Question 1

It is the auditor's responsibility to prepare the financial statements.

Accepted Answer

A) True 
 B)False

Question 2

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 .

Question 3

The following can be said about an emphasis of matter:

Accepted Answer

A)  it is included when the auditors opinion has changed and the auditor wants to bring the users' attention to a particular matter. 
B)  it is only used in unqualified audit opinions. 
C)  it is included when the auditor's opinion has not changed and the auditor wants to bring the users' attention to a particular matter. 
D)  it cannot be used when expressing audit opinion that has pervasive misstatements.

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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.

Question 6

International Auditing and Assurance Standards Board (IAASB) is not responsible for the redrafting of International Auditing Standards (ISAs) to Australian Auditing Standards (ASAs).

Accepted Answer

A) True 
 B)False

Question 7

Suppliers as a user of the financial statements would least consider which of the following aspects of the financial statements:

Accepted Answer

A)  solvency of the entity 
B)  profitability of the entity 
C)  return on investment of the entity
D ) corporate social responsibility of the entity

Question 8

Professional scepticism does not involve:

Accepted Answer

A)  the professional requirement that all management representations be substantiated with supporting documentation. 
B)  seeking independent evidence to corroborate information provided by their client 
C)  being suspicious when evidence contradicts documents held by their client or enquiries made of client personnel 
D)  none of the above.

Question 9

A compliance audit involves gathering evidence to ascertain whether the person or entity under review has followed the rules, policies, procedures, laws and regulations with which they must conform

Accepted Answer

A) True 
 B)False

Question 10

The main assurance service the general public are familiar with are financial report audits. Briefly describe the other services that an auditor can provide.

Accepted Answer

The answer of The main assurance service the general public...

Question 11

When auditors are engaged in work where no assurance is provided this means;

Accepted Answer

A)  That the review indicates adverse finding and the auditors are not prepared to give an assurance that the information gives a true and fair view. 
B)  The auditors found anomalies in the financial information and no assurance will be given until further testing is conducted 
C)  An assurance is not provided as the client determines the nature, timing and extent of the evidence that is gathered and will determine their own outcome 
D)  No assurance is provided as the client will determine the outcome once the auditors have gathered the data.

Question 12

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.

Question 13

An audit of a financial report by the contracted auditors will give absolute assurance that the financial reports give a true and fair view of the financial performance of the entity.

Accepted Answer

A) True 
 B)False

Question 14

An assurance engagement can be defined as

Accepted Answer

A)  an engagement to enhance the reliability of the subject matter 
B)  an engagement of an expert to direct the entity on subject matter 
C)  an audit to determine the validity of the subject matter 
D)  an engagement to determine a true and fair view of the entities course of actions

Question 15

You must complete further study after a bachelor's degree to become a member of the ICAA, CPA Australia or the NIA.

Accepted Answer

A) True 
 B)False

Question 16

Outline the reasons for the demand for assurance services.

Accepted Answer

The answer of Outline the reasons for the demand for...

Question 17

Which of the following would be an example of a reasonable assurance engagement?

Accepted Answer

A)  the review of annual financial statements. 
B)  the audit of annual financial statements. 
C)  the reporting of procedures performed by the auditor as agreed by the client. 
D)  all of the above.

Question 18

An assurance engagement is performed by an auditor or consultant to enhance the reliability of the subject matter

Accepted Answer

A) True 
 B)False

Question 19

The objective of the Financial Reporting Council does not include:

Accepted Answer

A)  to oversee the process used for setting accounting and auditing standards 
B)  to monitor and report regularly on matters concerning auditor independence 
C)  to be involved in the technical issues around the standard-setting process. 
D)  all of the above are included in the objectives of the Financial Reporting Council

Question 20

Agency theory can be described as the theory of:

Accepted Answer

A)  hiring an agency to review the work of the management, in this case it is the auditor. 
B)  when the finance function is outsourced to an outside party, and the auditor is required to audit the outside party's work. 
C)  the relationship between the owner and the management of the business when the owner is not the manager of the business.
D )none of the above.

Exam 1: Introduction and Overview of Audit and Assurance

It is the auditor's responsibility to prepare the financial statements.

Which of the following is not true in relation to comparability?

The following can be said about an emphasis of matter:

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

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

International Auditing and Assurance Standards Board (IAASB) is not responsible for the redrafting of International Auditing Standards (ISAs) to Australian Auditing Standards (ASAs).

Suppliers as a user of the financial statements would least consider which of the following aspects of the financial statements:

Professional scepticism does not involve:

A compliance audit involves gathering evidence to ascertain whether the person or entity under review has followed the rules, policies, procedures, laws and regulations with which they must conform

The main assurance service the general public are familiar with are financial report audits. Briefly describe the other services that an auditor can provide.

When auditors are engaged in work where no assurance is provided this means;

The expectation gap can be reduced by:

An audit of a financial report by the contracted auditors will give absolute assurance that the financial reports give a true and fair view of the financial performance of the entity.

An assurance engagement can be defined as

You must complete further study after a bachelor's degree to become a member of the ICAA, CPA Australia or the NIA.

Outline the reasons for the demand for assurance services.

Which of the following would be an example of a reasonable assurance engagement?

An assurance engagement is performed by an auditor or consultant to enhance the reliability of the subject matter

The objective of the Financial Reporting Council does not include:

Agency theory can be described as the theory of: