Audit & Assuarance -1

Which three of the following describe aspects of the expectations gap with respect to the external audit

• Users do not understand the meaning of the audit opinion

• Users do not aware of the limitations of the audit process

• Users do not appreciate that reasonable assurance is a low level of assurance

• Users do not understand what the audit process involves

The level of assurance given by an assurance engagement will depend on the type of engagement. For Review of financial information,  select what level of  assurance you would expect to be given: 

• Reasonable

• Limited

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

• The external audit is an exercise carried out by auditors in order to give an opinion on whether the financial statements of a company are materially misstated.

  
  

• The external audit is an exercise carried out in order to give an opinion on the effectiveness of a company's 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 statements

  
  

Who normally appoints the external auditors of a company? 

• Directors

  
  

• Shareholders

• Audit committee

  
  

• Senior management

  
  

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 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.

  
  

• The gift should only be accepted if its value is trivial and inconsequential to the recipients.

  
  

The level of assurance given by an assurance engagement will depend on the type of engagement. For Report on profit and cash flow forecasts,  select what level of  assurance you would expect to be given: 

• Reasonable

  
  

• Limited

  
  

The statement: "The criteria for all assurance engagements will be the same" is true or false?

• 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

  
  

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

• A user

  
  

• A subject matter

• Suitable criteria

• An assurance file