Question 1

A claim for a breach of duty of care might arise against an auditor if:

Accepted Answer

A)  an existing shareholder suffered losses because he increased his investment in the company based on figures in the audited financial report. 
B)  a bank made a loss due to a loan made to the company based on figures in an audited financial report commissioned by the bank. 
C)  a new investor suffered losses because she purchased shares in the company based on figures in the annual audited financial report. 
D)  a stockbroker made a loss due to a loan made to the company based on figures in an audited financial report commissioned by the company. 
A)  an existing shareholder suffered losses because he increased his investment in the company based on figures in the audited financial report. 
B)  a bank made a loss due to a loan made to the company based on figures in an audited financial report commissioned by the bank. 
C)  a new investor suffered losses because she purchased shares in the company based on figures in the annual audited financial report. 
D)  a stockbroker made a loss due to a loan made to the company based on figures in an audited financial report commissioned by the company.

Question 2

ASA 240 (ISA 240) provides that primary responsibility for fraudulent reporting rests with:

Accepted Answer

A)  the board of directors. 
B)  management. 
C)  the external auditor. 
D)  the audit committee. 
A)  the board of directors. 
B)  management. 
C)  the external auditor. 
D)  the audit committee.

Question 3

The AWA case established that:

Accepted Answer

A)  reasonable care and skill means following the auditing standards. 
B)  auditors have a duty to closely supervise and review the work of inexperienced audit staff. 
C)  auditors are only liable for the proportion of damages attributable to their actions. 
D)  auditors have a duty of care only to the shareholders as a group. 
A)  reasonable care and skill means following the auditing standards. 
B)  auditors have a duty to closely supervise and review the work of inexperienced audit staff. 
C)  auditors are only liable for the proportion of damages attributable to their actions. 
D)  auditors have a duty of care only to the shareholders as a group.

Question 4

If an illegal act is discovered during the audit of a publicly held company, the auditor should:

Accepted Answer

A)  notify the regulatory authorities. 
B)  determine who was responsible for the illegal act. 
C)  intensify the audit. 
D)  report the act to high-level personnel within the client's organisation. 
A)  notify the regulatory authorities. 
B)  determine who was responsible for the illegal act. 
C)  intensify the audit. 
D)  report the act to high-level personnel within the client's organisation.

A claim for a breach of duty of care might arise against an auditor if:

ASA 240 (ISA 240) provides that primary responsibility for fraudulent reporting rests with:

The AWA case established that:

If an illegal act is discovered during the audit of a publicly held company, the auditor should:

Assurance and Auditing: An Overview

The Structure of the Profession

Ethics, Independence and Corporate Governance

Overview of Elements of the Financial Report Audit Process

Planning, Understanding the Entity and Evaluating Business Risk

Assessing Specific Business Risk

Understanding and Assessing Internal Control Part Three: Tests of Control and Tests of Details

Tests of Controls

Substantive Tests of Transactions and Balances

Audit Sampling Part Four: Completion and Communication

Completion and Review

The Auditors Reporting Obligations Part Five: Other Assurance Services

Internal Auditing

Auditing and Assurance Services in the Public Sector

Other Assurance Services and Advanced Topics

Filters

Exam 4: The Legal Liability of Auditors Part Two: Planning and Risk

A claim for a breach of duty of care might arise against an auditor if:

ASA 240 (ISA 240) provides that primary responsibility for fraudulent reporting rests with:

The AWA case established that:

If an illegal act is discovered during the audit of a publicly held company, the auditor should:

Assurance and Auditing: An Overview

The Structure of the Profession

Ethics, Independence and Corporate Governance

Overview of Elements of the Financial Report Audit Process

Planning, Understanding the Entity and Evaluating Business Risk

Assessing Specific Business Risk

Understanding and Assessing Internal Control Part Three: Tests of Control and Tests of Details

Tests of Controls

Substantive Tests of Transactions and Balances

Audit Sampling Part Four: Completion and Communication

Completion and Review

The Auditors Reporting Obligations Part Five: Other Assurance Services

Internal Auditing

Auditing and Assurance Services in the Public Sector

Other Assurance Services and Advanced Topics

Filters