Question 1

Which of the following statements is NOT correct when considering 'true and fair' from an auditing perspective?

Accepted Answer

A)  True and fair financial statements should not mislead the reader. 
B)  True and fair financial statements should be able to be relied upon to make decisions. 
C)  The income statement, balance sheet and cash flow statement are not on their own sufficient to provide a true and fair view. 
D)  To be true and fair financial statements must be completely accurate. 
A)  True and fair financial statements should not mislead the reader. 
B)  True and fair financial statements should be able to be relied upon to make decisions. 
C)  The income statement, balance sheet and cash flow statement are not on their own sufficient to provide a true and fair view. 
D)  To be true and fair financial statements must be completely accurate. D

Question 2

Which of the following is NOT an assumption of agency theory?

Accepted Answer

A)  Both owners and managers are trying to maximize their own wealth 
B)  The financial report provides a mechanism for owners to monitor managers 
C)  The appointment of auditors is considered a cost-effective monitoring mechanism 
D)  Managers do not benefit from the financial statements being audited. 
A)  Both owners and managers are trying to maximize their own wealth 
B)  The financial report provides a mechanism for owners to monitor managers 
C)  The appointment of auditors is considered a cost-effective monitoring mechanism 
D)  Managers do not benefit from the financial statements being audited. D

Question 3

Which sort of attitude towards management is generally best for an auditor to adopt?

Accepted Answer

A)  Professional scepticism 
B)  Suspicion 
C)  Collegiality 
D)  Friendship 
A)  Professional scepticism 
B)  Suspicion 
C)  Collegiality 
D)  Friendship A

Question 4

Ideally an auditor wants what level of assurance before giving their opinion on a set of financial statements?

Accepted Answer

A)  Reasonable 
B)  Absolute 
C)  Limited 
D)  Material 
A)  Reasonable 
B)  Absolute 
C)  Limited 
D)  Material

Question 5

One justification of audit is that it makes financial statements more reliable and,because it is more reliable, it is more useful to decision makers. This is an example of:

Accepted Answer

A)  The agency theory hypothesis 
B)  The information hypothesis 
C)  The true and fair view hypothesis 
D)  The insurance hypothesis 
A)  The agency theory hypothesis 
B)  The information hypothesis 
C)  The true and fair view hypothesis 
D)  The insurance hypothesis

Question 6

Which of the following best describes what an auditor is doing before providing an opinion on a set of financial statements?

Accepted Answer

A)  An auditor is taking the source documents and is recreating the financial statements to prove they are accurate. 
B)  An auditor is trying to collect sufficient appropriate evidence to prove the financial statements are true and fair. 
C)  An auditor is assessing the liability they have to shareholders for losses suffered from inaccurate financial statements. 
D)  An auditor is checking that the accountants preparing the financial statements have followed their advice correctly on material matters. 
A)  An auditor is taking the source documents and is recreating the financial statements to prove they are accurate. 
B)  An auditor is trying to collect sufficient appropriate evidence to prove the financial statements are true and fair. 
C)  An auditor is assessing the liability they have to shareholders for losses suffered from inaccurate financial statements. 
D)  An auditor is checking that the accountants preparing the financial statements have followed their advice correctly on material matters.

Question 7

Which of the following people described would be in the best position to audit a set of financial statements?

Accepted Answer

A)  An accountant who prepared the financial statements because they understand the accounts best. 
B)  A senior manager in the organization whose accounts are being audited because they understand the environment in which the organization operates. 
C)  An independent professional with accounting knowledge because they can remain unbiased when reviewing the financial statements. 
D)  An owner of the organization who is not involved in its day to day operations because they are most interested in ensuring the information is accurate. 
A)  An accountant who prepared the financial statements because they understand the accounts best. 
B)  A senior manager in the organization whose accounts are being audited because they understand the environment in which the organization operates. 
C)  An independent professional with accounting knowledge because they can remain unbiased when reviewing the financial statements. 
D)  An owner of the organization who is not involved in its day to day operations because they are most interested in ensuring the information is accurate.

Which of the following statements is NOT correct when considering 'true and fair' from an auditing perspective?

Which of the following is NOT an assumption of agency theory?

Which sort of attitude towards management is generally best for an auditor to adopt?

Ideally an auditor wants what level of assurance before giving their opinion on a set of financial statements?

One justification of audit is that it makes financial statements more reliable and,because it is more reliable, it is more useful to decision makers. This is an example of:

Which of the following best describes what an auditor is doing before providing an opinion on a set of financial statements?

Which of the following people described would be in the best position to audit a set of financial statements?

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 Audit Expectations Gap and Audit Quality

The Auditor and Liability Under the Law

Issues in Auditing

Filters

Exam 1: Why Are Auditors Needed

Which of the following statements is NOT correct when considering 'true and fair' from an auditing perspective?

Which of the following is NOT an assumption of agency theory?

Which sort of attitude towards management is generally best for an auditor to adopt?

Ideally an auditor wants what level of assurance before giving their opinion on a set of financial statements?

One justification of audit is that it makes financial statements more reliable and,because it is more reliable, it is more useful to decision makers. This is an example of:

Which of the following best describes what an auditor is doing before providing an opinion on a set of financial statements?

Which of the following people described would be in the best position to audit a set of financial statements?

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 Audit Expectations Gap and Audit Quality

The Auditor and Liability Under the Law

Issues in Auditing

Filters