Audit and Assurance Quiz

Which two of the following are risks associated with the sales system?

• Orders may be taken from customers who are not able to pay

• Invoices may be cancelled by valid credit notes

• Goods may be received but not invoiced

• Sales might be recorded in the wrong customer accounts

Which one of the following populations should the auditor start from when testing for the completeness of reported sales of a manufacturing company?

• Sales receipts

• Sales invoices

• Goods despatch records

• Sales orders

Which three of the following are assertions used by the auditor about account balances at the period end?

• Existence

• Accuracy, valuation and allocation

• Cut-off

• Completeness

Which one of the following best describes the principal difference between fraud and error?

• Fraud may result in the financial statements being material misstated

• Fraud is an intentional act whereas error is unintentional

• A misstatement can be material whether it is caused by fraud or by error

Which two of the following internal controls are most likely to prevent services being used for the private purposes of employees?

• Purchase orders are processed by the buying department following authorisation by the production director

• Purchase requisitions must be signed by two team members for any given project

• Purchase orders should only be placed with authorised contractors

• Purchase invoices are matched to authorised purchase orders

Which two of the following deficiencies identified in the purchases system of Hasina Ltd could result in a misstatement of liabilities?

• The buying department does not always use authorised suppliers

• Hasina Ltd does not always take advantage of prompt payment discounts

• Purchase invoices are not matched with goods received records

• The payables ledger is not reconciled to the payables ledger control account

Which two of the following roles could internal audit carry out in respect of risk management and still operate effectively?

• Monitoring the company's overall risk strategy

• Designing an internal control system in a production department

• Testing internal controls in the purchasing department

• Implementing internal controls in the sales department

Which one of the following statements is correct in respect of the minimum period, as required by ICAB, for which audit working papers must be retained by the auditor?

• Five years from the date of completion of the audit work

• Six years from the date of the auditor's report

• Six years from the end of the accounting period to which they relate

• Five years from the date of approval of the financial statements by the shareholders

In cases where significant judgement is required, the auditor can choose to delay the preparation of working papers in order to allow for suitable reflection.

• True

• False

Test data are a type of substantive procedure.

• True

• False