Question 1

Which of these responsibilities of the auditor is not undertaken as part of the evaluation of the findings?

Accepted Answer

A)  undertake a final assessment of materiality and audit risk. 
B)  undertake a technical review of the financial report. 
C)  prepare the written communication to those charged with governance. 
D)  formulate an opinion and draft the audit report. 
A)  undertake a final assessment of materiality and audit risk. 
B)  undertake a technical review of the financial report. 
C)  prepare the written communication to those charged with governance. 
D)  formulate an opinion and draft the audit report. C

Question 2

A client's refusal to provide a management representation letter to the auditor will normally require the auditor to:

Accepted Answer

A)  issue a qualified opinion or a disclaimer of opinion. 
B)  contact the audit committee for the relevant information. 
C)  issue an unqualified opinion with an 'emphasis of matter' paragraph. 
D)  issue an adverse opinion. 
A)  issue a qualified opinion or a disclaimer of opinion. 
B)  contact the audit committee for the relevant information. 
C)  issue an unqualified opinion with an 'emphasis of matter' paragraph. 
D)  issue an adverse opinion. A

Question 3

Identify the audit procedures normally associated with subsequent events.
2. What actions may the auditor take when he concludes at the end of the audit that audit risk is not acceptable?

Accepted Answer

1.The procedures include:
-reviewing procedures that management has established to ensure that subsequent events are identified,
-reading minutes of the meetings of shareholders, those charged with governance, audit and executive committees held after the reporting date, and enquiring about matters discussed at meetings for which minutes are not yet available,
-reading the entity's latest available interim financial statements and, as considered necessary and appropriate, budgets, cash flow forecasts and other related management reports,
-enquiring of the entity's lawyers, and
-enquiring of management as to whether any subsequent events have occurred that may affect the financial statements.
2.When audit risk is unacceptable, the auditor should perform additional substantive tests or convince the client to make corrections necessary to reduce the risk of material misstatement to an acceptable level. If management does not make the adjustments as required then the auditor may decide to issue a qualified audit report.

Question 4

During the final reviews of the working papers, the partner in charge of the engagement would ordinarily be expected to review working papers:

Accepted Answer

A)  perceived to have high risk. 
B)  prepared by seniors. 
C)  reviewed by managers. 
D)  reviewed by seniors. 
A)  perceived to have high risk. 
B)  prepared by seniors. 
C)  reviewed by managers. 
D)  reviewed by seniors.

Question 5

Significant matters identified as a result of audit procedures often include those relating to the internal control structure that the auditor feels would be of particular interest to:

Accepted Answer

A)  the audit committee. 
B)  the CEO. 
C)  the regulators. 
D)  the accounting staff 
A)  the audit committee. 
B)  the CEO. 
C)  the regulators. 
D)  the accounting staff

Question 6

Which of the following is not among the specific auditing procedures the auditor performs to obtain additional audit evidence to complete the audit?

Accepted Answer

A)  make subsequent events review. 
B)  place a notice in the daily newspaper asking if anyone has any matters they wish to bring up concerning the audit. 
C)  obtain a management representation letter. 
D)  review the possibility of contingent liabilities 
A)  make subsequent events review. 
B)  place a notice in the daily newspaper asking if anyone has any matters they wish to bring up concerning the audit. 
C)  obtain a management representation letter. 
D)  review the possibility of contingent liabilities

Question 7

When a solicitor refuses to respond to a letter of audit inquiry and alternative audit procedures are unsuccessful, the auditor will normally:

Accepted Answer

A)  contact the client's in-house solicitor for the relevant information. 
B)  issue a qualified opinion or a disclaimer of opinion. 
C)  issue an unqualified opinion with an emphasis of matter paragraph. 
D)  issue an adverse opinion. 
A)  contact the client's in-house solicitor for the relevant information. 
B)  issue a qualified opinion or a disclaimer of opinion. 
C)  issue an unqualified opinion with an emphasis of matter paragraph. 
D)  issue an adverse opinion.

Question 8

What are the objectives of the management representation letter? Under what circumstances are management representations considered acceptable audit evidence?

Accepted Answer

The objectives of the management represe

Question 9

An existing condition, situation or set of circumstances that involves uncertainty as to a possible gain, that will be resolved when one or more future events occur or fail to occur is:

Accepted Answer

A)  a contingent liability. 
B)  a contingent asset. 
C)  projected event. 
D)  estimated value. 
A)  a contingent liability. 
B)  a contingent asset. 
C)  projected event. 
D)  estimated value.

Question 10

A representation letter to a lawyer would not normally ask for confirmation of, or information about:

Accepted Answer

A)  directors' description of the situation. 
B)  reasonableness of directors' estimates of the likely amounts of settlement. 
C)  any open files that may have been referred to other legal firms. 
D)  a representation letter would normally ask about all of the above 
A)  directors' description of the situation. 
B)  reasonableness of directors' estimates of the likely amounts of settlement. 
C)  any open files that may have been referred to other legal firms. 
D)  a representation letter would normally ask about all of the above

Question 11

The auditor has decided that the financial statements are affected by an uncertainty that is not susceptible to reasonable estimation at the balance sheet date. If this uncertainty is adequately disclosed in the financial statements, the auditor's report should contain a(n):

Accepted Answer

A)  standard unqualified opinion. 
B)  adverse opinion. 
C)  disclaimer of opinion. 
D)  unqualified opinion with an 'emphasis of matter' paragraph. 
A)  standard unqualified opinion. 
B)  adverse opinion. 
C)  disclaimer of opinion. 
D)  unqualified opinion with an 'emphasis of matter' paragraph.

Question 12

After the auditor's report has been signed, the auditor:

Accepted Answer

A)  does not have a responsibility to detect subsequent events. 
B)  has a responsibility to detect subsequent events only if they will have a material effect on the financial statements 
C)  has provided absolute assurance that all significant events occurring up to that date have been identified. 
D)  only has responsibility to detect subsequent events if they have a negative impact on the financial statements 
A)  does not have a responsibility to detect subsequent events. 
B)  has a responsibility to detect subsequent events only if they will have a material effect on the financial statements 
C)  has provided absolute assurance that all significant events occurring up to that date have been identified. 
D)  only has responsibility to detect subsequent events if they have a negative impact on the financial statements

Question 13

Financial statements are usually prepared on the going concern basis. The auditor is required by ASA 570 (ISA 570) to assess the risk of going concern problems at which stage of the audit?

Accepted Answer

A)  ASA 570 (ISA 570) does not require the assessment of the risk of going concern problems, this is left to the directors 
B)  during the final review. 
C)  the planning stage. 
D)  the planning stage and again during the final review. 
A)  ASA 570 (ISA 570) does not require the assessment of the risk of going concern problems, this is left to the directors 
B)  during the final review. 
C)  the planning stage. 
D)  the planning stage and again during the final review.

Question 14

How should the auditor disclose material adjusting events? Give three examples of common adjusting events.
2.How should the auditor disclose material non-adjusting events? Give three examples of common non-adjusting events.

Accepted Answer

1.Adjusting events require the financial

Question 15

Which of these is among the characteristics of the procedures performed in completing the audit?

Accepted Answer

A)  they involve many subjective judgements by the auditor. 
B)  they do not relate to specific transaction cycles or accounts. 
C)  they are usually performed by audit managers or seniors. 
D)  all of the above are characteristics of the procedures performed in completing the audit 
A)  they involve many subjective judgements by the auditor. 
B)  they do not relate to specific transaction cycles or accounts. 
C)  they are usually performed by audit managers or seniors. 
D)  all of the above are characteristics of the procedures performed in completing the audit

Question 16

In making the technical review of the financial statements, the auditor is likely to use a detailed financial statement checklist provided by the:

Accepted Answer

A)  client. 
B)  CPA Australia. 
C)  ASIC. 
D)  audit firm. 
A)  client. 
B)  CPA Australia. 
C)  ASIC. 
D)  audit firm.

Question 17

In working with the minutes of meetings of shareholders, those charged with governance, and their subcommittees, the auditor should:

Accepted Answer

A)  read the minutes of all important meetings. 
B)  read the minutes of a sample of meetings. 
C)  read the minutes of all meetings. 
D)  read the minutes of AGMs. 
A)  read the minutes of all important meetings. 
B)  read the minutes of a sample of meetings. 
C)  read the minutes of all meetings. 
D)  read the minutes of AGMs.

Question 18

Distinguish conditions existing at the reporting date and conditions arising after the reporting date as they relate to subsequent events.

Accepted Answer

-AASB 110 (IAS 10) states that the finan

Question 19

The following steps are taken during the evaluation of the audit findings: 
A: Making technical review of financial statements
B: Making final review(s) of working papers
C: Making final assessment of materiality and audit risk
D: Formulating opinion and drafting audit report
 The order in which these steps should be performed is:

Accepted Answer

A)  ABCD. 
B)  DCAB. 
C)  CABD. 
D)  BACD. 
A)  ABCD. 
B)  DCAB. 
C)  CABD. 
D)  BACD.

Question 20

Normally the initial source of information about litigation, claims, and unrecorded or contingent liabilities is:

Accepted Answer

A)  management. 
B)  the audit committee. 
C)  the client's solicitors. 
D)  the board of directors. 
A)  management. 
B)  the audit committee. 
C)  the client's solicitors. 
D)  the board of directors.

Which of these responsibilities of the auditor is not undertaken as part of the evaluation of the findings?

A client's refusal to provide a management representation letter to the auditor will normally require the auditor to:

Identify the audit procedures normally associated with subsequent events. 2. What actions may the auditor take when he concludes at the end of the audit that audit risk is not acceptable?

During the final reviews of the working papers, the partner in charge of the engagement would ordinarily be expected to review working papers:

Significant matters identified as a result of audit procedures often include those relating to the internal control structure that the auditor feels would be of particular interest to:

Which of the following is not among the specific auditing procedures the auditor performs to obtain additional audit evidence to complete the audit?

When a solicitor refuses to respond to a letter of audit inquiry and alternative audit procedures are unsuccessful, the auditor will normally:

What are the objectives of the management representation letter? Under what circumstances are management representations considered acceptable audit evidence?

An existing condition, situation or set of circumstances that involves uncertainty as to a possible gain, that will be resolved when one or more future events occur or fail to occur is:

A representation letter to a lawyer would not normally ask for confirmation of, or information about:

The auditor has decided that the financial statements are affected by an uncertainty that is not susceptible to reasonable estimation at the balance sheet date. If this uncertainty is adequately disclosed in the financial statements, the auditor's report should contain a(n):

After the auditor's report has been signed, the auditor:

Financial statements are usually prepared on the going concern basis. The auditor is required by ASA 570 (ISA 570) to assess the risk of going concern problems at which stage of the audit?

How should the auditor disclose material adjusting events? Give three examples of common adjusting events. 2.How should the auditor disclose material non-adjusting events? Give three examples of common non-adjusting events.

Which of these is among the characteristics of the procedures performed in completing the audit?

In making the technical review of the financial statements, the auditor is likely to use a detailed financial statement checklist provided by the:

In working with the minutes of meetings of shareholders, those charged with governance, and their subcommittees, the auditor should:

Distinguish conditions existing at the reporting date and conditions arising after the reporting date as they relate to subsequent events.

Normally the initial source of information about litigation, claims, and unrecorded or contingent liabilities is:

An Overview of Auditing

Governance and the Auditor

Professional Ethics, Independence and Audit Quality

Other Assurance Engagements and Quality Standards

The Auditors Legal Liability

Overview of the Audit Financial Statements

The Auditors Report

Client Evaluation and Planning the Audit

Audit Risk Assessment

Materiality and Audit Evidence

Tests of Controls

Designing Substantive Procedures

Audit Sampling

Auditing Sales and Receivables

Auditing Purchases, Payables and Payroll

Auditing Inventories and Property, Plant and Equipment

Auditing Cash and Investments

Filters

Exam 18: Completing the Audit

Which of these responsibilities of the auditor is not undertaken as part of the evaluation of the findings?

A client's refusal to provide a management representation letter to the auditor will normally require the auditor to:

Identify the audit procedures normally associated with subsequent events. 2. What actions may the auditor take when he concludes at the end of the audit that audit risk is not acceptable?

During the final reviews of the working papers, the partner in charge of the engagement would ordinarily be expected to review working papers:

Significant matters identified as a result of audit procedures often include those relating to the internal control structure that the auditor feels would be of particular interest to:

Which of the following is not among the specific auditing procedures the auditor performs to obtain additional audit evidence to complete the audit?

When a solicitor refuses to respond to a letter of audit inquiry and alternative audit procedures are unsuccessful, the auditor will normally:

What are the objectives of the management representation letter? Under what circumstances are management representations considered acceptable audit evidence?

An existing condition, situation or set of circumstances that involves uncertainty as to a possible gain, that will be resolved when one or more future events occur or fail to occur is:

A representation letter to a lawyer would not normally ask for confirmation of, or information about:

The auditor has decided that the financial statements are affected by an uncertainty that is not susceptible to reasonable estimation at the balance sheet date. If this uncertainty is adequately disclosed in the financial statements, the auditor's report should contain a(n):

After the auditor's report has been signed, the auditor:

Financial statements are usually prepared on the going concern basis. The auditor is required by ASA 570 (ISA 570) to assess the risk of going concern problems at which stage of the audit?

How should the auditor disclose material adjusting events? Give three examples of common adjusting events. 2.How should the auditor disclose material non-adjusting events? Give three examples of common non-adjusting events.

Which of these is among the characteristics of the procedures performed in completing the audit?

In making the technical review of the financial statements, the auditor is likely to use a detailed financial statement checklist provided by the:

In working with the minutes of meetings of shareholders, those charged with governance, and their subcommittees, the auditor should:

Distinguish conditions existing at the reporting date and conditions arising after the reporting date as they relate to subsequent events.

Normally the initial source of information about litigation, claims, and unrecorded or contingent liabilities is:

An Overview of Auditing

Governance and the Auditor

Professional Ethics, Independence and Audit Quality

Other Assurance Engagements and Quality Standards

The Auditors Legal Liability

Overview of the Audit Financial Statements

The Auditors Report

Client Evaluation and Planning the Audit

Audit Risk Assessment

Materiality and Audit Evidence

Tests of Controls

Designing Substantive Procedures

Audit Sampling

Auditing Sales and Receivables

Auditing Purchases, Payables and Payroll

Auditing Inventories and Property, Plant and Equipment

Auditing Cash and Investments

Filters