place. 
B)  ensure that the audit work is reviewed by an accountant, not a member of the audit team. 
C)  ensure that all members of the audit team are independent, both in fact and in appearance. 
D)  ensure adequate quality control procedures are in place and that the audit work is reviewed by an accountant, not a member of the audit team.

Question 5

Audit committees' responsibilities include:

Accepted Answer

A)  considering the scope and quality of the external audit. 
B)  controlling the progress of the audit. 
C)  assessing the independence and objectivity of the audit team. 
D)  all of the above 
A)  considering the scope and quality of the external audit. 
B)  controlling the progress of the audit. 
C)  assessing the independence and objectivity of the audit team. 
D)  all of the above

Question 6

The first step of the six- step process for resolving ethical dilemmas is:

Accepted Answer

A)  obtain the relevant facts. 
B)  identify the parties involved. 
C)  identify all parties potentially affected by the outcomes. 
D)  identify the ethical issues. 
A)  obtain the relevant facts. 
B)  identify the parties involved. 
C)  identify all parties potentially affected by the outcomes. 
D)  identify the ethical issues.

Question 7

In the Code of Ethics for Professional Accountants, the advantage of general statements of ideal conduct, as opposed to specific rules of behaviour, is:

Accepted Answer

A)  the ability to enforce the ideals. 
B)  the emphasis on positive activities. 
C)  the enforceability of minimum behaviour and performance standards. 
D)  the tendency to define the rules as maximum rather than minimum standards. 
A)  the ability to enforce the ideals. 
B)  the emphasis on positive activities. 
C)  the enforceability of minimum behaviour and performance standards. 
D)  the tendency to define the rules as maximum rather than minimum standards.

Question 8

Many of the ethical values of society are NOT incorporated into laws because:

Accepted Answer

A)  it is not cost- beneficial to do so. 
B)  of the judgemental nature of particular values. 
C)  of enforcement difficulties. 
D)  of cultural differences in society. 
A)  it is not cost- beneficial to do so. 
B)  of the judgemental nature of particular values. 
C)  of enforcement difficulties. 
D)  of cultural differences in society.

Question 9

What is the 'expectation gap' and to what causes has the 'expectation gap' been attributed?

Accepted Answer

The expectation gap is the difference be

Question 10

The ASX Corporate Governance Principles do NOT include:

Accepted Answer

A)  structuring the board to add value. 
B)  remunerating the auditor fairly and responsibly. 
C)  recognising and managing risk. 
D)  making timely and balanced disclosure. 
A)  structuring the board to add value. 
B)  remunerating the auditor fairly and responsibly. 
C)  recognising and managing risk. 
D)  making timely and balanced disclosure.

Question 11

The agency view of the corporation emphasises:

Accepted Answer

A)  a control- oriented approach to governance. 
B)  issues associated with the potential conflicts of interest of management (as the agents of the owners) in serving the interests of shareholders (as the owners of the corporation). 
C)  mechanisms designed to curb managerial self- serving decisions and actions. 
D)  all of the above 
A)  a control- oriented approach to governance. 
B)  issues associated with the potential conflicts of interest of management (as the agents of the owners) in serving the interests of shareholders (as the owners of the corporation). 
C)  mechanisms designed to curb managerial self- serving decisions and actions. 
D)  all of the above

Question 12

Which one of the following would most likely be a breach of the ethical rules?

Accepted Answer

A)  Auditing Telstra while owning $250 of Telstra shares 
B)  Auditing the bank from which you have a home mortgage 
C)  Purchasing a motor vehicle from an audit client at a substantial discount 
D)  All would be equally likely to breach the ethical rules. 
A)  Auditing Telstra while owning $250 of Telstra shares 
B)  Auditing the bank from which you have a home mortgage 
C)  Purchasing a motor vehicle from an audit client at a substantial discount 
D)  All would be equally likely to breach the ethical rules.

Question 13

Which one of the following statements about audit committees is NOT correct?

Accepted Answer

A)  Ideally, members should be actively involved in company management. 
B)  They help to keep auditors independent of management. 
C)  Members are selected from a company's board of directors. 
D)  Most have 3- 5 members. 
A)  Ideally, members should be actively involved in company management. 
B)  They help to keep auditors independent of management. 
C)  Members are selected from a company's board of directors. 
D)  Most have 3- 5 members.

Question 14

Which one of the following is NOT listed as a factor that may influence the effectiveness of an audit committee?

Accepted Answer

A)  Its interaction with internal audit 
B)  The experience of its members 
C)  The appropriateness of its actions 
D)  The personality of the chairperson 
A)  Its interaction with internal audit 
B)  The experience of its members 
C)  The appropriateness of its actions 
D)  The personality of the chairperson

Question 15

Most accounting and auditing professionals agree that when an audit has failed to uncover material misstatements, and the wrong type of audit opinion is issued, the audit firm:

Accepted Answer

A)  has failed to follow auditing standards. 
B)  deserves to lose the lawsuit. 
C)  should be asked to defend the quality of the audit. 
D)  should not be held responsible for the financial loss suffered by others. 
A)  has failed to follow auditing standards. 
B)  deserves to lose the lawsuit. 
C)  should be asked to defend the quality of the audit. 
D)  should not be held responsible for the financial loss suffered by others.

Question 16

In determining independence with respect of any audit engagement, the ultimate decision as to whether independence has been achieved is made by the:

Accepted Answer

A)  audit committee. 
B)  client. 
C)  auditor. 
D)  users. 
A)  audit committee. 
B)  client. 
C)  auditor. 
D)  users.

Question 17

An advantage of specific rules in the Code of Ethics for Professional Accountants is the enforceability of minimum behaviour and performance standards.

Accepted Answer

A) True 
 B)False

Question 18

The provision of internal audit services to an auditee:

Accepted Answer

A)  creates a self- review threat to independence. 
B)  should improve the efficiency of the financial statement audit. 
C)  is prohibited by Corporations legislation. 
D)  is best done by subcontracting staff from the public accounting firm to the auditee. 
A)  creates a self- review threat to independence. 
B)  should improve the efficiency of the financial statement audit. 
C)  is prohibited by Corporations legislation. 
D)  is best done by subcontracting staff from the public accounting firm to the auditee.

Question 19

There are five fundamental principles of professional conduct set out in Part A of the Code of Ethics for Professional Accountants. List each and briefly discuss each in the context of provision of audit services.

Accepted Answer

1. Integrity. Auditors must be straightf

Question 20

A familiarity threat can be reduced by:

Accepted Answer

A)  rotation of the lead auditor and review partner. 
B)  rotation of the senior partner. 
C)  rotation of the audit team. 
D)  rotation of audit firms. 
A)  rotation of the lead auditor and review partner. 
B)  rotation of the senior partner. 
C)  rotation of the audit team. 
D)  rotation of audit firms.

ASCQC1 requires:

To emphasise auditor independence from management, many companies:

Many accounting firms have adopted policies known as improved business practices. Which of the following is NOT one of the above?

Where the fees from an audit client are more than 15% of total fees, the public accounting firm should:

Audit committees' responsibilities include:

The first step of the six- step process for resolving ethical dilemmas is:

In the Code of Ethics for Professional Accountants, the advantage of general statements of ideal conduct, as opposed to specific rules of behaviour, is:

Many of the ethical values of society are NOT incorporated into laws because:

What is the 'expectation gap' and to what causes has the 'expectation gap' been attributed?

The ASX Corporate Governance Principles do NOT include:

The agency view of the corporation emphasises:

Which one of the following would most likely be a breach of the ethical rules?

Which one of the following statements about audit committees is NOT correct?

Which one of the following is NOT listed as a factor that may influence the effectiveness of an audit committee?

Most accounting and auditing professionals agree that when an audit has failed to uncover material misstatements, and the wrong type of audit opinion is issued, the audit firm:

In determining independence with respect of any audit engagement, the ultimate decision as to whether independence has been achieved is made by the:

An advantage of specific rules in the Code of Ethics for Professional Accountants is the enforceability of minimum behaviour and performance standards.

The provision of internal audit services to an auditee:

There are five fundamental principles of professional conduct set out in Part A of the Code of Ethics for Professional Accountants. List each and briefly discuss each in the context of provision of audit services.

A familiarity threat can be reduced by:

Demand for Audit and Assurance Services

Auditors Legal Environment

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Documentation

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 3: Audit Quality and Ethics

ASCQC1 requires:

To emphasise auditor independence from management, many companies:

Many accounting firms have adopted policies known as improved business practices. Which of the following is NOT one of the above?

Where the fees from an audit client are more than 15% of total fees, the public accounting firm should:

Audit committees' responsibilities include:

The first step of the six- step process for resolving ethical dilemmas is:

In the Code of Ethics for Professional Accountants, the advantage of general statements of ideal conduct, as opposed to specific rules of behaviour, is:

Many of the ethical values of society are NOT incorporated into laws because:

What is the 'expectation gap' and to what causes has the 'expectation gap' been attributed?

The ASX Corporate Governance Principles do NOT include:

The agency view of the corporation emphasises:

Which one of the following would most likely be a breach of the ethical rules?

Which one of the following statements about audit committees is NOT correct?

Which one of the following is NOT listed as a factor that may influence the effectiveness of an audit committee?

Most accounting and auditing professionals agree that when an audit has failed to uncover material misstatements, and the wrong type of audit opinion is issued, the audit firm:

In determining independence with respect of any audit engagement, the ultimate decision as to whether independence has been achieved is made by the:

An advantage of specific rules in the Code of Ethics for Professional Accountants is the enforceability of minimum behaviour and performance standards.

The provision of internal audit services to an auditee:

There are five fundamental principles of professional conduct set out in Part A of the Code of Ethics for Professional Accountants. List each and briefly discuss each in the context of provision of audit services.

A familiarity threat can be reduced by:

Demand for Audit and Assurance Services

Auditors Legal Environment

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Documentation

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