Question 1

What is the purpose of bridging work?

Accepted Answer

A)  To assist clients preparing their financial statements, so they comply with the accounting standards. 
B)  To ensure that systems operated as expected during the whole year, not just a part of it. 
C)  To do desk top reviews of the client's previous financial statements in preparation for the new audit. 
D)  To train the auditors on the changes to accounting and auditing regulations that will impact the current year's audit. 
A)  To assist clients preparing their financial statements, so they comply with the accounting standards. 
B)  To ensure that systems operated as expected during the whole year, not just a part of it. 
C)  To do desk top reviews of the client's previous financial statements in preparation for the new audit. 
D)  To train the auditors on the changes to accounting and auditing regulations that will impact the current year's audit. B

Question 2

Which statement completes paragraph 6 of ISA 520: ?
The auditor shall design and perform analytical procedures near the end of the audit that assist the auditor when forming an overall conclusion as to whether the financial statements…

Accepted Answer

A)  … provide a true and fair view. 
B)  … present all material amounts. 
C)  … are consistent with the auditor's understanding of the entity. 
D)  … comply with the accounting standards. 
A)  … provide a true and fair view. 
B)  … present all material amounts. 
C)  … are consistent with the auditor's understanding of the entity. 
D)  … comply with the accounting standards. C

Question 3

Complete the definition of analytical procedures using the phrases below:
a. evaluations
b. expected
c. financial and non-financial data
d. fluctuations or relationships
e. internal and external data
f. previous
g. reviews
h. transactions
-________________ of financial information through analysis of plausible relationshipsamong both ________________. Analytical procedures also encompasssuch investigation as is necessary of identified ________________that are inconsistent with other relevant information or that differ from ________________values by a significant amount.

Accepted Answer

Evaluations,financial and non-financial data, fluctuations or relationships, expected.

Question 4

An auditor doing analytical analysis calculates the acid test ratio for a supermarket. The acid test, or quick, ratio compares a company's most short-term assets to its most short-term liabilities to see if a company has enough cash to pay its immediate liabilities, such as short-term debt. The formula is: Acid Test = (Cash + Marketable Securities + Accounts Receivable)/Current Liabilities
 The auditor determines that the ratio is 0.19.
 Which of the following conclusions is most valid?

Accepted Answer

A)  The ratio is extremely concerning because the expected average for the acid test ratio is 1. 
B)  The ratio is extremely good because the expected average for the acid test ratio is 1. 
C)  The ratio is meaningless for supermarkets and can be safely ignored. 
D)  To be useful the ratio needs to be compared with previous periods and other supermarkets. 
A)  The ratio is extremely concerning because the expected average for the acid test ratio is 1. 
B)  The ratio is extremely good because the expected average for the acid test ratio is 1. 
C)  The ratio is meaningless for supermarkets and can be safely ignored. 
D)  To be useful the ratio needs to be compared with previous periods and other supermarkets.

Question 5

If the preparers of the financial statements conclude that compliance with the accounting and reporting standards issued by the ASB and IASB (the Board) is insufficient to provide a true and fair view of the accounts what should they do?

Accepted Answer

A)  Provide sufficient additional disclosures to provide a true and fair view. 
B)  Ask the auditor to provide an alternative accounting approach. 
C)  Determine their own accounting approach. 
D)  Revert to UK GAAP to determine the correct accounting. 
A)  Provide sufficient additional disclosures to provide a true and fair view. 
B)  Ask the auditor to provide an alternative accounting approach. 
C)  Determine their own accounting approach. 
D)  Revert to UK GAAP to determine the correct accounting.

Question 6

If the auditor is using only analytical procedures as substantive tests rather than tests of detail what should they do?

Accepted Answer

A)  Only use evidence generated in the normal course of business. 
B)  Ensure that control risk is low. 
C)  Analytical procedures cannot be the only substantive test used. 
D)  Analytical procedures can only be used as tests of detail. 
A)  Only use evidence generated in the normal course of business. 
B)  Ensure that control risk is low. 
C)  Analytical procedures cannot be the only substantive test used. 
D)  Analytical procedures can only be used as tests of detail.

Question 7

By the time the interim work has been completed the auditor should have a good understanding of the client and problems that management is likely to encounter preparing the financial statements. What should the auditor do if, as they prepare for the final work, they discover a significant unanticipated problem area?

Accepted Answer

A)  Amend the audit plan and advise management about impacts on disclosure and accounting. 
B)  Follow the audit plan that has been agreed and include an appropriate qualification in the audit report. 
C)  Resign as auditor as the risk is too great that other problems will arise. 
D)  Notify the appropriate regulator that there is a problem with the financial statements. 
A)  Amend the audit plan and advise management about impacts on disclosure and accounting. 
B)  Follow the audit plan that has been agreed and include an appropriate qualification in the audit report. 
C)  Resign as auditor as the risk is too great that other problems will arise. 
D)  Notify the appropriate regulator that there is a problem with the financial statements.

Question 8

Which of the following activities should form part of the interim audit work?

Accepted Answer

A)  Inventory count observations 
B)  Circularization of customers 
C)  Confirmation of stage of completion of long-term construction assets 
D)  Tests of controls 
A)  Inventory count observations 
B)  Circularization of customers 
C)  Confirmation of stage of completion of long-term construction assets 
D)  Tests of controls

What is the purpose of bridging work?

Which statement completes paragraph 6 of ISA 520: ? The auditor shall design and perform analytical procedures near the end of the audit that assist the auditor when forming an overall conclusion as to whether the financial statements…

If the preparers of the financial statements conclude that compliance with the accounting and reporting standards issued by the ASB and IASB (the Board) is insufficient to provide a true and fair view of the accounts what should they do?

If the auditor is using only analytical procedures as substantive tests rather than tests of detail what should they do?

Which of the following activities should form part of the interim audit work?

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: 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 Audit Expectations Gap and Audit Quality

The Auditor and Liability Under the Law

Issues in Auditing

Filters

Exam 13: Final Work: General Principles and Analytical Review of Financial Statements, and Management Assertions on Financial Statement Heading

What is the purpose of bridging work?

Which statement completes paragraph 6 of ISA 520: ? The auditor shall design and perform analytical procedures near the end of the audit that assist the auditor when forming an overall conclusion as to whether the financial statements…

If the preparers of the financial statements conclude that compliance with the accounting and reporting standards issued by the ASB and IASB (the Board) is insufficient to provide a true and fair view of the accounts what should they do?

If the auditor is using only analytical procedures as substantive tests rather than tests of detail what should they do?

Which of the following activities should form part of the interim audit work?

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: 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 Audit Expectations Gap and Audit Quality

The Auditor and Liability Under the Law

Issues in Auditing

Filters