Chapter 1

1. Who normally appoints the external auditor of a company?

• Directors

• Internal Auditors

• Shareholders

• Audit Committee

Which of the following is a TRUE statement.

• An auditor will give reasonable assurance in a review engagement.

• An auditor will give limited assurance in a review engagement.

• Negative assurance means “Nothing has come to our attention that causes us to believe that the FS does show true and fair view.”

• The level of assurance provided by an external audit is absolute.

• There are three types of audit reports and audit opinions can be issued by external auditors.

Which of the following are NOT an element of an assurance engagement?

• The user of the information

• The Auditor

• A court of law

• The preparer of the information

Which of the following would you associate with a Limited Assurance Engagement?

• A report containing positive assurance from the Auditor

• A high level of assurance

• A report containing negative assurance from the Auditor

• A large amount of detailed testing and large sample sizes

An auditor will give reasonable assurance in review engagement

• True

• False

Negative assurance means based on our review, nothing has come to our attention that cause use to believe that’s the financial statement or forecast does show true and fair view

• True

• False

Which of the following is the most appropriate definition of the external audit?

• The external audit is an exercise carried out by auditor in order to give opinion on whether the financial statement of a company are true and fair

• The external audit is an exercise carried out by auditor in order to give opinion on the effectiveness of company internal control system

• The external audit is performed by management to identify areas of deficiency within a company and to make recommendations to mitigate those deficiencies

• The external audit provides negative assurance on the truth and fairness of a company’s financial statement

Which of the following statements correctly describes the principal purpose of an external audit of a limited company

• To assist in the preparation of the company‘s financial statement

• To prevent fraud within the company

• To examine and express an opinion on the company’s financial statement

• To assist the director in improving the company’s financial reporting process

The level of assurance provided by an external audit is absolute.

• True

• False

An audit which is compulsory by the law __________.

• Government audit.

• Internal audit.

• Cost audit.

• Statutory audit.