Question 1

Which of the following is part of phase III of the audit process, which is responding to assessed risks?

Accepted Answer

A) Determine the nature, timing and extent of audit tests. 
B) Conduct tests of controls. 
C) Assess the risk of material misstatement. 
D) Identify significant inherent risks. 
A) Determine the nature, timing and extent of audit tests. 
B) Conduct tests of controls. 
C) Assess the risk of material misstatement. 
D) Identify significant inherent risks.

Question 2

In a financial statement audit, the auditor maintains professional relationships with:

Accepted Answer

A) the board of directors and ASIC. 
B) the audit committee and the internal auditors. 
C) management and the professional accounting bodies. 
D) shareholders and creditors. 
A) the board of directors and ASIC. 
B) the audit committee and the internal auditors. 
C) management and the professional accounting bodies. 
D) shareholders and creditors.

Question 3

Which of the following is a benefit of the ASIC register of company auditors?

Accepted Answer

A) The register contains a code of ethics that auditors must follow. 
B) The register provides assurance of the qualification, level of competence and experience of the auditor. 
C) The register facilitates disciplinary procedures against auditors. 
D) All of the above are benefits. 
A) The register contains a code of ethics that auditors must follow. 
B) The register provides assurance of the qualification, level of competence and experience of the auditor. 
C) The register facilitates disciplinary procedures against auditors. 
D) All of the above are benefits.

Question 4

During phase I of the audit, the auditor performs risk assessment procedures.Which of the following is not one of the tasks undertaken during this phase of the audit?

Accepted Answer

A) Understand internal control. 
B) Assess the risk of material misstatements. 
C) Develop preliminary audit strategies. 
D) Make decisions about materiality. 
A) Understand internal control. 
B) Assess the risk of material misstatements. 
C) Develop preliminary audit strategies. 
D) Make decisions about materiality.

Question 5

The body that prepares the auditing standards that apply in Australia is:

Accepted Answer

A) the ASIC. 
B) the AASB. 
C) the IFAC. 
D) the AUASB. 
A) the ASIC. 
B) the AASB. 
C) the IFAC. 
D) the AUASB.

Question 6

ABC Ltd recently established an audit committee in compliance with the Australian Stock Exchange listing requirements.The committee is made up of Ian Wright, John Small and Todd Smith.Ian is an executive of the company and has worked his way up from a factory worker through to management.Ian is the chairperson of the audit committee.John is not a member of management and is therefore a non-executive director but he does serve on a number of boards.John's background is in accounting and before he became a director he was the CFO of a large corporation for many years.Todd is the chairperson of the board of directors and is an executive of the company.Todd's background is in manufacturing and he has been with the current company for 5 years.The committee has just completed having its formal charter drawn up which details its rights and responsibilities.
Identify the strengths and weaknesses of ABC Ltd's audit committee.

Accepted Answer

Strengths:
@#LAT-DLM&Chairperson of the audit comm

Question 7

The Corporations Act does not require the audit of which of the following type of entity, except in specified circumstances?

Accepted Answer

A) A small proprietary company. 
B) A public company. 
C) A government company. 
D) A large proprietary company. 
A) A small proprietary company. 
B) A public company. 
C) A government company. 
D) A large proprietary company.

Question 8

An auditor must be registered:

Accepted Answer

A) by the ASIC. 
B) by the Financial Reporting Council. 
C) through CPA Australia, CAANZ or the Institute of Public Accountants. 
D) by the AUASB. 
A) by the ASIC. 
B) by the Financial Reporting Council. 
C) through CPA Australia, CAANZ or the Institute of Public Accountants. 
D) by the AUASB.

Question 9

Audit committees are perceived to strengthen the independence of auditors.Which of the following is normally an objective of an audit committee?

Accepted Answer

A) Ensuring that the entity operates in the best interests of the shareholders. 
B) Assisting the board of directors to discharge its responsibility to exercise due care, diligence and skill. 
C) Giving advice on the selection of the board of directors. 
D) All are objectives of an audit committee. 
A) Ensuring that the entity operates in the best interests of the shareholders. 
B) Assisting the board of directors to discharge its responsibility to exercise due care, diligence and skill. 
C) Giving advice on the selection of the board of directors. 
D) All are objectives of an audit committee.

Question 10

The Corporations Act requires that auditors are competent.To be suitably qualified the person must:

Accepted Answer

A) be a fit and proper person to be registered as an auditor. 
B) be a member of CAANZ, CPA Australia, the Institute of Public Accountants or other prescribed body. 
C) hold a degree, diploma or certificate from a university or other prescribed body. 
D) all of the above. 
A) be a fit and proper person to be registered as an auditor. 
B) be a member of CAANZ, CPA Australia, the Institute of Public Accountants or other prescribed body. 
C) hold a degree, diploma or certificate from a university or other prescribed body. 
D) all of the above.

Which of the following is part of phase III of the audit process, which is responding to assessed risks?

In a financial statement audit, the auditor maintains professional relationships with:

Which of the following is a benefit of the ASIC register of company auditors?

During phase I of the audit, the auditor performs risk assessment procedures.Which of the following is not one of the tasks undertaken during this phase of the audit?

The body that prepares the auditing standards that apply in Australia is:

The Corporations Act does not require the audit of which of the following type of entity, except in specified circumstances?

An auditor must be registered:

Audit committees are perceived to strengthen the independence of auditors.Which of the following is normally an objective of an audit committee?

The Corporations Act requires that auditors are competent.To be suitably qualified the person must:

An Overview of Auditing

Governance and the Auditor

Professional Ethics, Regulation and Liability

Quality and Standards of Assurance Engagements

The Auditors Report

Client Evaluation and Planning the Audit

Audit Risk Assessment

Materiality and Audit Evidence

Tests of Controls

Designing Substantive Procedures

Managing Audit Data

Completing the Audit

Filters

Exam 5: Overview of the Audit Financial Reports

Which of the following is part of phase III of the audit process, which is responding to assessed risks?

In a financial statement audit, the auditor maintains professional relationships with:

Which of the following is a benefit of the ASIC register of company auditors?

During phase I of the audit, the auditor performs risk assessment procedures.Which of the following is not one of the tasks undertaken during this phase of the audit?

The body that prepares the auditing standards that apply in Australia is:

The Corporations Act does not require the audit of which of the following type of entity, except in specified circumstances?

An auditor must be registered:

Audit committees are perceived to strengthen the independence of auditors.Which of the following is normally an objective of an audit committee?

The Corporations Act requires that auditors are competent.To be suitably qualified the person must:

An Overview of Auditing

Governance and the Auditor

Professional Ethics, Regulation and Liability

Quality and Standards of Assurance Engagements

The Auditors Report

Client Evaluation and Planning the Audit

Audit Risk Assessment

Materiality and Audit Evidence

Tests of Controls

Designing Substantive Procedures

Managing Audit Data

Completing the Audit

Filters