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WorksheetsACCA F8 Audit Specific Procedure
Total questions: 18
Worksheet time: 19mins
Much of the work in the audit involves assertions. Which
of the following statements is correct relating to assertions:
The auditor makes the assertion and then tests it during the course of the audit.
Management make the assertions by inclusion of items in the financial statements and the auditor tests those assertions.
Management make formal assertions to the auditor in the form of a letter and those assertions are given to the shareholders.
The auditor may assume that the assertions made by management are correct if the Finance Director is a qualified accountant.
Which of the following are areas of the financial statements for which the assertions differ?
i) Transactions and events.
ii) Nominal codes.
iii) Ledger
iv) Accounts Disclosures
v) Account Balance
All of the above.
ii) & iii) only.
i) ii) &v) only.
i) iv) & v) only.
In order to test the assertions of management, the auditor must carry out procedures as specified in ISA 500. Which of the following are examples of such procedures:
i) Re-performance.
ii) Evaluation.
iii) Confirmation.
iv) Analytical procedures.
v) Observation.
A. All of the above.
B. i) ii) iii) & iv) only.
C. i) iii) & v) only.
D. i) iii) iv) & v) only.
All evidence gathered by the auditor in order to test an assertion or support their opinion must be:
A. Specific and proportionate.
B. Sufficient and appropriate.
C. Salient and approved.
An audit junior has been assigned to the audit of bank and cash balances of Howard Co. He has obtained the following audit evidence:
1 Bank reconciliation carried out by the cashier
2 Bank confirmation report from Howard’s bankers
3 Verbal confirmation from the directors that the overdraft limit is to be increased
4 Cash count carried out by the audit junior
What is the order of reliability of the audit evidence starting with the most reliable first
4, 2, 1 and 3
2, 1, 4 and 3
4, 3, 2 and 1
2, 4, 1 and 3
Analytical procedures can be described as:
A. A review of expectations based on ratio analysis, trends and industry information.
B.Ratio analysis to predict what next year’s figures may look like.
C.Industry analysis to evaluate technological advances. <br />
According to ISA 540 analytical procedures must be carried out at the following stages of the audit:
i) On every balance on the Statement of Financial Position during the audit.
ii) At the review stage of the audit.
iii) At the planning stage of the audit.
iv) Only during the interim audit.
A.All of the above.
B.ii) iii) & iv) only.
C.i) iii) & iv) only.
D.ii) & iii) only.
The auditor will make use of analytical review to identify any strange movements in balances indicating risk areas and to identify anomalous figures indicating potential misstatements.
This Statement is.....
A.TRUE
B.FALSE
Which of the following is a procedure that the auditor could use to verify existence of receivables?
A.Add up the aged receivable listing.
B.Undertake a receivables circularisation.
C.Re-calculate the bad debt write-off amount.
D.Check with companies house that each debtor is a legitimate company.
How can the auditor verify that the bad-debt write-off is correct?
A.Compare it to last year as it should be the same.
B.Discuss with management and recalculate based on the information available.
C.Carry out a receivable circularisation.
Which TWO of the following substantive procedures provide evidence over the EXISTENCE of trade receivables?
(1) Agreeing a sample of goods despatched notes to sales invoices and to the sales ledger
(2) Undertaking a receivables circularisation
(3) Review of post year-end cash receipts, if these relate to year-end receivables follow through to the sales ledger
(4) Recalculating the allowance for uncollectible accounts
A. 1 and 3
B. 2 and 4
C. 2 and 3
D. 1 and 4
As trade receivables is a material balance, the audit partner has asked that the audit team carry out a trade receivables circularisation.
Which of the following are benefits of carrying out a trade receivables circularisation?
(1) It provides evidence from an independent external source
(2) It provides sufficient appropriate audit evidence over all relevant balance assertions
(3) It improves audit efficiency as all customers are required to respond
(4) It improves the reliability of audit evidence as the process is under the control of the auditor
A. 1 and 2
B. 1, 2 and 4
C. 2 and 3
D. 1 and 4 only
What Assertion Verified by Compare Receivable Turnover and the Receivable Collection Period with the previous year and or with industry data
(a)
What Assertion Verified by Performing Receivable Circularisation in a sample of year-end trade receivable?
(a)
A confirmation request which the confirming parties respond directly to the auditor, whether they agree with the information in the request or provides the requested information called (a)
A confirmation request which the confirming parties respond to the auditor only when they are disagree with the information in the request called (a)
What Assertion Verified by examining the customer's accounts and customer correspondence on whether the balance outstanding represent specific invoice and confirms its validity?
(a)
What Assertion Verified by tracing the sample of shipping documentation to sales and receivable ledger?
(a)
