INSTURCTION
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1. Which of the following procedures will be performed by the auditor as part of a subsequent events review?
(1) Request for written representations from management
(2) Review of minutes of board meetings held after the date of the financial statements.
2. The auditor of S Co has concluded that the use of the going concern assumption is appropriate and that the material uncertainty has been adequately disclosed. What is the impact of this conclusion on the audit report?
3. The auditor of Y Co has concluded that Y Co is not a going concern. The financial statements have been prepared on a going concern basis and management has refused to change them.
What form of audit opinion will be issued by the auditor?
4. For which of the following matters must written representations be sought?
- That management has fulfilled its responsibility for the preparation of the financial statements
- That management has provided the auditor with all the information relevan: to the audit
- That accounts receivable are recoverable
- That inventory is correctly valued at the lower of cost and net realisable value
5. ISA 700 Forming an opinion and reporting on financial statements sets out the basic elements of an auditor's report.
Which of the following is not included in an unmodified auditor's report?
6. The draft financial statements of ABC Ltd for year 2019 show the following information:
| | GHC’000 |
| Revenue | 420 |
| Cost of sales | 270 |
| Gross profit | 150 |
| Trade receivables | 160 |
| Trade payables | 130 |
The audit manager is conducting analytical procedures at the conclusion of the audit and would evaluate the entity's credit policy implementation against that of the previous year.
What is the receivables collection period?
7. ABC Ltd has an internal audit function. The external auditor has concluded that the internal audit function does not apply a systematic and disciplined approach to its work. How does this affect the extent to which the external auditor can rely on the work of the internal audit function?
8. The auditor of G Ltd is performing audit procedures to confirm the company's ownership of motor vehicles. Which of the following would provide the most persuasive evidence of this?
9. Which of the following audit procedures would provide the auditor with evidence of completeness of inventory?
10. The auditor of Q Ltd has performed purchases cut-off procedures and has identified that in two material instances goods received prior to the inventory count have not been included on the schedule of 'goods received not invoiced'. At the period end purchase invoices have not been received. What is the auditor's conclusion based on this evidence?
11. The auditor of QSL Ltd has completed the audit and has concluded that sufficient appropriate evidence has been obtained, which confirms that the financial statements are not materially misstated.
Which form of audit opinion will the auditor issue?
12. ISA 705 Modification to the opinion in the independent auditor's report identifies three possible types of modification. In which of the following circumstances would a disclaimer of opinion be issued? The auditor .....
13. The financial statements of Z Ltd include a receivables balance of GHS20,000 which the auditors do not believe will be recovered. Materiality has been set at GHS100,000. There are no other unadjusted misstatements.
What form of audit opinion would be issued by the auditor?
14. 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?
15. 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?
16. Which of the following statements is/are true regarding direct confirmation of accounts receivable?
- Responses from the customer must be returned directly to the client
- Under the positive method the customer only replies if the amount stated agrees with the customer's records
17. The key audit risk associated with trade payables is understatement. Which of the following procedures would provide the most reliable evidence of the completeness of amounts due?
18. The auditor of M Co has agreed a sample of non-current assets selected by physical inspection back to the non-current asset register. For which of the following assertions does this test provide assurance?
19. Which of the following assertions about classes of transactions and events for the period under audit is defined below as follows: 'Amounts and other data relating to recorded transactions and events have been recorded appropriately
20. As the audit senior on the year end audit of Z Co, you have instructed the audit junior to obtain and inspect supporting sales contracts for large sales transactions. Which of the following assertions are you seeking to test with this audit procedure?
