Deck 4: Quality and Standards of Assurance Engagements

Question 1

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 identified as principles of sustainable development.

Answer 1

D

Question 2

An assurance engagement as compared to a non-assurance engagement, requires:

A)an opinion to be provided.
B)a positive not a negative opinion.
C)the assurance practitioner to reduce the assurance risk to a level that is appropriate to the engagement.
D)all of the above are required.

Answer 2

A

Question 3

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.

Answer 3

D

Question 4

Performance engagements investigate:

A)compliance with regulations and contractual obligations.
B)the causes and effects of possible fraudulent activities.
C)the full range of organisational sustainability performance.
D)the economy, efficiency and effectiveness of business activities.

Question 5

According to a KPMG 2016 survey:

A)the dollar value of the typical fraud has increased.
B)the number of instances of detected fraud has increased.
C)the total dollar value lost to fraud has increased.
D)the total dollar value lost to fraud has decreased.

Question 6

Auditors may be asked to give an audit opinion on only one part of a financial report based on historical financial information.These include all of the following except for:

A)a statement of financial position.
B)forecast information in support of a bank loan application.
C)accounts receivable.
D)provision for income taxes.

Question 7

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 8

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

A)Review of ratios and trends.
B)Testing of the computer controls.
C)Reading the minutes of the shareholders' meetings.
D)Inquiry of management.

Question 9

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 10

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 11

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

A)an audit of annual general purpose financial reports.
B)a part only of a financial report, rather than the full report.
C)a summarised financial report.
D)they apply to all of the above.

Question 12

Which of these is not an assurance engagement?

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

Question 13

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

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

Question 14

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

A)An assessment of the internal control system.
B)Preparing financial reports.
C)A management consulting service.
D)All are assurance engagements.

Question 15

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 16

The suitability of criteria is the basis on which the information about the subject matter is prepared and measured.It is normally based on:

A)relevance and reliability.
B)neutrality and completeness.
C)understandability.
D)all of the above.

Question 17

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

A)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)60% 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 18

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

A)Partial assurance.
B)Absolute assurance.
C)Reasonable assurance.
D)All are types of assurance engagements.

Question 19

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 20

Performance engagements may give rise to:

A)limited assurance.
B)reasonable assurance.
C)either a or b.
D)limited assurance, reasonable assurance or complete assurance.

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

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

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

Question 23

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

Question 24

Define an assurance engagement and list its characteristics.

Question 25

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

Question 26

Briefly outline the difference between compliance engagements and performance engagements.

Question 27

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

A)leadership.
B)demonstrate conformance.
C)engagement of people.
D)process approach.

Question 28

Which of the following factors is a driver for the current electronic environment?

A)The increasing amount of interconnectivity among organisations.
B)The reliance of business on technology.
C)The complexity of the information economy.
D)All of the above.

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.

Question 30

The ISO 9000 series is concerned with:

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

Question 31

Which of the following mechanisms and standards is not included as a self-regulatory control with which professional accountants and auditors must comply?

A)Compulsory continuing professional development.
B)Compulsory professional indemnity insurance.
C)Character checking on entry to the profession.
D)Minimal ethical rulings and codes of ethics.

Question 32

The ISO 14000 series is concerned with:

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