Question 1

The ASX listing rules require listed companies who do not have an audit committee to establish an audit committee within three years.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

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

Question 3

A public accounting firm currently audits XYZ Co., a publicly listed company.The firm has been approached by XYZ Co.to also provide valuation services on all its property, plant, and equipment.Can the firm provide these services?

Accepted Answer

Subsection 290.176 of the Code of Ethics

Question 4

According to the profession's ethical standards, an auditor would be considered independent in which one of the following instances?

Accepted Answer

A)  The client owes the auditor fees for the last two annual audits. 
B)  An employee of the audit firm acts as the honorary treasurer for a charity that is an audit client. 
C)  The auditor's main bank account is held at a client financial institution. 
D)  The auditor is also a solicitor advising the client. 
A)  The client owes the auditor fees for the last two annual audits. 
B)  An employee of the audit firm acts as the honorary treasurer for a charity that is an audit client. 
C)  The auditor's main bank account is held at a client financial institution. 
D)  The auditor is also a solicitor advising the client.

Question 5

An ethical dilemma arises when a person is faced with a situation that requires a decision about the:

Accepted Answer

A)  most appropriate behaviour, but they have very few options available. 
B)  most appropriate behaviour when there is a range of options available. 
C)  most appropriate behaviour, but the available options require a trade-off of interests or ideals. 
D)  least appropriate behaviour, but the available options require a trade-off of interests or ideals. 
A)  most appropriate behaviour, but they have very few options available. 
B)  most appropriate behaviour when there is a range of options available. 
C)  most appropriate behaviour, but the available options require a trade-off of interests or ideals. 
D)  least appropriate behaviour, but the available options require a trade-off of interests or ideals.

Question 6

Which statement about the Code of Ethics for Professional Accountants is NOT true? The Code of Ethics for Professional Accountants

Accepted Answer

A)  includes specific rules defining unacceptable behaviours. 
B)  has the force of law applicable to auditing standards. 
C)  contains a section of quality control ideals. 
D)  outlines a six-step model for resolving ethical dilemmas. 
A)  includes specific rules defining unacceptable behaviours. 
B)  has the force of law applicable to auditing standards. 
C)  contains a section of quality control ideals. 
D)  outlines a six-step model for resolving ethical dilemmas.

Question 7

What rules prohibit an auditor from being an employee, officer, or director of an audit client?

Accepted Answer

The Corporations Act (s.324CH)

Question 8

Which of the following is a concern that may arise from an audit firm completing an audit for a substantially reduced fee?

Accepted Answer

A)  a more efficient audit being conducted because the audit is completed within a budgeted time frame 
B)  auditor independence 
C)  increased staffing to complete the audit 
D)  consistent applications of client accounting principles 
A)  a more efficient audit being conducted because the audit is completed within a budgeted time frame 
B)  auditor independence 
C)  increased staffing to complete the audit 
D)  consistent applications of client accounting principles

Question 9

Which one of the following is incorrect with respect to working papers?

Accepted Answer

A)  They are the property of the client and can be accessed by the client at the conclusion of the audit. 
B)  Information contained in them is not legally viewed as privileged information. 
C)  They can be viewed by another member of the professional bodies during a peer review. 
D)  Ordinarily, they can only be provided to a third party with the express permission of the auditee. 
A)  They are the property of the client and can be accessed by the client at the conclusion of the audit. 
B)  Information contained in them is not legally viewed as privileged information. 
C)  They can be viewed by another member of the professional bodies during a peer review. 
D)  Ordinarily, they can only be provided to a third party with the express permission of the auditee.

Question 10

A set of moral principles or values is known as:

Accepted Answer

A)  ethics. 
B)  independence in fact. 
C)  independence in appearance. 
D)  auditor competence. 
A)  ethics. 
B)  independence in fact. 
C)  independence in appearance. 
D)  auditor competence.

Question 11

When audit working papers are viewed by another party as part of a peer review, the permission of the client must be obtained.

Accepted Answer

A) True 
 B)False

Question 12

The value of the audit report and the demand for audit services depends on:

Accepted Answer

A)  public confidence in the independence and integrity of CPAs and chartered accountants. 
B)  public confidence in the regulators. 
C)  the fees paid for audits. 
D)  all of the above 
A)  public confidence in the independence and integrity of CPAs and chartered accountants. 
B)  public confidence in the regulators. 
C)  the fees paid for audits. 
D)  all of the above

Question 13

A public accounting firm should decline an offer to perform management advisory services if:

Accepted Answer

A)  the firm audits the financial statements of a subsidiary of the prospective client. 
B)  recommendations to be made by the firm are to be subject to review by the client. 
C)  the proposed engagement is not accounting-related. 
D)  acceptance would require the firm to make management decisions for an audit client. 
A)  the firm audits the financial statements of a subsidiary of the prospective client. 
B)  recommendations to be made by the firm are to be subject to review by the client. 
C)  the proposed engagement is not accounting-related. 
D)  acceptance would require the firm to make management decisions for an audit client.

Question 14

Which one of the following situations is most likely to impair independence? Legal action is taken by

Accepted Answer

A)  the auditee against the audit firm in relation to taxation services provided. 
B)  a third party against both the auditee and the audit firm. 
C)  the auditee against the audit firm claiming deficiencies in the prior year's audit. 
D)  the auditee against the audit firm in relation to management consulting advice. 
A)  the auditee against the audit firm in relation to taxation services provided. 
B)  a third party against both the auditee and the audit firm. 
C)  the auditee against the audit firm claiming deficiencies in the prior year's audit. 
D)  the auditee against the audit firm in relation to management consulting advice.

Question 15

The ASX Corporate Governance Principles do NOT include:

Accepted Answer

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

Question 16

Which of the following would be a breach of the ethical rules?

Accepted Answer

A)  auditing the bank from which you have a home mortgage 
B)  auditing Telstra while owning $250 of Telstra shares 
C)  purchasing a motor vehicle from an audit client at a substantial discount 
D)  all of the above 
A)  auditing the bank from which you have a home mortgage 
B)  auditing Telstra while owning $250 of Telstra shares 
C)  purchasing a motor vehicle from an audit client at a substantial discount 
D)  all of the above

Question 17

A self-review threat to independence occurs when:

Accepted Answer

A)  a provision of internal audit services to an auditee has been made. 
B)  the auditor renders an unmodified opinion on the financial statements. 
C)  the client employs internal auditors. 
D)  all of the above 
A)  a provision of internal audit services to an auditee has been made. 
B)  the auditor renders an unmodified opinion on the financial statements. 
C)  the client employs internal auditors. 
D)  all of the above

Question 18

The auditor's relationship with financial statement users is different from the relationship that most professionals have with the users of their services because:

Accepted Answer

A)  higher standards of professionalism apply. 
B)  the users directly remunerate the auditor. 
C)  of the confidentiality aspects involved. 
D)  the primary beneficiaries of the audit do not engage the auditor. 
A)  higher standards of professionalism apply. 
B)  the users directly remunerate the auditor. 
C)  of the confidentiality aspects involved. 
D)  the primary beneficiaries of the audit do not engage the auditor.

Question 19

What percentage of listed Australian companies have an audit committee?

Accepted Answer

A)  50% 
B)  10% 
C)  75% 
D)  90% 
A)  50% 
B)  10% 
C)  75% 
D)  90%

Question 20

Changes in social expectations and auditors' self-interest in protecting their profits are characteristics of:

Accepted Answer

A)  independence. 
B)  the audit expectations gap. 
C)  unethical auditor behaviour. 
D)  client acceptance. 
A)  independence. 
B)  the audit expectations gap. 
C)  unethical auditor behaviour. 
D)  client acceptance.

The ASX listing rules require listed companies who do not have an audit committee to establish an audit committee within three years.

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

A public accounting firm currently audits XYZ Co., a publicly listed company.The firm has been approached by XYZ Co.to also provide valuation services on all its property, plant, and equipment.Can the firm provide these services?

According to the profession's ethical standards, an auditor would be considered independent in which one of the following instances?

An ethical dilemma arises when a person is faced with a situation that requires a decision about the:

Which statement about the Code of Ethics for Professional Accountants is NOT true? The Code of Ethics for Professional Accountants

What rules prohibit an auditor from being an employee, officer, or director of an audit client?

Which of the following is a concern that may arise from an audit firm completing an audit for a substantially reduced fee?

Which one of the following is incorrect with respect to working papers?

A set of moral principles or values is known as:

When audit working papers are viewed by another party as part of a peer review, the permission of the client must be obtained.

The value of the audit report and the demand for audit services depends on:

A public accounting firm should decline an offer to perform management advisory services if:

Which one of the following situations is most likely to impair independence? Legal action is taken by

The ASX Corporate Governance Principles do NOT include:

Which of the following would be a breach of the ethical rules?

A self-review threat to independence occurs when:

The auditor's relationship with financial statement users is different from the relationship that most professionals have with the users of their services because:

What percentage of listed Australian companies have an audit committee?

Changes in social expectations and auditors' self-interest in protecting their profits are characteristics of:

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

The ASX listing rules require listed companies who do not have an audit committee to establish an audit committee within three years.

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

A public accounting firm currently audits XYZ Co., a publicly listed company.The firm has been approached by XYZ Co.to also provide valuation services on all its property, plant, and equipment.Can the firm provide these services?

According to the profession's ethical standards, an auditor would be considered independent in which one of the following instances?

An ethical dilemma arises when a person is faced with a situation that requires a decision about the:

Which statement about the Code of Ethics for Professional Accountants is NOT true? The Code of Ethics for Professional Accountants

What rules prohibit an auditor from being an employee, officer, or director of an audit client?

Which of the following is a concern that may arise from an audit firm completing an audit for a substantially reduced fee?

Which one of the following is incorrect with respect to working papers?

A set of moral principles or values is known as:

When audit working papers are viewed by another party as part of a peer review, the permission of the client must be obtained.

The value of the audit report and the demand for audit services depends on:

A public accounting firm should decline an offer to perform management advisory services if:

Which one of the following situations is most likely to impair independence? Legal action is taken by

The ASX Corporate Governance Principles do NOT include:

Which of the following would be a breach of the ethical rules?

A self-review threat to independence occurs when:

The auditor's relationship with financial statement users is different from the relationship that most professionals have with the users of their services because:

What percentage of listed Australian companies have an audit committee?

Changes in social expectations and auditors' self-interest in protecting their profits are characteristics of:

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