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WorksheetsAA ACC4201 Quiz 3
Total questions: 22
Worksheet time: 11mins
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
This is the mechanism by which a profession ensures that its members use their knowledge and skills for the benefit of society
certification
initial professional education
code of ethics
An auditor should not accept a loan on favourable commercial terms from an audit client because of the threat to his or her independence. The threat would be a___________?
Self-review threat
Familiarity threat
Self-interest threat
Advocacy threat
You have been proposed as auditor of a company. What is the first step that you should take?
Obtain the existing auditor’s working papers
Obtain a copy of the company’s most recent board minutes
Obtain a copy of the existing auditor’s letter of engagement
Obtain the client’s permission to communicate with the existing auditor
Which one of the following may auditors NOT perform for their client?
Preparing tax computations
Taking management decisions
Preparation of accounting records
Advising on weaknesses in the internal control systems
Which of the following are fundamental ethical principles for professional accountants?
1. Competence
2. Compliance
3. Integrity
4. Objectivity
1, 2 and 3 only
1, 3 and 4 only
1, 2 and 4 only
2, 3 and 4 only
Which of the following statements is INCORRECT?
An auditor who was recently a director of an audit client must not be assigned to the audit team for that client
Purchasing goods from an audit client on normal commercial terms does not create a threat to the auditor’s independence
An auditor may serve on the board of directors of an audit client
An auditor who is an immediate family member of the director of an audit client must not be assigned to the audit team
Identify the correct sentence from the following, considering the audit of financial statements carried out by an Independent Auditor:
An Audit of financial statements is an official investigation of auditee’s financials statements
An Auditor is given certain legal powers like power to search which may be necessary for concluding the audit
An audit is not an official investigation into alleged wrongdoing
None of the above
What will be the course of action if the management does not acknowledge its responsibilities or agree to provide written representations for an audit?
Auditor will be unable to obtain sufficient appropriate audit evidence
Do not accept engagement unless required by Laws and regulations
If auditor is required to accept engagement, explain to management the importance of these matters & impact on auditor’s report
All the above
The nature and extent of planning activities will vary depending on:
The size and complexity of the entity
The key engagement team members’ previous experience with the entity
Changes in circumstances that occur during the audit engagement
All of the above
In line with ACCA’s Code of Ethics and Conduct, which of the following factors must be considered before the internal audit engagement should be accepted?
(1) Whether the external audit team have the expertise to carry out the internal audit work
(2) If the assignments will relate to the internal controls over financial reporting
(3) If management will accept responsibility for implementing appropriate recommendations
(4) The probable timescale for the outsourcing of the internal audit function
1, 2 & 3
2 & 3
3 & 4
1, 3 & 4
1. What is the best definition of Corporate Governance?
1. The internal structure designed to allow the organisation to comply with laws and regulations
2. A commitment to economic development by working with stakeholders to improve their lives
3. A set of tools to help management run the day to day activities of the business
4. The same as Corporate social responsibility
5. A system by which the organisation is directed and controlled on behalf of its stakeholders
2.Who should have overall responsibility for Corporate Governance?
1. Risk Management
2. The Board
3. Internal Audit
4. The Strategy Department
5. The Compliance function
