Deck 4: Other Assurance Engagements and Quality Standards

Question 1

The assurance engagement that the normal auditing standards (ASAs 100-799) apply to is:

A) a part only of a financial report, rather than the full report
B) a summarised financial report
C) a review engagement
D) they apply to all of the above

Answer 1

C

Question 2

The ISO 9000 series is concerned with:

A) quality management.
B) audit requirements of specific businesses.
C) environmental management.
D) marketing management.

Answer 2

A

Question 3

The ISO 14000 series is concerned with:

A) quality management.
B) audit requirements of specific businesses.
C) environmental management.
D) marketing management.

Answer 3

C

Question 4

Which of these possible engagements by a firm with their accountants is an assurance engagement?

A) preparing financial reports
B) a management consulting service
C) an assessment of the internal control system
D) all are assurance engagements

Question 5

A special purpose audit report is one that relates to:

A) non-financial information.
B) entities that are listed on the stock exchange or have borrowed from the public.
C) entities that are not reporting entities.
D) reports that must comply with approved accounting standards.

Question 6

A forensic audit in an organisation with an electronic environment may feature:

A) investigating employee emails and addresses, log-on times and messages.
B) searching for duplicate numbers of payments or receipts.
C) scanning lists of suppliers.
D) all of the above.

Question 7

According to a KPMG 2010 survey:

A) The number of instances of detected fraud has decreased but the dollar value of the typical fraud has increased
B) The number of instances of detected fraud has increased and the dollar value of the typical fraud has also increased
C) The number of instances of detected fraud has increased but the dollar value of the typical fraud has decreased
D) The number of instances of detected fraud has increased but no research findings are available about the dollar value of a typical fraud.

Question 8

During a review of a financial report, the auditor would be least likely to:

A) read the financial report and consider its conformance with generally accepted accounting principles.
B) obtain reports from other accountants who reviewed a portion of the total entity.
C) obtain written confirmation from management regarding loans to officers.
D) perform analytical procedures designed to identify relationships that appear to be unusual.

Question 9

The three-pronged approach developed by ISO 14000 to meet the needs of its stakeholders include:

A) standardised testing methods, environmental management system standards and a systematic approach to managing business processes.
B) standardised testing methods, technical reports and a systematic approach to managing business processes.
C) standardised testing methods, environmental management system standards and technical reports.
D) none of the above

Question 10

Which of these best describes an audit report on a compliance with contractual agreements?

A) a special purpose report.
B) an unaudited report.
C) a supplementary report.
D) a report on limited review of financial information.

Question 11

When an auditor performs a review of an interim financial report which of the following steps would not be part of the review?

A) testing of the computer controls.
B) inquiry of management.
C) review of ratios and trends.
D) reading the minutes of the shareholders' meetings.

Question 12

An assurance engagements as compared to a non-assurance engagement, requires
A) a positive not a negative opinion

A) an opinion to be provided
B) the assurance practitioner to reduce the assurance risk to a level that is appropriate to the engagement
C) all of the above are required

Question 13

The eight quality management principles outlined by ISO 9000 do not include:

A) factual approach to decision making.
B) leadership.
C) demonstrate conformance.
D) involvement of people.

Question 14

In a continuous audit client information is released in a very short timeframe, and auditors' reports on that information follow the release almost immediately. One of the issues for auditors is:

A) there is enough time for the auditor to gather evidence.
B) the auditor cannot rely on normal audit procedures.
C) the auditor cannot use fully automated audit software.
D) the auditor cannot check the internal control system.

Question 15

KPMG's fraud survey identified a number of factors which have given rise to the increase in electronic fraud. Which is one of these?

A) restricted access.
B) the ease with which funds can be moved around the world.
C) the replacement of traditional internal controls with efficient electronic systems controls.
D) the denial of a certain level of fraud in business.

Question 16

A negative opinion in a limited assurance engagement:

A) is not as strong an opinion as a positive opinion
B) normally is not based on detailed substantive or control testing
C) expresses the opinion that nothing has come to the attention of the practitioner to suggest that the outcome is not in compliance with the criteria
D) all of the above are true concerning negative opinions

Question 17

Under the Framework for Assurance Engagements which of these is one of the types of assurance engagements?

A) absolute assurance.
B) reasonable assurance.
C) partial assurance.
D) all are types of assurance engagements

Question 18

It is incorrect that the Framework for Assurance Engagements:

A) is based on the International Framework issued by the IFAC
B) defines and describes the elements of an assurance engagement
C) shows the concepts of an assurance engagement
D) establishes standards

Question 19

Which of these is not an assurance engagement?

A) a performance audit.
B) a consulting engagement to help an organisation meet its tax obligations.
C) a review of historical financial information.
D) all are assurance engagements

Question 20

When an auditor reports on a financial report summarising its annual audited financial report, the auditor's report should:

A) not express an opinion on whether the report is presented in conformity with the comprehensive basis of accounting used.
B) disclose that the report is not intended to conform with generally accepted accounting principles.
C) disclaim an opinion on whether the report was examined in accordance with generally accepted auditing standards.
D) include an explanation of how the results of operations differ from the cash receipts and disbursements basis of accounting.

Question 21

What is a forensic audit, and (briefly) what would the auditor be looking for? When might it be used? What would an audit involving the electronic environment feature?

Question 22

Which of the following was not identified in a research study by Hargroves and Smith as a principle of sustainable development?

A) equal opportunity
B) ensuring intergenerational equity
C) conservation of biodiversity
D) all were identifies as principles of sustainable development

Question 23

A set of official guidelines published by the United Nations Environmental program is knows as:

A) triple bottom line reporting
B) the Global Reporting Initiative
C) the AA1000 Assurance Standard
D) the World Sustainability Guidelines

Question 24

Describe the differences between a reasonable assurance engagement and a limited assurance engagement.

Question 25

Evidence should be obtained for which of the following in a prospective financial information assurance engagement report (PFI) such as a forecast or projection?

A) that the assumptions used by management are appropriate
B) that the PFI was prepared at the same time as the historical financial statements
C) that the PFI gives a true and fair view
D) evidence should be obtained for all of the above

Question 26

What is continuous auditing and where might it be used? What are some of the problems associated with the continuous audit?

Question 27

In research conducted by CPA Australia and the University of Sydney it was found that in Australia:

A) over 80% of companies in the private sector had their sustainability reports audited or verified.
B) just under 15% of companies in the private sector had their sustainability reports audited or verified.
C) just over 50% of companies in the private sector had their sustainability reports audited or verified.
D) less than 25% of companies in the private sector had their sustainability reports audited or verified.

Question 28

Briefly outline the difference between compliance engagements and performance engagements.

Question 29

Research conducted by CPA Australia and the University of Sydney identified a number of observations in relation to firms providing sustainability reporting. Outline the main findings of the research.