Deck 17: Assurance Engagements and Internal Audit

Question 1

In a review engagement the auditor is able to provide what level of assurance?

A) No assurance
B) Limited assurance
C) Reasonable assurance
D) Complete assurance

Answer 1

Limited assurance

Question 2

Complete the definition of assurance engagement using the terms 1 to 6 below:
1. enhance the degree of confidence of
2. financial statements
3. limited
4. provide assurance to
5. subject matter information
6. sufficient appropriate
-An engagement in which a practitioner aims to obtain ________________ evidence in order to express a conclusion designed to ________________ the intended users other than the responsible party about the ________________.

Answer 2

sufficient appropriate, enhance the degree of confidence of , subject matter information.

Question 3

In accordance with ISAE 3000 there are a number of factors an auditor should consider before accepting an assurance engagement. Which of the following is NOT a factor mentioned?

A) The relevant ethical requirements are met, including independence.
B) There is a rational purpose for the engagement.
C) The auditor is certain the report will be understood.
D) None of the above, they are all factors that should be considered.

Answer 3

None of the above, they are all factors that should be considered.

Question 4

In a limited assurance engagement when might the auditor need to undertake detailed procedures?

A) If analytical procedures had detected unexpected and material variations from expectations.
B) Never, they are not required for a limited assurance engagement.
C) Always, they should form part of any engagement.
D) Only if evidence of fraud is uncovered.

Question 5

Which of the following conclusions would be appropriate for a limited assurance engagement?

A) In our opinion, the entity has complied, in all material respects, with the identified laws and regulations.
B) Based on the procedures performed and evidence obtained, we believe it is probable that the entity has complied, in all material respects, with the identified laws and regulations.
C) Based on the procedures performed and evidence obtained, nothing has come to our attention that causes us to believe that the entity has not complied, in all material respects, with the identified laws and regulations.
D) None of the above.

Question 6

Complete the definition of internal audit using the terms 1 to 8 below:
1. a systematic, disciplined
2. add value and improve an organization's operations
3. an independent
4. financial safeguards and reporting
5. governance, risk management and control processes
6. identify and eliminate risks associated with fraud and errors
7. independent, objective
8. limited, internal
-An activity that provides ________________ assurance and consulting services designed to ________________. The internal audit activity helps an organization accomplish its objectives by bringing ________________ approach to evaluate and improve the effectiveness of ________________.

Question 7

Which of the following is not work you would expect to see an internal auditor undertaking?

A) Monitoring internal control systems
B) Overseeing work undertaken by the external auditor
C) Reviewing compliance with laws and regulations
D) Reviewing the efficiency and effectiveness of operating activities

Question 8

Which of the following would support the effective operation of the internal audit team?

A) A good working relationship with the audit committee
B) Reporting directly to the Chief Accountant (or equivalent)
C) Ensuring all internal auditors have a strong external audit background
D) All of the above

Question 9

To what extent can an external auditor rely on the work of the internal auditors?

A) No reliance should be placed on the work of the internal auditors.
B) Internal auditors can only be used to support inventory counts.
C) If the internal auditors are assessed to be competent and objective their work may form a part of gathering sufficient and appropriate evidence.
D) If the internal auditors are assessed to be competent and objective their work may be relied upon to form an opinion.

Question 10

In an auditor's report on financial statements an unmodified opinion is issued when the auditor is satisfied in all material respects that:

A) The view presented by the financial information as a whole is consistent with the auditor's knowledge of the business of the entity.
B) There are no disagreements with management.
C) Internal controls are consistent in design and operation.
D) The audit has been conducted in accordance with International Standards on Auditing.