INSTURCTION
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1. P Co is being sued by a customer for the supply of faulty products. At the year end the outcome of the legal case is still uncertain. The directors have fully disclosed the matter as a contingent liability and the auditors are satisfied with the treatment and the level of disclosure. The auditors have concluded that the uncertainty is fundamental to the understanding of the financial statements.
What form of audit opinion would the auditor give?
2. The auditor may wish to draw the users' attention to a matter which is not presented or disclosed in the financial statements but which is relevant to the users' understanding of the auditor's report. How would this affect the auditor's report?
3. Which of the following bodies regulates audit practice in Ghana?
4. The audit partner responsible for the audit of ABC Ltd, a limited liability company, has completed the overall review of the Financial Statements and discussed all Significant matters arising with the directors. Her conclusions are as follows.
I). the company cannot continue in operational existence for the foreseeable future.
II). Full disclosure of the company's trading difficulties has been made in the notes to the financial statements.
III) The financial statements have been prepared on the going concern basis.
IV) The directors have refused to make any further adjustments to the financial statements and the break-up value of the assets would be significantly lower than their carrying amount.
What type of auditor's report should be issued?
5. Which of the following relationships is unlikely to impair the independence of a non-executive director?
6. Who is primarily responsible for ensuring that a company complies with all relevant legal provisions?
7. Which of the following statements is true in respect of audit committees?
8. Good corporate governance covers a range of areas. Which of the following areas does not constitute a major element of corporate governance?
9. Which of the following statements is true regarding International Standards o Auditing?
10. Which of the following elements should not be included in the money laundering program of an assurance firm?
11. Mr Brown is a senior manager in a small firm of Chartered Accountants, ABC and Co, and has been asked by Mr Smith, the managing director of Ahafo Ltd, to become their financial director. Initially, it is not expected that this will take up much of M Brown's time and so he will remain an employee of ABC and Co for the foreseeable future. Which of the following Chartered Accountants could then act as auditor of Ahafo Ltd without infringing the provisions of the IESBA Code of Ethics?
12. The directors of SAR, a limited liability company, have failed to write off a bad debt in the financial statements relating to ABC Ltd, a company which went bankrupt on 14 July 2015. SAR's year end is 30 June 2015 and included in receivables is an amount of GHS100,000 owed by ABC. This amount is material to the financial statements.
If the directors do not amend the financial statements, which of the following auditor's opinions will be expressed?
13. Which of the following is not included in the fundamental principles of the IESBA's Code of Ethics?
14. Which of the following statements is not true in respect of the acceptance of an audit appointment?
15. Which of the following terms correctly describes professional indemnity insurance?
16. What does a signed unmodified auditor's report mean with respect to the possibility of fraud within a company?
17. According to ISA 315 Identifying and assessing the risks of material misstatement through understanding the entity and its environment which of the following is not amongst the elements which make up internal control system?
18. A material fraud was discovered at Conner, a limited liability company, shortly after the auditor had presented an unmodified audit opinion to the annual general meeting. His standard letter of engagement indicated that he would plan the audit so as to have reasonable expectation of detecting material misstatements in the financial statements resulting from irregularities or fraud, but also stated that the primary responsibility for the prevention and detection of fraud lay with management.
Which of the following statements most accurately reflects the likelihood of the auditor being held liable for the failure to find the fraud?
19. The professional staff for the audit of Middling Ltd comprises:
- The reporting partner
- A manager
- An assistant manager
- Two seniors (each with two years experience with the firm)
- Three juniors (each with six months experience with the firm)
The firm's review policy requires that the work of juniors is reviewed first by a senior and then by an assistant manager. A senior's work is reviewed by an assistant manager and an assistant manager's work by a manager.
In the light of this policy, which of the following would represent an acceptable and practical review policy for application by the reporting partner?
20. What is the primary objective of ISQC 1 Quality control for firms that perform audits and reviews of financial statements, and other assurance and related services engagements on quality control?
