Question 1

The audit can be divided into transaction cycles.Which of the following is NOT one of the transaction cycles?

Accepted Answer

A)  payroll and personnel cycle 
B)  sales and payment cycle 
C)  sales and collection cycle 
D)  acquisition and payment cycle 
A)  payroll and personnel cycle 
B)  sales and payment cycle 
C)  sales and collection cycle 
D)  acquisition and payment cycle

Question 2

When planning an audit, which of the following should be an overriding consideration?

Accepted Answer

A)  the accumulation of appropriate audit evidence 
B)  the accumulation of sufficient audit evidence 
C)  the minimisation of costs incurred to accumulate evidence 
D)  all of the above 
A)  the accumulation of appropriate audit evidence 
B)  the accumulation of sufficient audit evidence 
C)  the minimisation of costs incurred to accumulate evidence 
D)  all of the above

Question 3

What is the purpose of tests of details of balances?

Accepted Answer

A)  Test for monetary errors in the financial statements. 
B)  Identify the details of the internal control system. 
C)  Prove that the trial balance is correct. 
D)  Prove that the accounts with material balances are correctly classified. 
A)  Test for monetary errors in the financial statements. 
B)  Identify the details of the internal control system. 
C)  Prove that the trial balance is correct. 
D)  Prove that the accounts with material balances are correctly classified.

Question 4

What are the responsibilities of management in regard to their declaration in the financial reports? Discuss.

Accepted Answer

The Corporations Act requires the direct

Question 5

Which of the following journals would be included in all of the various audit cycles?

Accepted Answer

A)  cash receipts journal 
B)  general journal 
C)  cash disbursements journal 
D)  sales journal 
A)  cash receipts journal 
B)  general journal 
C)  cash disbursements journal 
D)  sales journal

Question 6

In comparing management fraud with employee fraud, the auditor's responsibility to discover the fraud is:

Accepted Answer

A)  greater for employee fraud because of the larger number of employees in the organisation. 
B)  the same for both management and employee fraud. 
C)  greater for management fraud because of management's ability to override existing internal controls. 
D)  greater for management fraud because managers are inherently smarter than employees. 
A)  greater for employee fraud because of the larger number of employees in the organisation. 
B)  the same for both management and employee fraud. 
C)  greater for management fraud because of management's ability to override existing internal controls. 
D)  greater for management fraud because managers are inherently smarter than employees.

Question 7

'The auditor should not assume that management is dishonest, but the possibility of dishonesty must be considered.This illustrates:

Accepted Answer

A)  adhering to the Code of Ethics for Professional Accountants. 
B)  an attitude of professional scepticism. 
C)  unprofessional behaviour. 
D)  due diligence. 
A)  adhering to the Code of Ethics for Professional Accountants. 
B)  an attitude of professional scepticism. 
C)  unprofessional behaviour. 
D)  due diligence.

Question 8

An audit generally provides no assurance that indirect-effect illegal acts will be detected.

Accepted Answer

A) True 
 B)False

Question 9

There are five general transaction-related audit objectives.One is the existence objective, which deals with whether recorded transactions have actually occurred.Identify and discuss each of the remaining general transaction-related audit objectives.

Accepted Answer

.Completeness.Completeness deals with wh

Question 10

The objective of issuing an audit opinion on the financial report includes an opinion on the:

Accepted Answer

A)  financial statements. 
B)  directors' declaration. 
C)  accompanying notes. 
D)  all of the above 
A)  financial statements. 
B)  directors' declaration. 
C)  accompanying notes. 
D)  all of the above

Question 11

'Illegal acts,' as opposed to fraud, are defined as violations of:

Accepted Answer

A)  law which would result in the arrest of the perpetrator. 
B)  laws or government regulations, other than fraud. 
C)  laws or government regulations, other than errors. 
D)  laws or government regulations, other than irregularities. 
A)  law which would result in the arrest of the perpetrator. 
B)  laws or government regulations, other than fraud. 
C)  laws or government regulations, other than errors. 
D)  laws or government regulations, other than irregularities.

Question 12

The auditor's responsibility for uncovering direct-effect illegal acts is the same as for errors and fraud.

Accepted Answer

A) True 
 B)False

Question 13

When the auditor has assessed control risk of a particular area at a reduced level, he or she will then:

Accepted Answer

A)  proceed to expand the sample sizes in that area. 
B)  test the effectiveness of the controls in that area. 
C)  negotiate with management to determine which controls will be tested in that area. 
D)  eliminate the need to gather evidence in that area. 
A)  proceed to expand the sample sizes in that area. 
B)  test the effectiveness of the controls in that area. 
C)  negotiate with management to determine which controls will be tested in that area. 
D)  eliminate the need to gather evidence in that area.

Question 14

Which level of assurance has the auditor hoped to attain at the completion of the audit?

Accepted Answer

A)  absolute 
B)  reasonable 
C)  moderate 
D)  any of the above is considered appropriate 
A)  absolute 
B)  reasonable 
C)  moderate 
D)  any of the above is considered appropriate

Question 15

'All assets, liabilities and equity interests that should have been recorded have been recorded' relates to which management assertion?

Accepted Answer

A)  rights and obligations 
B)  valuation and allocation 
C)  existence or occurrence 
D)  completeness 
A)  rights and obligations 
B)  valuation and allocation 
C)  existence or occurrence 
D)  completeness

Question 16

Which of the following is NOT one of the four phases in the audit process?

Accepted Answer

A)  Complete the audit and issue the report. 
B)  Plan and design an audit approach. 
C)  Test controls and transactions. 
D)  Inform the client of any adjustments or corrections to be made to the financial statements. 
A)  Complete the audit and issue the report. 
B)  Plan and design an audit approach. 
C)  Test controls and transactions. 
D)  Inform the client of any adjustments or corrections to be made to the financial statements.

Question 17

When an auditor informs the client's audit committee of an illegal act discovered during an audit, it is acceptable for this communication to be either oral or written.

Accepted Answer

A) True 
 B)False

Question 18

When the auditor knows that an illegal act exists, he should:

Accepted Answer

A)  modify the audit report. 
B)  consider the adequacy of disclosures. 
C)  consider the effects on the financial statements. 
D)  all of the above 
A)  modify the audit report. 
B)  consider the adequacy of disclosures. 
C)  consider the effects on the financial statements. 
D)  all of the above

Question 19

There are eight general balance-related audit objectives.One is the existence objective, which deals with whether the amounts included in the financial statements should actually be included.Identify and discuss each of the remaining eight general balance-related audit objectives.

Accepted Answer

.Completeness.Completeness deals with wh

Question 20

What is the objective in testing for cut-off?

Accepted Answer

A)  that no transactions of the current period have been delayed and recorded in a future period 
B)  whether all of the current period's transactions are recorded 
C)  whether transactions are recorded in the proper period 
D)  that no transactions from the prior period are included in the current period's balances 
A)  that no transactions of the current period have been delayed and recorded in a future period 
B)  whether all of the current period's transactions are recorded 
C)  whether transactions are recorded in the proper period 
D)  that no transactions from the prior period are included in the current period's balances

The audit can be divided into transaction cycles.Which of the following is NOT one of the transaction cycles?

When planning an audit, which of the following should be an overriding consideration?

What is the purpose of tests of details of balances?

What are the responsibilities of management in regard to their declaration in the financial reports? Discuss.

Which of the following journals would be included in all of the various audit cycles?

In comparing management fraud with employee fraud, the auditor's responsibility to discover the fraud is:

'The auditor should not assume that management is dishonest, but the possibility of dishonesty must be considered.This illustrates:

An audit generally provides no assurance that indirect-effect illegal acts will be detected.

There are five general transaction-related audit objectives.One is the existence objective, which deals with whether recorded transactions have actually occurred.Identify and discuss each of the remaining general transaction-related audit objectives.

The objective of issuing an audit opinion on the financial report includes an opinion on the:

'Illegal acts,' as opposed to fraud, are defined as violations of:

The auditor's responsibility for uncovering direct-effect illegal acts is the same as for errors and fraud.

When the auditor has assessed control risk of a particular area at a reduced level, he or she will then:

Which level of assurance has the auditor hoped to attain at the completion of the audit?

'All assets, liabilities and equity interests that should have been recorded have been recorded' relates to which management assertion?

Which of the following is NOT one of the four phases in the audit process?

When an auditor informs the client's audit committee of an illegal act discovered during an audit, it is acceptable for this communication to be either oral or written.

When the auditor knows that an illegal act exists, he should:

There are eight general balance-related audit objectives.One is the existence objective, which deals with whether the amounts included in the financial statements should actually be included.Identify and discuss each of the remaining eight general balance-related audit objectives.

What is the objective in testing for cut-off?

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

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 4: Audit responsibilities and objectives

The audit can be divided into transaction cycles.Which of the following is NOT one of the transaction cycles?

When planning an audit, which of the following should be an overriding consideration?

What is the purpose of tests of details of balances?

What are the responsibilities of management in regard to their declaration in the financial reports? Discuss.

Which of the following journals would be included in all of the various audit cycles?

In comparing management fraud with employee fraud, the auditor's responsibility to discover the fraud is:

'The auditor should not assume that management is dishonest, but the possibility of dishonesty must be considered.This illustrates:

An audit generally provides no assurance that indirect-effect illegal acts will be detected.

There are five general transaction-related audit objectives.One is the existence objective, which deals with whether recorded transactions have actually occurred.Identify and discuss each of the remaining general transaction-related audit objectives.

The objective of issuing an audit opinion on the financial report includes an opinion on the:

'Illegal acts,' as opposed to fraud, are defined as violations of:

The auditor's responsibility for uncovering direct-effect illegal acts is the same as for errors and fraud.

When the auditor has assessed control risk of a particular area at a reduced level, he or she will then:

Which level of assurance has the auditor hoped to attain at the completion of the audit?

'All assets, liabilities and equity interests that should have been recorded have been recorded' relates to which management assertion?

Which of the following is NOT one of the four phases in the audit process?

When an auditor informs the client's audit committee of an illegal act discovered during an audit, it is acceptable for this communication to be either oral or written.

When the auditor knows that an illegal act exists, he should:

There are eight general balance-related audit objectives.One is the existence objective, which deals with whether the amounts included in the financial statements should actually be included.Identify and discuss each of the remaining eight general balance-related audit objectives.

What is the objective in testing for cut-off?

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

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