Audit and Assurance Quiz

Is the following statement regarding stewardship true or false? Directors are stewards of the investment made by shareholders in a company.

• True

• False

Which two of the following are elements of an assurance engagement? (1) A three-party relationship (2) Suitable criteria (3) Determination of materiality (4) An engagement letter

• (1) and (2) only

• (1) and (3) only

• (2) and (3) only

• (1) and (4) only

What is the correct order of the following stages involved in the development of an ISA? (1) Distribution of exposure draft for public comment (2) Consideration of comments received as a result of the exposure draft (3) Approval by IAASB members (4) Establishment of task force to develop draft standard (5) Discussion of proposed standard at a public meeting

• (1), (5), (4), (3), (2)

• (3), (4), (1), (2), (5)

• (4), (5), (1), (2), (3)

• (5), (4), (2), (1), (3)

Who normally appoints the external auditors of a company?

• Directors

• Shareholders

• Audit committee

• Senior management

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.

The level of assurance provided by an external audit is absolute. Is this statement true or false?

• True

• False

Which of the following is/are not a statutory right of the auditors of a limited liability company? (1) A right to attend all directors' meetings and receive all notices and communications relating to such meetings. (2) A right to speak at general meetings on any part of the business that concerns them as auditors. (3) A right to attend any general meeting and receive all notices and communications relating to such meetings.

• (1) only

• (1) and (3)

• (2) only

• (2) and (3)

Is the following statement true or false? In an effective system of corporate governance the directors take responsibility for risk management strategies within the business.

• True

• False

Which of the following are recognised threats to independence and objectivity as identified in ACCA's Code of Ethics and Conduct? (1) Familiarity (2) Self-interest (3) Integrity (4) Advocacy

• (1), (2), (3) and (4)

• (1), (2) and (4)

• (2), (3) and (4)

• (2) and (4) only

In which of the following situations would the auditor be able to disclose confidential information about a client? (1) Disclosure is required by law. (2) Disclosure is permitted by law but the auditor has not requested the client's permission. (3) The auditor suspects that the client has committed money-laundering offences.

• (1) and (2) only

• (1) and (3) only

• (2) and (3) only

• (1), (2) and (3)