Question 1

Which of the following best describes the audit expectation gap?

Accepted Answer

A)  Auditors are performing in a manner which is at variance with the beliefs and desires of others who are party to or interested in the audit. 
B)  The expectation that the primary focus of an audit is detecting fraud. 
C)  Audits are of a lower quality than shareholders expect given how much they cost. 
D)  The level of assurance provided by an audit should be "almost certain". 
A)  Auditors are performing in a manner which is at variance with the beliefs and desires of others who are party to or interested in the audit. 
B)  The expectation that the primary focus of an audit is detecting fraud. 
C)  Audits are of a lower quality than shareholders expect given how much they cost. 
D)  The level of assurance provided by an audit should be "almost certain". A

Question 2

Why has it been argued that accounting professional bodies have not been more active in addressing the deficiencies in audit standards?

Accepted Answer

A)  They do not see the promulgation and enforcement of standards as their role. 
B)  They believe the auditing standards are appropriate and do not need to change. 
C)  Introducing rigorous standards may add to the potential liability of their members. 
D)  All of the above. 
A)  They do not see the promulgation and enforcement of standards as their role. 
B)  They believe the auditing standards are appropriate and do not need to change. 
C)  Introducing rigorous standards may add to the potential liability of their members. 
D)  All of the above. C

Question 3

Which of the following was NOT identified by the FRC's 2008 Audit Quality Framework as being a driver for achieving quality?

Accepted Answer

A)  The culture within audit firms 
B)  The auditing standards 
C)  The personal qualities of audit partners 
D)  None of the above, they were all identified as drivers. 
A)  The culture within audit firms 
B)  The auditing standards 
C)  The personal qualities of audit partners 
D)  None of the above, they were all identified as drivers. B

Question 4

According to ISA 240 - The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements who has primary responsibility for the detection of fraud?

Accepted Answer

A)  Auditors 
B)  Management 
C)  Regulators 
D)  Directors 
A)  Auditors 
B)  Management 
C)  Regulators 
D)  Directors

Question 5

Auditors have been criticized in the past for not paying enough attention to the issue of going concern. How has ISA 570 - Going Concern addressed this expectation gap?

Accepted Answer

A)  Auditors must get external verification that the entity is a going concern. 
B)  Auditors must look at a longer time frame when assessing going concern. 
C)  Auditors must qualify the accounts if there is significant uncertainty that the entity is a going concern. 
D)  Auditors must specifically obtain sufficient appropriate audit evidence about management's use of the going concern assumption. 
A)  Auditors must get external verification that the entity is a going concern. 
B)  Auditors must look at a longer time frame when assessing going concern. 
C)  Auditors must qualify the accounts if there is significant uncertainty that the entity is a going concern. 
D)  Auditors must specifically obtain sufficient appropriate audit evidence about management's use of the going concern assumption.

Question 6

In the UK who is responsible for monitoring the quality of audits of listed entities and major public interest entities?

Accepted Answer

A)  The FRC's Audit Quality Review Team (AQRT) 
B)  The Department of Business, Energy & Industrial Strategy (BEIS) 
C)  An independent panel of auditors drawn from the large audit firms 
D)  The accounting professional bodies 
A)  The FRC's Audit Quality Review Team (AQRT) 
B)  The Department of Business, Energy & Industrial Strategy (BEIS) 
C)  An independent panel of auditors drawn from the large audit firms 
D)  The accounting professional bodies

Question 7

Which audit firms are required to publish a transparency report in accordance with the provisions of Article 13 of the EU Audit Regulations?

Accepted Answer

A)  All entities providing an audit service 
B)  Statutory auditors of one or more public interest entities 
C)  The "big four" accounting firms 
D)  Auditors of companies with combined revenues of £10 million or greater. 
A)  All entities providing an audit service 
B)  Statutory auditors of one or more public interest entities 
C)  The "big four" accounting firms 
D)  Auditors of companies with combined revenues of £10 million or greater.

Question 8

What has been seen as a primary contributor to the perception that auditors lack competence?

Accepted Answer

A)  Failure of auditors to undertake continuing professional development 
B)  Reluctance of professional bodies to take disciplinary action against auditors 
C)  Increasing complexity of business 
D)  Lack of regulation of who can undertake auditing duties 
A)  Failure of auditors to undertake continuing professional development 
B)  Reluctance of professional bodies to take disciplinary action against auditors 
C)  Increasing complexity of business 
D)  Lack of regulation of who can undertake auditing duties

Which of the following best describes the audit expectation gap?

Why has it been argued that accounting professional bodies have not been more active in addressing the deficiencies in audit standards?

Which of the following was NOT identified by the FRC's 2008 Audit Quality Framework as being a driver for achieving quality?

According to ISA 240 - The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements who has primary responsibility for the detection of fraud?

Auditors have been criticized in the past for not paying enough attention to the issue of going concern. How has ISA 570 - Going Concern addressed this expectation gap?

In the UK who is responsible for monitoring the quality of audits of listed entities and major public interest entities?

Which audit firms are required to publish a transparency report in accordance with the provisions of Article 13 of the EU Audit Regulations?

What has been seen as a primary contributor to the perception that auditors lack competence?

Why Are Auditors Needed

An Overview of the Postulates and Concepts of Auditing

Auditor Independence

Audit Regulation

An Introduction to Corporate Governance

Risk

Evidence

Systems Work Basic Ideas 1

Systems Work Basic Ideas 2

Testing and Evaluation of Systems

Substantive Testing, Caat and Audit Programmes

Sampling and Materiality

Final Work: General Principles and Analytical Review of Financial Statements, and Management Assertions on Financial Statement Heading

Final Work: Non-Current Assets, Trade Receivables and Financial Assets

Final Work: Specific Problems Relating to Inventories, Construction Contracts, Trade Payables and Financial Liabilities

Final Review: Post Balance Sheet Period, Provisions, Contingencies, Letter of Rep

Assurance Engagements and Internal Audit

The Audit Report, Including Reporting on Corporate Governance

Fraud and Going Concern

The Auditor and Liability Under the Law

Issues in Auditing

Filters

Exam 20: The Audit Expectations Gap and Audit Quality

Which of the following best describes the audit expectation gap?

Why has it been argued that accounting professional bodies have not been more active in addressing the deficiencies in audit standards?

Which of the following was NOT identified by the FRC's 2008 Audit Quality Framework as being a driver for achieving quality?

According to ISA 240 - The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements who has primary responsibility for the detection of fraud?

Auditors have been criticized in the past for not paying enough attention to the issue of going concern. How has ISA 570 - Going Concern addressed this expectation gap?

In the UK who is responsible for monitoring the quality of audits of listed entities and major public interest entities?

Which audit firms are required to publish a transparency report in accordance with the provisions of Article 13 of the EU Audit Regulations?

What has been seen as a primary contributor to the perception that auditors lack competence?

Why Are Auditors Needed

An Overview of the Postulates and Concepts of Auditing

Auditor Independence

Audit Regulation

An Introduction to Corporate Governance

Risk

Evidence

Systems Work Basic Ideas 1

Systems Work Basic Ideas 2

Testing and Evaluation of Systems

Substantive Testing, Caat and Audit Programmes

Sampling and Materiality

Final Work: General Principles and Analytical Review of Financial Statements, and Management Assertions on Financial Statement Heading

Final Work: Non-Current Assets, Trade Receivables and Financial Assets

Final Work: Specific Problems Relating to Inventories, Construction Contracts, Trade Payables and Financial Liabilities

Final Review: Post Balance Sheet Period, Provisions, Contingencies, Letter of Rep

Assurance Engagements and Internal Audit

The Audit Report, Including Reporting on Corporate Governance

Fraud and Going Concern

The Auditor and Liability Under the Law

Issues in Auditing

Filters