Question 1

The independent auditor adds credibility to the client's financial report by:

Accepted Answer

A)  testifying under oath about client financial information. 
B)  attaching an auditor's opinion to the client's financial report. 
C)  maintaining a clear-cut distinction between management's representations and the auditor's representations. 
D)  stating in the auditor's communication of internal-control-related matters that the audit was made in accordance with Australian auditing standards. 
A)  testifying under oath about client financial information. 
B)  attaching an auditor's opinion to the client's financial report. 
C)  maintaining a clear-cut distinction between management's representations and the auditor's representations. 
D)  stating in the auditor's communication of internal-control-related matters that the audit was made in accordance with Australian auditing standards. B

Question 2

Which of the following statements is not true concerning assurance services?

Accepted Answer

A)  Assurance services focus on improving the quality of information, or its context, for decision makers. 
B)  The growth in assurance services has been driven in part by users' demands for more relevant and reliable information. 
C)  Auditing services can be viewed as a subset of assurance services. 
D)  Unlike audit engagements, an engagement to perform assurance services does not require the auditor to consider information reliability. 
A)  Assurance services focus on improving the quality of information, or its context, for decision makers. 
B)  The growth in assurance services has been driven in part by users' demands for more relevant and reliable information. 
C)  Auditing services can be viewed as a subset of assurance services. 
D)  Unlike audit engagements, an engagement to perform assurance services does not require the auditor to consider information reliability. D

Question 3

Which of the following is not considered to be a value added to financial information that has been audited?

Accepted Answer

A)  Comparability. 
B)  Relevance. 
C)  Reliability. 
D)  Periodicity. 
A)  Comparability. 
B)  Relevance. 
C)  Reliability. 
D)  Periodicity. D

Question 4

Assurance services would include which of the following?

Accepted Answer

A)  Working with a client to develop a more efficient method of processing financial transactions. 
B)  Preparing a report representing a client's position during a tax audit. 
C)  Assisting a client in identifying potential sources of capital for acquisitions. 
D)  Providing an opinion concerning the accuracy of statements made on a client's web site. 
A)  Working with a client to develop a more efficient method of processing financial transactions. 
B)  Preparing a report representing a client's position during a tax audit. 
C)  Assisting a client in identifying potential sources of capital for acquisitions. 
D)  Providing an opinion concerning the accuracy of statements made on a client's web site.

Question 5

Independent auditors perform audits on the financial reports of public companies. This type of auditing can best be described as:

Accepted Answer

A)  a discipline that assures financial information presented by management. 
B)  an activity whose purpose is to search for irregularities. 
C)  a regulatory function that prevents the issuance of improper financial information. 
D)  a professional activity that measures and communicates financial and business data. 
A)  a discipline that assures financial information presented by management. 
B)  an activity whose purpose is to search for irregularities. 
C)  a regulatory function that prevents the issuance of improper financial information. 
D)  a professional activity that measures and communicates financial and business data.

Question 6

At what levels can assurance be provided under the assurance services framework?

Accepted Answer

A)  Reasonable assurance and limited assurance. 
B)  High assurance and reasonable assurance. 
C)  Assurance can be provided on a continuum from 0% to 100%. 
D)  Assurance can be provided on a continuum from absolute to limited. 
A)  Reasonable assurance and limited assurance. 
B)  High assurance and reasonable assurance. 
C)  Assurance can be provided on a continuum from 0% to 100%. 
D)  Assurance can be provided on a continuum from absolute to limited.

Question 7

The essence of a financial report audit is to:

Accepted Answer

A)  examine individual transactions so that the auditor may certify as to their validity. 
B)  detect fraud. 
C)  assure the consistent application of correct accounting procedures. 
D)  determine whether the client's financial reports are fairly stated. 
A)  examine individual transactions so that the auditor may certify as to their validity. 
B)  detect fraud. 
C)  assure the consistent application of correct accounting procedures. 
D)  determine whether the client's financial reports are fairly stated.

Question 8

When an auditor expresses an opinion on the financial report, the auditor's responsibilities extend to:

Accepted Answer

A)  an ongoing responsibility for the entity's solvency in accordance with the requirements of the Corporations Act 2001. 
B)  the underlying wisdom of the management's decisions. 
C)  active participation in the implementation of advice given. 
D)  whether the entity's results are fairly presented in the financial report in accordance with approved accounting standards. 
A)  an ongoing responsibility for the entity's solvency in accordance with the requirements of the Corporations Act 2001. 
B)  the underlying wisdom of the management's decisions. 
C)  active participation in the implementation of advice given. 
D)  whether the entity's results are fairly presented in the financial report in accordance with approved accounting standards.

Question 9

An audit establishes the conformity of assertions with specified criteria. In an audit of a financial report, the criteria by which financial report assertions are judged are:

Accepted Answer

A)  the ethical rules of conduct. 
B)  Australian Auditing Standards. 
C)  listing rules of the Australian Securities and Investments Commission. 
D)  applicable accounting standards. 
A)  the ethical rules of conduct. 
B)  Australian Auditing Standards. 
C)  listing rules of the Australian Securities and Investments Commission. 
D)  applicable accounting standards.

Question 10

Which of the following is not an element of an assurance engagement?

Accepted Answer

A)  Three-party relationship. 
B)  Approved assurance standards. 
C)  Suitable criteria. 
D)  A written assurance report. 
A)  Three-party relationship. 
B)  Approved assurance standards. 
C)  Suitable criteria. 
D)  A written assurance report.

Question 11

The accuracy of information included in notes that accompany the audited financial report of a company whose shares are traded on a stock exchange is the primary responsibility of:

Accepted Answer

A)  the independent auditor. 
B)  the stock exchange officials. 
C)  the Securities and Exchange Commission. 
D)  the company's management. 
A)  the independent auditor. 
B)  the stock exchange officials. 
C)  the Securities and Exchange Commission. 
D)  the company's management.

Question 12

Below are a number of potential areas where a gap between society's expectations of auditors and the perceived performance of auditors has been identified:
I.compliance with laws and regulations.
II.the detection and reporting of earnings management and fraud.
III.the messages contained in the auditor's report.Which combination of these has been identified as an expectations gap?

Accepted Answer

A)  I and II only. 
B)  I and III only. 
C)  II and III only. 
D)  I, II and III. 
A)  I and II only. 
B)  I and III only. 
C)  II and III only. 
D)  I, II and III.

Question 13

The value of an assurance service lies in its ability to:

Accepted Answer

A)  improve information relevance and reliability. 
B)  report on the assurance process. 
C)  improve the consistency of information. 
D)  provide a professional service that is valued by the responsible party. 
A)  improve information relevance and reliability. 
B)  report on the assurance process. 
C)  improve the consistency of information. 
D)  provide a professional service that is valued by the responsible party.

Question 14

Who establishes Australian auditing standards?

Accepted Answer

A)  Australian Auditing and Assurance Standards Board. 
B)  Australian Accounting Standards Board. 
C)  Australian Securities and Investments Commission. 
D)  The professional bodies together (CPA Australia, The Institute of Chartered Accountants in Australia and the National Institute of Accountants). 
A)  Australian Auditing and Assurance Standards Board. 
B)  Australian Accounting Standards Board. 
C)  Australian Securities and Investments Commission. 
D)  The professional bodies together (CPA Australia, The Institute of Chartered Accountants in Australia and the National Institute of Accountants).

Question 15

An auditor of a company finds that there are rare and exceptional circumstances where they are unable to comply with a relevant requirement in an auditing standard. They are however able to perform appropriate alternative audit
Procedures. To whom do they have to report or document these circumstances?

Accepted Answer

A)  The auditor must report these circumstances to either management or the audit committee and obtain their agreement that the alternative procedures are appropriate. 
B)  If the auditor can use appropriate alternative audit procedures, no reporting or documentation required. 
C)  The auditor is required to document the circumstances in the auditor's report. 
D)  The auditor is required to document the circumstances in the audit working papers. 
A)  The auditor must report these circumstances to either management or the audit committee and obtain their agreement that the alternative procedures are appropriate. 
B)  If the auditor can use appropriate alternative audit procedures, no reporting or documentation required. 
C)  The auditor is required to document the circumstances in the auditor's report. 
D)  The auditor is required to document the circumstances in the audit working papers.

Question 16

An audit of the financial report of Campbell Ltd, an Australian listed company, is being conducted by an external auditor. The external auditor is expected to:

Accepted Answer

A)  express an opinion as to the attractiveness of Campbell for investment purposes. 
B)  express an opinion as to whether the financial report is prepared in accordance with an applicable financial reporting framework. 
C)  make a 100% examination of Campbell's records. 
D)  certify the correctness of Campbell's financial report. 
A)  express an opinion as to the attractiveness of Campbell for investment purposes. 
B)  express an opinion as to whether the financial report is prepared in accordance with an applicable financial reporting framework. 
C)  make a 100% examination of Campbell's records. 
D)  certify the correctness of Campbell's financial report.

Question 17

Who is the responsible party for the adequacy of the disclosure in the financial report and accompanying footnotes?

Accepted Answer

A)  Auditor in charge of fieldwork. 
B)  Management of the entity. 
C)  Auditor who signs the auditor's report. 
D)  Audit clerk who assists in preparing the report and footnotes. 
A)  Auditor in charge of fieldwork. 
B)  Management of the entity. 
C)  Auditor who signs the auditor's report. 
D)  Audit clerk who assists in preparing the report and footnotes.

Question 18

Under the Corporations Act 2001, if a company's financial report, when prepared in accordance with accounting standards, would not otherwise give a true and fair view:

Accepted Answer

A)  the auditors are required to add such information and explanations in the financial report so as to give a true and fair view. 
B)  the directors are required to add such information and explanations in the financial report so as to give a true and fair view. 
C)  the directors should refer to this situation in their director's declaration. 
D)  no additional information should be added to the financial report. 
A)  the auditors are required to add such information and explanations in the financial report so as to give a true and fair view. 
B)  the directors are required to add such information and explanations in the financial report so as to give a true and fair view. 
C)  the directors should refer to this situation in their director's declaration. 
D)  no additional information should be added to the financial report.

Question 19

Which of the following was first in the evolution of auditing approaches?

Accepted Answer

A)  Business risk approach. 
B)  Transactions cycle approach. 
C)  Statement of financial position approach. 
D)  Financial risk approach. 
A)  Business risk approach. 
B)  Transactions cycle approach. 
C)  Statement of financial position approach. 
D)  Financial risk approach.

Question 20

To which assurance engagements does the Framework for Assurance Engagements apply?

Accepted Answer

A)  Audits of historical financial information. 
B)  Reviews of historical financial information. 
C)  Assurance engagements other than audits or reviews of historical financial information. 
D)  All of the given answers are correct. 
A)  Audits of historical financial information. 
B)  Reviews of historical financial information. 
C)  Assurance engagements other than audits or reviews of historical financial information. 
D)  All of the given answers are correct.

The independent auditor adds credibility to the client's financial report by:

Which of the following statements is not true concerning assurance services?

Which of the following is not considered to be a value added to financial information that has been audited?

Assurance services would include which of the following?

Independent auditors perform audits on the financial reports of public companies. This type of auditing can best be described as:

At what levels can assurance be provided under the assurance services framework?

The essence of a financial report audit is to:

When an auditor expresses an opinion on the financial report, the auditor's responsibilities extend to:

An audit establishes the conformity of assertions with specified criteria. In an audit of a financial report, the criteria by which financial report assertions are judged are:

Which of the following is not an element of an assurance engagement?

The accuracy of information included in notes that accompany the audited financial report of a company whose shares are traded on a stock exchange is the primary responsibility of:

The value of an assurance service lies in its ability to:

Who establishes Australian auditing standards?

An audit of the financial report of Campbell Ltd, an Australian listed company, is being conducted by an external auditor. The external auditor is expected to:

Who is the responsible party for the adequacy of the disclosure in the financial report and accompanying footnotes?

Under the Corporations Act 2001, if a company's financial report, when prepared in accordance with accounting standards, would not otherwise give a true and fair view:

Which of the following was first in the evolution of auditing approaches?

To which assurance engagements does the Framework for Assurance Engagements apply?

The Structure of the Profession

Ethics, Independence and Corporate Governance

The Legal Liability of Auditors Part Two: Planning and Risk

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 1: Assurance and Auditing: An Overview

The independent auditor adds credibility to the client's financial report by:

Which of the following statements is not true concerning assurance services?

Which of the following is not considered to be a value added to financial information that has been audited?

Assurance services would include which of the following?

Independent auditors perform audits on the financial reports of public companies. This type of auditing can best be described as:

At what levels can assurance be provided under the assurance services framework?

The essence of a financial report audit is to:

When an auditor expresses an opinion on the financial report, the auditor's responsibilities extend to:

An audit establishes the conformity of assertions with specified criteria. In an audit of a financial report, the criteria by which financial report assertions are judged are:

Which of the following is not an element of an assurance engagement?

The accuracy of information included in notes that accompany the audited financial report of a company whose shares are traded on a stock exchange is the primary responsibility of:

The value of an assurance service lies in its ability to:

Who establishes Australian auditing standards?

An audit of the financial report of Campbell Ltd, an Australian listed company, is being conducted by an external auditor. The external auditor is expected to:

Who is the responsible party for the adequacy of the disclosure in the financial report and accompanying footnotes?

Under the Corporations Act 2001, if a company's financial report, when prepared in accordance with accounting standards, would not otherwise give a true and fair view:

Which of the following was first in the evolution of auditing approaches?

To which assurance engagements does the Framework for Assurance Engagements apply?

The Structure of the Profession

Ethics, Independence and Corporate Governance

The Legal Liability of Auditors Part Two: Planning and Risk

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