Question 1

In addition to the preparation of financial statements, it is also the responsibility of those charged with governance to:

Accepted Answer

A)  identify the financial reporting framework to be used in the preparation and presentation of their financial statements. 
B)  establish and maintain internal controls that are effective in preventing and detecting material misstatements 
C)  selecting and applying appropriate accounting policies and making reasonable accounting estimates 
D)  all of the above. 
A)  identify the financial reporting framework to be used in the preparation and presentation of their financial statements. 
B)  establish and maintain internal controls that are effective in preventing and detecting material misstatements 
C)  selecting and applying appropriate accounting policies and making reasonable accounting estimates 
D)  all of the above. D

Question 2

Maggie Oh performed an audit of a client that had undergone flooding to its operations in St-Jean Sur Richelieu. The client was insured and was able to keep operating. However,
There was material damage to the client's warehouse and Maggie felt it would be appropriate
To inform the users of the financial statements of this fact in the audit report. This form of audit
Report is called:

Accepted Answer

A)  an adverse opinion 
B)  unmodified opinion - emphasis of matter 
C)  modified opinion 
D)  disclaimer of opinion 
A)  an adverse opinion 
B)  unmodified opinion - emphasis of matter 
C)  modified opinion 
D)  disclaimer of opinion B

Question 3

Which of the following is incorrect? A government can be considered to be a user of the general purpose financial statements because:

Accepted Answer

A)  it is the basis for the calculation of taxes owed to the government 
B)  it can determine whether certain regulations have been complied with 
C)  to gain a better understanding of the entity's activities 
D)  governments need to assess the entity so that they can provide the entity with grants that will benefit society. 
A)  it is the basis for the calculation of taxes owed to the government 
B)  it can determine whether certain regulations have been complied with 
C)  to gain a better understanding of the entity's activities 
D)  governments need to assess the entity so that they can provide the entity with grants that will benefit society. A

Question 4

The expectation gap can be reduced by:

Accepted Answer

A)  auditors performing their duties properly 
B)  enhanced reporting to explain what processes have been followed in arriving at an audit or a review opinion 
C)  assurance providers reporting accurately the level of assurance being provided 
D)  all of the above. 
A)  auditors performing their duties properly 
B)  enhanced reporting to explain what processes have been followed in arriving at an audit or a review opinion 
C)  assurance providers reporting accurately the level of assurance being provided 
D)  all of the above.

Question 5

The wording of a negative expression of opinion generally states that:

Accepted Answer

A)  there is nothing wrong with the subject matter. 
B)  there is something wrong with the subject matter. 
C)  there is nothing that has come to the attention of the auditors that would lead them to believe that the information being assured is not true and fair. 
D)  there is something that has come to the attention of the auditors that would lead them to believe that the information being assured is not true and fair. 
A)  there is nothing wrong with the subject matter. 
B)  there is something wrong with the subject matter. 
C)  there is nothing that has come to the attention of the auditors that would lead them to believe that the information being assured is not true and fair. 
D)  there is something that has come to the attention of the auditors that would lead them to believe that the information being assured is not true and fair.

Question 6

A negative expression of opinion is only given when there is a disagreement with management and the auditor.

Accepted Answer

A) True 
 B)False

Question 7

The most common types of assurance engagements are financial statement audits, confirmation audits, performance audits, comprehensive audits and assurance on corporate social responsibility (CSR) disclosures.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is NOT true in relation to comparability:

Accepted Answer

A)  able to identify trends, that may influence their perception of how well the entity is doing. 
B)  able to assess performance of the entity over time and with other entities 
C)  able to evaluate 
D)  all of the above are correct. 
A)  able to identify trends, that may influence their perception of how well the entity is doing. 
B)  able to assess performance of the entity over time and with other entities 
C)  able to evaluate 
D)  all of the above are correct.

Question 9

Michael Stiller performed work for a client in the real estate business and issued a Notice to Reader. What degree of assurance does a Notice to Reader provide to the user of the
Statements?

Accepted Answer

A)  reasonable assurance 
B)  moderate assurance 
C)  no assurance 
D)  none of the above 
A)  reasonable assurance 
B)  moderate assurance 
C)  no assurance 
D)  none of the above

Question 10

Which of the following is NOT true about Corporate Social Responsibility assurance?

Accepted Answer

A)  reporting is voluntary and is becoming more widespread. 
B)  includes both financial and non-financial information. 
C)  is required to be performed by an auditor. 
D)  disclosures include environmental, employee and social reporting. 
A)  reporting is voluntary and is becoming more widespread. 
B)  includes both financial and non-financial information. 
C)  is required to be performed by an auditor. 
D)  disclosures include environmental, employee and social reporting.

Question 11

Jimmy Bunting, the senior auditor at Yanzhou Coal Mining and Minerals, performed the following tasks: he used analytical procedures and he had discussions with management.
These activities were a basis for a negative form of opinion. What did Jimmy Bunting perform?

Accepted Answer

A)  a qualified report 
B)  an unmodified opinion 
C)  a compilation 
D)  a review engagement 
A)  a qualified report 
B)  an unmodified opinion 
C)  a compilation 
D)  a review engagement

Question 12

Indicate whether you agree or disagree with the following statements and explain your reasoning.
a) Rejean Tremblay feels that an internal auditor that reports to the chief financial officer of the company can be as independent as an auditor that reports to the audit committee.
b) Angela Pelletier discovered a very material overstatement in the financial statements of McKenzie Growth. She felt that the misstatement would have an impact on the decisions of users of the financial statements, and indicated to her audit senior that she would be including it as an "emphasis of matter" paragraph in the audit report.
c) An auditor is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards, and for such internal control as is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
d) An assurance engagement involves evaluation or measurement of subject matter against criteria.

Accepted Answer

a) Disagree. The internal auditor's inde

Question 13

Jeff Carboy owns St. Lawrence Vineyards, a successful winery in the Thousand Islands region. Annual sales are $3,500,000 and he has a $1,200,000 loan with a local bank.
Sales are split between wine sales (88%) and wine tasting and catering (12%).
Jeff has excellent personal relationships with his suppliers and has been provided with special contractual terms which allow him delays of up to 120 days to make invoice payments. These arrangements run out this year and he will have 30 days to pay after being invoiced.
The bank has made the $1,200,000 loan to St. Lawrence Vineyards based on an understanding that the company will undergo audits of its financial statements.
Jeff is an astute entrepreneur and has set up an advisory board which consists of his bank manager, another wine grower in the region, his old high school ethics instructor and track coach, himself, and his accountant.
The board has discussed certain issues including the following:
• The need for assurance service providers to audit his financial statements so that users can be provided with assurance that his statements are relevant and reliable.
• Non-audit services that would provide advice on special projects he may be considering in the future.
• A proper accounting firm to conduct an audit mandate.
Required:
a) What is the objective of a financial statement audit and how does it relate to St. Lawrence Vineyards?
b) Jeff Carboy's financial statements must be relevant and reliable. What do these two terms mean in the context of this case?
c) What three characteristics should St. Lawrence Vineyards' auditors possess when conducting an audit? Explain them briefly.
d) What are non-audit services? Can you describe possible non-audit services that St. Lawrence Vineyards might employ?

Accepted Answer

a) A financial statement audit provides

Question 14

An example of an unmodified audit opinion is:

Accepted Answer

A)  qualified audit opinion 
B)  adverse audit opinion 
C)  unqualified audit opinion with an emphasis of matter. 
D)  none of the above. 
A)  qualified audit opinion 
B)  adverse audit opinion 
C)  unqualified audit opinion with an emphasis of matter. 
D)  none of the above.

Question 15

The nature of audit procedures refers to the reliance on evidence provided by the client and its management.

Accepted Answer

A) True 
 B)False

Question 16

A no assurance engagement is of little use as no assurance is given to the client.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not a type of opinion?

Accepted Answer

A)  qualified opinion 
B)  modified opinion 
C)  adverse opinion 
D)  disclaimer of opinion 
A)  qualified opinion 
B)  modified opinion 
C)  adverse opinion 
D)  disclaimer of opinion

Question 18

Insurance hypothesis is a means whereby the investor can guarantee the success of their investment.

Accepted Answer

A) True 
 B)False

Question 19

How is the expectation gap caused and how can the effects on the expectation gap be reduced?

Accepted Answer

In particular, the gap is caused by unre

Question 20

An auditor can provide a reasonable level of assurance on information other than historical financial information.

Accepted Answer

A) True 
 B)False

In addition to the preparation of financial statements, it is also the responsibility of those charged with governance to:

Which of the following is incorrect? A government can be considered to be a user of the general purpose financial statements because:

The expectation gap can be reduced by:

The wording of a negative expression of opinion generally states that:

A negative expression of opinion is only given when there is a disagreement with management and the auditor.

The most common types of assurance engagements are financial statement audits, confirmation audits, performance audits, comprehensive audits and assurance on corporate social responsibility (CSR) disclosures.

Which of the following is NOT true in relation to comparability:

Michael Stiller performed work for a client in the real estate business and issued a Notice to Reader. What degree of assurance does a Notice to Reader provide to the user of the Statements?

Which of the following is NOT true about Corporate Social Responsibility assurance?

Jimmy Bunting, the senior auditor at Yanzhou Coal Mining and Minerals, performed the following tasks: he used analytical procedures and he had discussions with management. These activities were a basis for a negative form of opinion. What did Jimmy Bunting perform?

An example of an unmodified audit opinion is:

The nature of audit procedures refers to the reliance on evidence provided by the client and its management.

A no assurance engagement is of little use as no assurance is given to the client.

Which of the following is not a type of opinion?

Insurance hypothesis is a means whereby the investor can guarantee the success of their investment.

How is the expectation gap caused and how can the effects on the expectation gap be reduced?

An auditor can provide a reasonable level of assurance on information other than historical financial information.

Ethics, Legal Liability and Client Acceptance

Audit Planning I

Audit Planning II

Audit Evidence

Sampling and Overview of the Risk Response Phase of the Audit

Gaining an Understanding of the Clients System of Internal Controls

Execution of the Audittesting of Controls

Execution of the Auditperforming Substantive Procedures

Substantive Testing and Balance Sheet Accounts

Substantive Testing and Income Statement Accounts

Completing and Reporting on the Audit

Filters

Exam 1: Introduction and Overview of Audit and Assurance

In addition to the preparation of financial statements, it is also the responsibility of those charged with governance to:

Which of the following is incorrect? A government can be considered to be a user of the general purpose financial statements because:

The expectation gap can be reduced by:

The wording of a negative expression of opinion generally states that:

A negative expression of opinion is only given when there is a disagreement with management and the auditor.

The most common types of assurance engagements are financial statement audits, confirmation audits, performance audits, comprehensive audits and assurance on corporate social responsibility (CSR) disclosures.

Which of the following is NOT true in relation to comparability:

Michael Stiller performed work for a client in the real estate business and issued a Notice to Reader. What degree of assurance does a Notice to Reader provide to the user of the Statements?

Which of the following is NOT true about Corporate Social Responsibility assurance?

Jimmy Bunting, the senior auditor at Yanzhou Coal Mining and Minerals, performed the following tasks: he used analytical procedures and he had discussions with management. These activities were a basis for a negative form of opinion. What did Jimmy Bunting perform?

An example of an unmodified audit opinion is:

The nature of audit procedures refers to the reliance on evidence provided by the client and its management.

A no assurance engagement is of little use as no assurance is given to the client.

Which of the following is not a type of opinion?

Insurance hypothesis is a means whereby the investor can guarantee the success of their investment.

How is the expectation gap caused and how can the effects on the expectation gap be reduced?

An auditor can provide a reasonable level of assurance on information other than historical financial information.

Ethics, Legal Liability and Client Acceptance

Audit Planning I

Audit Planning II

Audit Evidence

Sampling and Overview of the Risk Response Phase of the Audit

Gaining an Understanding of the Clients System of Internal Controls

Execution of the Audittesting of Controls

Execution of the Auditperforming Substantive Procedures

Substantive Testing and Balance Sheet Accounts

Substantive Testing and Income Statement Accounts

Completing and Reporting on the Audit

Filters