Audit & Assuarance -1

In any assurance engagement there are three parties involved: the responsible party, the practitioner and user. In respect of given subject matter state which party determines the suitable criteria?

• User
• Practitioner
• Responsible party

Which three of the following are key elements of a general assurance engagement?

• A user
• A subject matter
• Suitable criteria
• An assurance file

Which one of the following best describes the concept of assuarance?

• An assurance firm's high level of satisfaction as to the reliability of an assertion being made by one party for the use of another party
• An assurance firm's satisfaction as to the reliability of an assertion being made by one party for the use of another party
• A user's satisfaction as to the reliability of an assertion being made by another party
• An assurance firm's limited level of satisfaction as to the reliability of an assertion being made by one party for the use of another party

You are the audit manager of an audit firm and you are planning the audit of ABC Co, a listed company, which has been an audit client for five years and specialises in manufacturing luxury laptop. The employees of ABC Co are entitled to purchase laptop at a discount of 20%. The audit team has in previous years been offered the same level of staff discount. Which of the following statements is true in accordance with Code of Ethics and Conduct?

• The audit team can accept the discount as it is on the same terms as that offered to staff
• Junior members of the audit team are allowed to accept the discount, but the audit manager and audit partner should not
• Unless the value of the discount is trivial and inconsequential to the audit team members, the offer should be declined
• The audit team is only allowed to accept a discount of up to 5%

In any assurance  engagement there are three parties involved: The responsible party, the practitioner and the user. In respect of given subject matter state which party prepares the subject matter

• responsible party
• practitioner
• User

The following is an extract from an independent accountant's unmodified report on a profit forecast: "Base on our examination of the evidence supporting the assumptios, nothing has come to our attention which causes us to believe that these assumptions do not provide a reasonable basis for the forecast". Which ONE of the following BEST describes the type of assurance provided by this statement?

• Positive assurance expressed negatively
• Negative assurance expressed positively
• High level of assurance expressed negatively
• Limited level of assurance expressed negatively

The statement: "Suitable criteria can only be identified for assurance engagements relating to financial statements" is true or false?

• True
• False

You are an audit manager of an audit firm and have just been assigned the audit of ABC company. In an initial meeting with the finance director of ABC, you learn that the audit team will not be entertained on ABC's yacht this year, instead, he has arranged a balloon flight costing less than one-tenth of the expense of using the yacht and hopes this will be acceptable. Which of the following actions should be taken to ensure the firm complies with Code of Ethics and Conduct? 

• The gift may be accepted as Stark has taken appropriate measures to reduce the value of the gift compared to previous years.
• The value of the gift should be assessed to determine whether it is of material value to the financial statements.
• The gift should only be accepted if its value is trivial and inconsequential to the recipients.
• Only the audit partner and audit manager should accept the gift.

For each of the following statements select whether they are true or false. Reasonable assurance is absolute assurance of the correctness of the subject matter

• True
• False

Which of the following could cause advocacy

• Audit team to be offered a balloon flight entertainment
• Tax fee to be based on a percentage of tax saved
• Firm to represent client in a dispute with the tax authorities