ASR CH. 4

Tests of controls are tests designed to give evidence of whether the controls in the company are operating effectively or not

• True

• False

Analytical procedures are a type of substantive procedures

• True

• False

Lack of credit control activities would affect the valuation assertion for trade receivable

• True

• False

Which three of the following are reported by exception in the auditors report

• All information and explanation is required for the audit have been received

• Adequate accounting records have been kept

• The directors' report is consistent with the financial statements

• The financial statements have been prepared in accordance with the Companies Act 2006

• Details of directors emoluments have been properly disclosed in the financial statements

Which of the following are assertions about classes of transactions

• Completeness, classification, presentation

• Occurrence, cut-off, accuracy

• Existence, rights and obligations, accuracy, valuation and allocation

Which three of the following procedures that could be used by assurance providers to provide evidence relating to a balance in the financial statement

• Walk-through procedure

• Test of control

• Test of detail

• Analytical procedure

Which two of the following are valid comments about the quality of assurance evidence

• Evidence from external sources is more reliable than evidence obtained from the entity's records

• Evidence from internal sources is more reliable when related internal controls operate effectively

• Evidence from internal sources is more reliable than evidence created by the assurance provider

• Photocopies a more reliable than facsimiles

Which three of the following are assertions used by the auditor about classes of transactions

• Occurrence

• Existence

• Completeness

• Cut off

• Rights and obligations

Which three of the following statements are valid

• Positive assurance will be given on a statutory audit assignment

• Positive assurance requires more rigorous work to be undertaken than negative assurance does

• Positive assurance will be given on a review assignment

• Negative assurance is assurance given in the absence of any indications to the contrary

Which two of the following describe manifestations of the expectations gap

• Users blaming the auditors for a fraud discovered in a company subsequent to an audit

• Users discovering that the directors refuse to cooperate in providing the auditor with the evidence he requests

• Shareholders approving the appointment of the auditor at an annual general meeting

• Users relying on the audited financial statements as a fair valuation of the company