WorksheetsAA ACC4201 Quiz 2
Total questions: 22
Worksheet time: 14mins
The level of assurance provided by an external audit is absolute.
Is this statement true or false?
True
False
Which of the following is an element of an assurance engagement?
An appropriate subject matter
Positive assurance
Analytical review
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 & 3
1 & 2
2 & 3
1, 2 & 3
2 & 4
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.
Which two (2) of the following makes one eligible to act as auditor?
1. Need membership of an appropriate body eg ACCA
2. Must be intelligent and well spoken
3. Audit work must not be conducted properly and with professional integrity
4. There must be monitoring and enforcement mechanisms in place
1 & 3
2 & 3
1 & 4
1 & 2
The Board of BJM Co has asked your audit firm (YHT & Co) to conduct a review of BJM's compliance with hygiene regulations.
The partner responsible for the review engagement has asked you to tell him what level of assurance you believe YHT & Co should provide, and also what type of opinion the firm should give.
What is the level of assurance and type of opinion that can be provided on this review engagement?
Reasonable assurance, positive wording
Reasonable assurance, negative wording
Limited assurance, positive wording
Limited assurance, negative wording
Which of the following are the benefits of a statutory audit?
1. Impartial view of financial statements provided by the auditor
2. Review of accounting and control systems, including recommendations in relation to systems
3. Only auditors truly understand accounting standards
4. There is a possibility that the auditor might detect fraud and error
All of the above
1, 2 & 3
1, 2 & 4
2, 3 & 4
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
1 & 3
2
2 & 3
In an effective system of corporate governance the directors take responsibility for risk management strategies within the business.
True
False
Who is ultimately responsible for a company's system of internal controls?
External auditors
Board of directors
Internal auditors
Audit committee
Every company must have an audit committee!
True
False
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 & 2
1 & 3
2 & 3
1, 2 & 3
Which of the following best describes the aim of corporate governance
To ensure companies are well in the interests of their shareholders and the wider community
To ensure that company directors cannot commit fraud
To ensure the wealth of companies contributes to the health of economies where their shares are traded
To ensure companies have a positive impact on the local community and the environment
AAB & Co is the statutory auditor of Y Co, a public interest entity.
Which of the following services is AAB & Co prohibited from providing to Y Co under any circumstances?
Provision of bookkeeping services
Assistance in the resolution of tax disputes
Internal audit services
Valuation services where the valuation will have a material effect on the financial statements
Which of the following are valid disadvantages of having an audit committee?
It can undermine the authority of the board of directors.
The internal audit function may communicate directly with the audit committee rather than with management.
It may be difficult to find non-executive directors with the relevant experience.
Which of the following is not a benefit of establishing an audit committee?
Reduced opportunity of fraud, as the audit committee can advise the executive directors on managing the risks in the financial reporting process.
Greater external audit independence, as the audit committee can be responsible for appointing the external auditors
Reduced external audit fees, as the presence of the audit committee reduces audit risk and consequently, the amount of audit procedures required.
Which of the following statements best reflects the auditor's duty of confidentiality?
Auditors must never, under any circumstances, disclose any matters of which they become aware during the course of the audit to third parties, without the permission of the client.
Auditors may disclose any matters in relation to criminal activities to the police or taxation authorities, if requested to do so by the police or a tax inspector.
Auditors may disclose matters to third parties without their client's consent if it is in the public interest, and they must do so if there is a statutory duty to do so.
Auditors may only disclose matters to third parties without their client's consent if the public interest or national security is involved.
Which of the following statements are NOT true about best practice for audit committees?
(1) At least one non-executive director should have recent financial experience.
(2) The chief finance officer should chair the audit committee.
(3) The audit committee should meet the head of internal audit at least once a year without the presence of executive management.
(4) The audit committee should meet at least twelve times a year.
1 & 3
2 & 4
1 & 2
1 & 4
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
All 4
1, 2 & 4
2, 3 & 4
2 & 4
