Question 1

The body that is responsible for setting the auditing standards in Australia is:

Accepted Answer

A) AASB. 
B) AUASB. 
C) FRC. 
D) IAASB. 
A) AASB. 
B) AUASB. 
C) FRC. 
D) IAASB.

Question 2

An area where auditors in Australia have generally not expanded their role is:

Accepted Answer

A) detection of fraud. 
B) evaluation of whether an entity is a going concern. 
C) reporting on internal controls. 
D) all of the above are areas in Australia where auditors have not expanded their role. 
A) detection of fraud. 
B) evaluation of whether an entity is a going concern. 
C) reporting on internal controls. 
D) all of the above are areas in Australia where auditors have not expanded their role.

Question 3

In relation to auditing the information hypothesis relates:

Accepted Answer

A) to 'does the audit meet the demands of users'. 
B) to why there is a demand for audits. 
C) to what auditing is. 
D) to which auditing standards are produced. 
A) to 'does the audit meet the demands of users'. 
B) to why there is a demand for audits. 
C) to what auditing is. 
D) to which auditing standards are produced.

Question 4

In Australia, the auditor's opinion in the audit report must state:

Accepted Answer

A) whether the financial report is presented fairly, in all material respects, in accordance with the applicable financial reporting framework. 
B) whether the financial report presents a true and fair view, in all material respects, in accordance with the applicable financial reporting framework. 
C) whether the financial report provides a reasonable level of assurance, in all material respects, in accordance with the applicable financial reporting framework. 
D) a or b 
A) whether the financial report is presented fairly, in all material respects, in accordance with the applicable financial reporting framework. 
B) whether the financial report presents a true and fair view, in all material respects, in accordance with the applicable financial reporting framework. 
C) whether the financial report provides a reasonable level of assurance, in all material respects, in accordance with the applicable financial reporting framework. 
D) a or b

Question 5

Which theory of auditing focuses more towards the decision usefulness role of accounting?

Accepted Answer

A) Insurance hypothesis. 
B) Agency theory. 
C) Information hypothesis. 
D) None of the above. 
A) Insurance hypothesis. 
B) Agency theory. 
C) Information hypothesis. 
D) None of the above.

Question 6

The three major professional accounting bodies in Australia are:

Accepted Answer

A) CAANZ, CPA and ASIC. 
B) CPA Australia, IPA and AARF. 
C) ATO, AUASB and ASIC. 
D) CAANZ, CPA Australia and IPA. 
A) CAANZ, CPA and ASIC. 
B) CPA Australia, IPA and AARF. 
C) ATO, AUASB and ASIC. 
D) CAANZ, CPA Australia and IPA.

Question 7

Which of the following is true regarding auditors and fraud?

Accepted Answer

A) Auditors are required to detect all fraud during an audit. 
B) Auditors should actively investigate the possibility of fraud if suspicious circumstances exist. 
C) In the Kingston Cotton Mill case, it was said that the audit role was not primarily to detect fraud. 
D) b and c are true. 
A) Auditors are required to detect all fraud during an audit. 
B) Auditors should actively investigate the possibility of fraud if suspicious circumstances exist. 
C) In the Kingston Cotton Mill case, it was said that the audit role was not primarily to detect fraud. 
D) b and c are true.

Question 8

The reasonableness gap is:

Accepted Answer

A) The difference between what financial statement users believe the audit provides and what an audit actually provides. 
B) The gap between what society can reasonably expect auditors to accomplish and what they are perceived to achieve. 
C) The gap comprising deficient performance and deficient standards. 
D) the gap between what society expects auditors to achieve and what they can be reasonably expected to accomplish. 
A) The difference between what financial statement users believe the audit provides and what an audit actually provides. 
B) The gap between what society can reasonably expect auditors to accomplish and what they are perceived to achieve. 
C) The gap comprising deficient performance and deficient standards. 
D) the gap between what society expects auditors to achieve and what they can be reasonably expected to accomplish.

Question 9

In the HIH Royal Commission Report it was stated that current audit reports:

Accepted Answer

A) are not very informative about the nature and scope of audit services. 
B) are useful in informing users about the message that auditors are trying to get over. 
C) are generally a waste of the paper they are written on. 
D) are often wrong. 
A) are not very informative about the nature and scope of audit services. 
B) are useful in informing users about the message that auditors are trying to get over. 
C) are generally a waste of the paper they are written on. 
D) are often wrong.

Question 10

The oversight structure of financial reporting in Australia had many levels.CALDB is part of which level?

Accepted Answer

A) Regulation by the firm. 
B) Regulation by the profession. 
C) Government regulation. 
D) Self or peer regulation. 
A) Regulation by the firm. 
B) Regulation by the profession. 
C) Government regulation. 
D) Self or peer regulation.

Question 11

Under ASA 200/ IAS 200 the primary objective of a financial report audit is to:

Accepted Answer

A) ensure that the company is free from all fraud. 
B) provide assurance about the future viability of the entity. 
C) to express an opinion as to whether the financial report is prepared in all material aspects, in accordance with a financial reporting framework. 
D) ensure the company complies with all aspects of Corporations Law. 
A) ensure that the company is free from all fraud. 
B) provide assurance about the future viability of the entity. 
C) to express an opinion as to whether the financial report is prepared in all material aspects, in accordance with a financial reporting framework. 
D) ensure the company complies with all aspects of Corporations Law.

Question 12

Describe the principal - agent relationship and how it is used to explain the development of auditing.

Accepted Answer

When one or more of the principals engag

Question 13

The best test to decide if audits provide good value is:

Accepted Answer

A) by examining how often audits are associated with company failure. 
B) by examining whether the audit report is correct. 
C) by examining the premium, the market places on a share price for independently audited information. 
D) it is not possible to designate any one test as being the best to decide if audits provide good value. 
A) by examining how often audits are associated with company failure. 
B) by examining whether the audit report is correct. 
C) by examining the premium, the market places on a share price for independently audited information. 
D) it is not possible to designate any one test as being the best to decide if audits provide good value.

Question 14

Auditing bears what relationship to assurance?

Accepted Answer

A) Auditing is a sub-category of assurance. 
B) Assurance is a sub-category of auditing. 
C) They are different names for the same thing. 
D) Public accounting firms perform auditing engagements but not assurance engagements. 
A) Auditing is a sub-category of assurance. 
B) Assurance is a sub-category of auditing. 
C) They are different names for the same thing. 
D) Public accounting firms perform auditing engagements but not assurance engagements.

The body that is responsible for setting the auditing standards in Australia is:

An area where auditors in Australia have generally not expanded their role is:

In relation to auditing the information hypothesis relates:

In Australia, the auditor's opinion in the audit report must state:

Which theory of auditing focuses more towards the decision usefulness role of accounting?

The three major professional accounting bodies in Australia are:

Which of the following is true regarding auditors and fraud?

The reasonableness gap is:

In the HIH Royal Commission Report it was stated that current audit reports:

The oversight structure of financial reporting in Australia had many levels.CALDB is part of which level?

Under ASA 200/ IAS 200 the primary objective of a financial report audit is to:

Describe the principal - agent relationship and how it is used to explain the development of auditing.

The best test to decide if audits provide good value is:

Auditing bears what relationship to assurance?

Governance and the Auditor

Professional Ethics, Regulation and Liability

Quality and Standards of Assurance Engagements

Overview of the Audit Financial Reports

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 1: An Overview of Auditing

The body that is responsible for setting the auditing standards in Australia is:

An area where auditors in Australia have generally not expanded their role is:

In relation to auditing the information hypothesis relates:

In Australia, the auditor's opinion in the audit report must state:

Which theory of auditing focuses more towards the decision usefulness role of accounting?

The three major professional accounting bodies in Australia are:

Which of the following is true regarding auditors and fraud?

The reasonableness gap is:

In the HIH Royal Commission Report it was stated that current audit reports:

The oversight structure of financial reporting in Australia had many levels.CALDB is part of which level?

Under ASA 200/ IAS 200 the primary objective of a financial report audit is to:

Describe the principal - agent relationship and how it is used to explain the development of auditing.

The best test to decide if audits provide good value is:

Auditing bears what relationship to assurance?

Governance and the Auditor

Professional Ethics, Regulation and Liability

Quality and Standards of Assurance Engagements

Overview of the Audit Financial Reports

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