Instruction:
1. First try your hands on by answering ALL questions for the objectives
2. Click the Submit Button to see how you performed and the correct answers.
1. A private company has requested that its auditor prepares a valuation report on a prospective acquisition target in order to help it obtain finance for the acquisition from its bank.
Which two of the following threats may arise if the auditor agrees to take on this
assignment?
2. Which of the following statements best reflects the auditor's duty of confidentiality?
3. Which of the following correctly describes the auditors' responsibilities in accordance with ISA 240 The auditor's responsibilities relating to fraud in an audit of financial statements? The auditor is
4. In accordance with ISA 250 Consideration of laws and regulations in an audit of financial statements, what are the responsibilities of the external auditor?
5. The external auditor has identified a deficiency in the internal controls of a client. ABC Ltd. Which of the following factors would indicate That the deficiency is a significant deficiency in accordance with ISA 265 Communicating deficiencies in internal control to those charged with governance and management?
I. The likelihood of the deficiency leading to material misstatement is low
II. There is a risk of fraud
III. The number of transactions affected by the deficiency is low
IV. The deficiency interacts with other deficiencies identified
6. Which of the following is most likely to be ethically unacceptable?
7. Which of the following is not included in the fundamental principles of the IESBA's Code of Ethics? Members should:
8. 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?
9. What is the primary objective of ISQC1 Quality control for firms that perform audits and reviews of financial statements, and other assurance and related services engagements on quality control?
10. Which of the following describes a company's control environment?
11. Which two of the following are elements of an assurance engagement?
I. A three-party relationship
II. Suitable criteria
III. Determination of materiality
IV. An engagement letter
12. In which of the following situations would the auditor be able to disclose confidential information about a client?
I. Disclosure is required by law
II. Disclosure is permitted by law but the auditor has not requested the client's permission
III. The auditor suspects that the client has committed money-laundering offences
13. AB & Co audits DEF Ltd. Which two of the following circumstances would constitute a threat to objectivity?
I. An employee of AB & Co owns shares in DEF Ltd but is not part of the audit team
II. The best friend of the engagement partner owns an insignificant indirect financial interest in DEF Ltd
III. The audit manager of DEF Ltd owns a significant number of shares in DEF Ltd
IV. The husband of the audit partner owns shares in DEF Ltd
14. Which of the following internal audit assignments is described below? The examination of the economy, efficiency and effectiveness of activities and processes.
15. Which of the following internal audit assignments aims to monitor management's performance and ensures that company policy is followed?
16. Which of the following statements are true regarding the controls in a small company?
I. The external auditor will never be able to rely on the controls in a small company
II. Segregation of duties may be inadequate due to staff numbers
III. Evidence of the operation of controls is more likely to be available in documentary form
IV. The external auditor will assess the attitudes, awareness and actions of management
17. X 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? The external auditor………
18. Which of the following statements is true in respect of audit committees?
19. Good corporate governance covers a range of areas. Which of the following areas does not constitute a major element of corporate governance?
20. Which of the following elements should not be included in the money laundering program of an assurance firm?
