Question 1

Which of the following can be the subject matter of the audit?

Accepted Answer

A)  The financial report of a company. 
B)  The Australian accounting standards. 
C)  The Australian auditing standards. 
D)  The auditor's report. 
A)  The financial report of a company. 
B)  The Australian accounting standards. 
C)  The Australian auditing standards. 
D)  The auditor's report.

Question 2

Forensic audits include all of the following except:

Accepted Answer

A)  Manufacturers' claims about product quality. 
B)  Criminal investigations. 
C)  Matrimonial disputes. 
D)  Employee fraud. 
A)  Manufacturers' claims about product quality. 
B)  Criminal investigations. 
C)  Matrimonial disputes. 
D)  Employee fraud.

Question 3

Below are a number of potential additional benefits arising from an assurance service:
I.recommendations to improve the efficiency of operations.
II.a positive influence on the behaviour of people whose activities are being assured.
III.recommendations to improve the effectiveness of operations.Which combination of these is identified in the book as additional benefits?

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 4

Which of the following best describes the reason why an independent auditor reports on financial statements?

Accepted Answer

A)  A management fraud may exist and it is more likely to be detected by independent auditors. 
B)  Different interests may exist between the company preparing the statements and the parties using the statements. 
C)  A misstatement of account balances may exist and is generally corrected as the result of the independent auditor's work. 
D)  A poorly designed internal control system may be in place. 
A)  A management fraud may exist and it is more likely to be detected by independent auditors. 
B)  Different interests may exist between the company preparing the statements and the parties using the statements. 
C)  A misstatement of account balances may exist and is generally corrected as the result of the independent auditor's work. 
D)  A poorly designed internal control system may be in place.

Question 5

In the context of agency theory, information asymmetry refers to the idea that:

Accepted Answer

A)  information can vary in its reliability. 
B)  information can vary in its relevance. 
C)  management has more information about the entity's true financial position than do the absentee owners. 
D)  management will not act in the best interests of the absentee owners. 
A)  information can vary in its reliability. 
B)  information can vary in its relevance. 
C)  management has more information about the entity's true financial position than do the absentee owners. 
D)  management will not act in the best interests of the absentee owners.

Question 6

In which area is there a gap between society's expectations of auditors and the perceived performance of auditors?

Accepted Answer

A)  Compliance with laws and regulations. 
B)  The detection and reporting of earnings management and fraud. 
C)  Fair presentation of the financial report. 
D)  All of the given answers are correct . 
A)  Compliance with laws and regulations. 
B)  The detection and reporting of earnings management and fraud. 
C)  Fair presentation of the financial report. 
D)  All of the given answers are correct .

Question 7

Which of the following is not an attribute of an external auditor?

Accepted Answer

A)  Client advocacy. 
B)  Integrity. 
C)  Competence with regards to subject matter. 
D)  Objectivity. 
A)  Client advocacy. 
B)  Integrity. 
C)  Competence with regards to subject matter. 
D)  Objectivity.

Question 8

Which of the following is a necessary precondition for a practitioner to undertake an assurance engagement to examine and report on an entity's internal control over financial reporting?

Accepted Answer

A)  Management presents its written assertion about the effectiveness of internal control. 
B)  The practitioner anticipates relying on the entity's internal control in a financial report audit. 
C)  Management agrees not to present the practitioner's report in a general-use document to shareholders. 
D)  The practitioner is a continuing auditor who previously has audited the entity's financial report. 
A)  Management presents its written assertion about the effectiveness of internal control. 
B)  The practitioner anticipates relying on the entity's internal control in a financial report audit. 
C)  Management agrees not to present the practitioner's report in a general-use document to shareholders. 
D)  The practitioner is a continuing auditor who previously has audited the entity's financial report.

Question 9

The public has turned to auditors to provide assurance services primarily because:

Accepted Answer

A)  there is a need to develop new revenue streams for accounting firms. 
B)  the integrity and objectivity of auditors increases the public's trust that the underlying information is not materially misstated. 
C)  auditors have been proactive in identifying new types of assurance services to market to customers. 
D)  audits do not provide reliable information for decision makers. 
A)  there is a need to develop new revenue streams for accounting firms. 
B)  the integrity and objectivity of auditors increases the public's trust that the underlying information is not materially misstated. 
C)  auditors have been proactive in identifying new types of assurance services to market to customers. 
D)  audits do not provide reliable information for decision makers.

Question 10

Which of the statements is true with regards the basic principles and essential procedures contained in the auditing standards?

Accepted Answer

A)  The auditor may depart from basic principles in order to achieve a more efficient audit. 
B)  There should be no departure from basic principles and essential procedures. 
C)  There should be no departure from basic principles and essential procedures should be undertaken
In all except the rare circumstances where it is determined that the audit objective can be achieved
More effectively with alternative procedures. 
D)  There should be no departure from essential procedures and basic principles should be adhered to in all but the rare circumstances where they hinder audit efficiency. 
A)  The auditor may depart from basic principles in order to achieve a more efficient audit. 
B)  There should be no departure from basic principles and essential procedures. 
C)  There should be no departure from basic principles and essential procedures should be undertaken
In all except the rare circumstances where it is determined that the audit objective can be achieved
More effectively with alternative procedures. 
D)  There should be no departure from essential procedures and basic principles should be adhered to in all but the rare circumstances where they hinder audit efficiency.

Question 11

To which type of assurance engagement does the umbrella standard ASAE 3000 (ISAE 3000) 'Assurance Engagements other than Audits and Reviews of Historical Financial Information' not apply?

Accepted Answer

A)  A performance audit on a government department. 
B)  A review of a half-yearly financial report. 
C)  A limited assurance report on the effectiveness of internal control. 
D)  A limited assurance engagement on prospective financial information. 
A)  A performance audit on a government department. 
B)  A review of a half-yearly financial report. 
C)  A limited assurance report on the effectiveness of internal control. 
D)  A limited assurance engagement on prospective financial information.

Question 12

It is very hard for auditors to remain independent of their clients, given that they are paid by their clients. Below are a number of possible mechanisms:
I.ethical rules.
II.auditing and other professional standards.
III.audit committees.Which of these mechanisms can help the auditor maintain their independence?

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

Which of the following is not one of the fundamental principles of professional ethics underlying an audit?

Accepted Answer

A)  Objectivity. 
B)  Integrity. 
C)  Knowledge. 
D)  Confidentiality. 
A)  Objectivity. 
B)  Integrity. 
C)  Knowledge. 
D)  Confidentiality.

Question 14

The auditor's judgment concerning the overall fairness of the presentation of financial position, results of operations and cash flows is applied within the framework of:

Accepted Answer

A)  Australian Auditing Standards that include the concept of materiality. 
B)  quality control. 
C)  the agreed reporting framework. 
D)  the auditor's assessment of the audited entity's level of control risk. 
A)  Australian Auditing Standards that include the concept of materiality. 
B)  quality control. 
C)  the agreed reporting framework. 
D)  the auditor's assessment of the audited entity's level of control risk.

Question 15

Which of the following would not be included in a recommendation by the assurance provider in regards to the efficiency and effectiveness of operations?

Accepted Answer

A)  An explanation of the problem. 
B)  Suggested possible improvements in performance. 
C)  A statement that the assurance provider has reasonable assurance that they have identified all material matters with regards to efficiency and effectiveness that are of interest to management. 
D)  Recommendation of investigating specific areas of the entity's business processes. 
A)  An explanation of the problem. 
B)  Suggested possible improvements in performance. 
C)  A statement that the assurance provider has reasonable assurance that they have identified all material matters with regards to efficiency and effectiveness that are of interest to management. 
D)  Recommendation of investigating specific areas of the entity's business processes.

Question 16

Below are different types of audits:
I.compliance audit.
II.financial report audit.
III.internal audit.
IV.performance audit.Which combination of these types of audits can be collectively integrated and described as a comprehensive audit?

Accepted Answer

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

Question 17

Which of the following best describes why an independent auditor is asked to express an opinion on the true and fair presentation of a financial report?

Accepted Answer

A)  It is management's responsibility to seek available independent aid in the appraisal of the financial information shown in its financial report. 
B)  It is difficult to prepare a financial report that fairly presents a company's financial position and changes in cash flows without the expertise of an independent auditor. 
C)  It is a customary courtesy that all shareholders of a company receive an independent report on management's stewardship in managing the affairs of the business. 
D)  The opinion of an independent party is needed because a company may not be objective with respect to its own financial report. 
A)  It is management's responsibility to seek available independent aid in the appraisal of the financial information shown in its financial report. 
B)  It is difficult to prepare a financial report that fairly presents a company's financial position and changes in cash flows without the expertise of an independent auditor. 
C)  It is a customary courtesy that all shareholders of a company receive an independent report on management's stewardship in managing the affairs of the business. 
D)  The opinion of an independent party is needed because a company may not be objective with respect to its own financial report.

Question 18

Which of the following is not one of the fundamental principles underlying the objective of an audit?

Accepted Answer

A)  Knowledge. 
B)  Communication. 
C)  Evidence. 
D)  Client satisfaction. 
A)  Knowledge. 
B)  Communication. 
C)  Evidence. 
D)  Client satisfaction.

Question 19

Governmental auditing often extends beyond examinations leading to the expression of an opinion on the fairness of financial presentation and includes audits of economy, efficiency and:

Accepted Answer

A)  evaluation. 
B)  effectiveness. 
C)  compliance. 
D)  accuracy. 
A)  evaluation. 
B)  effectiveness. 
C)  compliance. 
D)  accuracy.

Question 20

Independent auditors are referred to as 'independent' because:

Accepted Answer

A)  their offices are not at the entity's place of business. 
B)  they are not employees of the entity being audited. 
C)  they are paid by parties outside of the audited entity. 
D)  they report to users outside of the audited entity. 
A)  their offices are not at the entity's place of business. 
B)  they are not employees of the entity being audited. 
C)  they are paid by parties outside of the audited entity. 
D)  they report to users outside of the audited entity.

Which of the following can be the subject matter of the audit?

Forensic audits include all of the following except:

Which of the following best describes the reason why an independent auditor reports on financial statements?

In the context of agency theory, information asymmetry refers to the idea that:

In which area is there a gap between society's expectations of auditors and the perceived performance of auditors?

Which of the following is not an attribute of an external auditor?

Which of the following is a necessary precondition for a practitioner to undertake an assurance engagement to examine and report on an entity's internal control over financial reporting?

The public has turned to auditors to provide assurance services primarily because:

Which of the statements is true with regards the basic principles and essential procedures contained in the auditing standards?

To which type of assurance engagement does the umbrella standard ASAE 3000 (ISAE 3000) 'Assurance Engagements other than Audits and Reviews of Historical Financial Information' not apply?

Which of the following is not one of the fundamental principles of professional ethics underlying an audit?

The auditor's judgment concerning the overall fairness of the presentation of financial position, results of operations and cash flows is applied within the framework of:

Which of the following would not be included in a recommendation by the assurance provider in regards to the efficiency and effectiveness of operations?

Below are different types of audits: I.compliance audit. II.financial report audit. III.internal audit. IV.performance audit.Which combination of these types of audits can be collectively integrated and described as a comprehensive audit?

Which of the following best describes why an independent auditor is asked to express an opinion on the true and fair presentation of a financial report?

Which of the following is not one of the fundamental principles underlying the objective of an audit?

Governmental auditing often extends beyond examinations leading to the expression of an opinion on the fairness of financial presentation and includes audits of economy, efficiency and:

Independent auditors are referred to as 'independent' because:

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

Which of the following can be the subject matter of the audit?

Forensic audits include all of the following except:

Which of the following best describes the reason why an independent auditor reports on financial statements?

In the context of agency theory, information asymmetry refers to the idea that:

In which area is there a gap between society's expectations of auditors and the perceived performance of auditors?

Which of the following is not an attribute of an external auditor?

Which of the following is a necessary precondition for a practitioner to undertake an assurance engagement to examine and report on an entity's internal control over financial reporting?

The public has turned to auditors to provide assurance services primarily because:

Which of the statements is true with regards the basic principles and essential procedures contained in the auditing standards?

To which type of assurance engagement does the umbrella standard ASAE 3000 (ISAE 3000) 'Assurance Engagements other than Audits and Reviews of Historical Financial Information' not apply?

Which of the following is not one of the fundamental principles of professional ethics underlying an audit?

The auditor's judgment concerning the overall fairness of the presentation of financial position, results of operations and cash flows is applied within the framework of:

Which of the following would not be included in a recommendation by the assurance provider in regards to the efficiency and effectiveness of operations?

Below are different types of audits: I.compliance audit. II.financial report audit. III.internal audit. IV.performance audit.Which combination of these types of audits can be collectively integrated and described as a comprehensive audit?

Which of the following best describes why an independent auditor is asked to express an opinion on the true and fair presentation of a financial report?

Which of the following is not one of the fundamental principles underlying the objective of an audit?

Governmental auditing often extends beyond examinations leading to the expression of an opinion on the fairness of financial presentation and includes audits of economy, efficiency and:

Independent auditors are referred to as 'independent' because:

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