Question 1

The engagement letter may also include an agreement to provide other services such as tax returns or
management consulting.

Accepted Answer

A) True 
 B)False  True

Question 2

When considering the desirability of staff continuity on an engagement, an audit partner must always:

Accepted Answer

A)  be satisfied that the team has the appropriate competence and capabilities. 
B)  ensure the client is satisfied. 
C)  ensure confidentiality is not compromised. 
D)  ensure the audit staff is satisfied. 
A)  be satisfied that the team has the appropriate competence and capabilities. 
B)  ensure the client is satisfied. 
C)  ensure confidentiality is not compromised. 
D)  ensure the audit staff is satisfied. A

Question 3

A successor (new)auditor may request information from a company's previous auditor.If there are legal problems or disputes between the client and the predecessor (old)auditor, the predecessor auditor's response to the new auditor may be limited to stating that no information will be provided.

Accepted Answer

A) True 
 B)False  True

Question 4

What is featured in ASA 220?

Accepted Answer

A)  guidance regarding planning of an audit 
B)  audit evidence 
C)  analytical procedures to be undertaken in an audit 
D)  quality control for an audit 
A)  guidance regarding planning of an audit 
B)  audit evidence 
C)  analytical procedures to be undertaken in an audit 
D)  quality control for an audit

Question 5

Good working papers should have common characteristics.Which one of the following is NOT one of those characteristics?

Accepted Answer

A)  recording notations directly on the working paper schedules to explain the work done 
B)  noting the client staff member responsible for the particular area under review 
C)  putting the preparer's initials on the audit working papers 
D)  writing a conclusion 
A)  recording notations directly on the working paper schedules to explain the work done 
B)  noting the client staff member responsible for the particular area under review 
C)  putting the preparer's initials on the audit working papers 
D)  writing a conclusion

Question 6

What is the purpose of planning an engagement in order to avoid misunderstandings with the client?

Accepted Answer

A)  to minimise legal liability and maintain the firm's good reputation in the business community 
B)  to help the firm remain competitive 
C)  to facilitate good client relations 
D)  all of the above 
A)  to minimise legal liability and maintain the firm's good reputation in the business community 
B)  to help the firm remain competitive 
C)  to facilitate good client relations 
D)  all of the above

Question 7

What is the last step in accepting an audit engagement within the initial planning phase?

Accepted Answer

A)  identifying why the client wants an audit 
B)  obtaining background information 
C)  performing preliminary analytical procedures 
D)  developing the overall audit plan and programs 
A)  identifying why the client wants an audit 
B)  obtaining background information 
C)  performing preliminary analytical procedures 
D)  developing the overall audit plan and programs

Question 8

The minutes of meetings of the board of directors and/or shareholders include:

Accepted Answer

A)  appointment and retirement of directors. 
B)  declaration of dividends. 
C)  allotment and issue of shares. 
D)  all of the above 
A)  appointment and retirement of directors. 
B)  declaration of dividends. 
C)  allotment and issue of shares. 
D)  all of the above

Question 9

Discuss the purpose of an audit engagement letter.

Accepted Answer

The purpose of an audit engage

Question 10

A common example of a related-party transaction is any transaction between a parent company and its
subsidiary.

Accepted Answer

A) True 
 B)False

Question 11

Notations on working papers are accomplished by the use of:

Accepted Answer

A)  tick marks. 
B)  cross reference numbers. 
C)  the auditor's initials. 
D)  sticky notes. 
A)  tick marks. 
B)  cross reference numbers. 
C)  the auditor's initials. 
D)  sticky notes.

Question 12

Assessing acceptable audit risk and inherent risk is an important part of audit planning because it helps to determine the:

Accepted Answer

A)  timing of audit procedures. 
B)  staff to be assigned to the engagement. 
C)  fees to charge for the audit. 
D)  all of the above 
A)  timing of audit procedures. 
B)  staff to be assigned to the engagement. 
C)  fees to charge for the audit. 
D)  all of the above

Question 13

There are three main reasons why an auditor should properly plan audit engagements.Please discuss each of these reasons.

Accepted Answer

Three reasons why an auditor should prop

Question 14

Which of the following would NOT be classified as a related-party transaction?

Accepted Answer

A)  loans or credit sales to the principal owner or client 
B)  an advance of one week's salary to an employee 
C)  sales of merchandise between affiliated companies 
D)  exchanges of equipment between two companies owned by the same person 
A)  loans or credit sales to the principal owner or client 
B)  an advance of one week's salary to an employee 
C)  sales of merchandise between affiliated companies 
D)  exchanges of equipment between two companies owned by the same person

Question 15

Which one of the following measures how willing the auditor is to accept that the financial statements may be materially misstated after the audit is completed and an unqualified opinion has been issued?

Accepted Answer

A)  financial risk. 
B)  inherent risk 
C)  statistical risk 
D)  acceptable audit risk 
A)  financial risk. 
B)  inherent risk 
C)  statistical risk 
D)  acceptable audit risk

Question 16

A predecessor (old)auditor who has been contacted by a successor (new)auditor for information about the client must obtain permission from the client before providing any confidential information to the successor auditor.

Accepted Answer

A) True 
 B)False

Question 17

As inherent risk decreases, audit expertise should normally increase.

Accepted Answer

A) True 
 B)False

Question 18

Assessing acceptable audit risk and inherent risk is an important part of audit planning, because it helps to determine the:

Accepted Answer

A)  timing of audit procedures. 
B)  amount of evidence that will need to be accumulated. 
C)  fees to charge for the audit. 
D)  all of the above 
A)  timing of audit procedures. 
B)  amount of evidence that will need to be accumulated. 
C)  fees to charge for the audit. 
D)  all of the above

Question 19

Which two risks are assessed early in the planning stages of the audit?

Accepted Answer

A)  acceptable audit risk and business risk 
B)  business risk and inherent risk 
C)  acceptable audit risk and inherent risk 
D)  none of the above 
A)  acceptable audit risk and business risk 
B)  business risk and inherent risk 
C)  acceptable audit risk and inherent risk 
D)  none of the above

Question 20

One of the first things that the auditor will do after accepting a new client is:

Accepted Answer

A)  communicate with the client's predecessor auditor. 
B)  tour the client's facilities. 
C)  contact the client's solicitor to discover legal obligations. 
D)  study the client's internal controls. 
A)  communicate with the client's predecessor auditor. 
B)  tour the client's facilities. 
C)  contact the client's solicitor to discover legal obligations. 
D)  study the client's internal controls.

The engagement letter may also include an agreement to provide other services such as tax returns or management consulting.

When considering the desirability of staff continuity on an engagement, an audit partner must always:

A successor (new)auditor may request information from a company's previous auditor.If there are legal problems or disputes between the client and the predecessor (old)auditor, the predecessor auditor's response to the new auditor may be limited to stating that no information will be provided.

What is featured in ASA 220?

Good working papers should have common characteristics.Which one of the following is NOT one of those characteristics?

What is the purpose of planning an engagement in order to avoid misunderstandings with the client?

What is the last step in accepting an audit engagement within the initial planning phase?

The minutes of meetings of the board of directors and/or shareholders include:

Discuss the purpose of an audit engagement letter.

A common example of a related-party transaction is any transaction between a parent company and its subsidiary.

Notations on working papers are accomplished by the use of:

Assessing acceptable audit risk and inherent risk is an important part of audit planning because it helps to determine the:

There are three main reasons why an auditor should properly plan audit engagements.Please discuss each of these reasons.

Which of the following would NOT be classified as a related-party transaction?

Which one of the following measures how willing the auditor is to accept that the financial statements may be materially misstated after the audit is completed and an unqualified opinion has been issued?

A predecessor (old)auditor who has been contacted by a successor (new)auditor for information about the client must obtain permission from the client before providing any confidential information to the successor auditor.

As inherent risk decreases, audit expertise should normally increase.

Assessing acceptable audit risk and inherent risk is an important part of audit planning, because it helps to determine the:

Which two risks are assessed early in the planning stages of the audit?

One of the first things that the auditor will do after accepting a new client is:

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

Audit responsibilities and objectives

Audit evidence

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 6: Audit planning and documentation

The engagement letter may also include an agreement to provide other services such as tax returns or management consulting.

When considering the desirability of staff continuity on an engagement, an audit partner must always:

A successor (new)auditor may request information from a company's previous auditor.If there are legal problems or disputes between the client and the predecessor (old)auditor, the predecessor auditor's response to the new auditor may be limited to stating that no information will be provided.

What is featured in ASA 220?

Good working papers should have common characteristics.Which one of the following is NOT one of those characteristics?

What is the purpose of planning an engagement in order to avoid misunderstandings with the client?

What is the last step in accepting an audit engagement within the initial planning phase?

The minutes of meetings of the board of directors and/or shareholders include:

Discuss the purpose of an audit engagement letter.

A common example of a related-party transaction is any transaction between a parent company and its subsidiary.

Notations on working papers are accomplished by the use of:

Assessing acceptable audit risk and inherent risk is an important part of audit planning because it helps to determine the:

There are three main reasons why an auditor should properly plan audit engagements.Please discuss each of these reasons.

Which of the following would NOT be classified as a related-party transaction?

Which one of the following measures how willing the auditor is to accept that the financial statements may be materially misstated after the audit is completed and an unqualified opinion has been issued?

A predecessor (old)auditor who has been contacted by a successor (new)auditor for information about the client must obtain permission from the client before providing any confidential information to the successor auditor.

As inherent risk decreases, audit expertise should normally increase.

Assessing acceptable audit risk and inherent risk is an important part of audit planning, because it helps to determine the:

Which two risks are assessed early in the planning stages of the audit?

One of the first things that the auditor will do after accepting a new client is:

Demand for audit and assurance services

Auditors’ legal environment

Audit quality and ethics

Audit responsibilities and objectives

Audit evidence

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