5 Planning

Question 1

What should be included in the audit plan?

Answer 1

The nature, timing, and event of risk assessment procedures and further audit procedures and any other procedures necessary to conform to auditing standards

Question 2

What does an interim audit focus on?

Answer 2

Documenting systems and evaluating controls

Question 3

What can an interim audit be used to do?

Answer 3

Test specific and complete material transactions, test transactions such as sales, purchases and payroll, access risks that will impact work in final audit and attend stock counts.

Question 4

What is the definition of fraud?

Answer 4

Intentional act by one or more individuals among management, those charged with governance, employees or third parties involving the use of deception to obtain an unjust or illegal advantage

Question 5

What are the two types of fraud?

Answer 5

Fraudulent financial reporting and misappropriation

Question 6

What is fraudulent financial reporting?

Answer 6

Deliberately misstating the financial statements to make the company’s performance or position look better/worse than it actually is

Question 7

What is fraud misappropriation?

Answer 7

The theft of a company’s assets such as cash or inventory

Question 8

What is the directors responsibility in respect of fraud and error?

Answer 8

To prevent and detect fraud
Implement an effective system of internal control
Create a culture of honesty, ethical behaviour and active oversight
Consider the need for internal audit department

Question 9

What is the auditors responsibility in respect of fraud and error?

Answer 9

Obtain reasonable assurance
Maintain an attitude of professional scepticism
Consider any incentives to commit fraud
Discuss among the engagement team
Identify and assess the risks of material misstatement

Question 10

What is the definition of non compliance?

Answer 10

Acts of omission or commission by the entity either international or unintentional which are contrary to the prevailing laws or regulations. (Must relate to business activities)

Question 11

What does engagement performance comprise of?

Answer 11

Direction, supervision and review of the engagement

Question 12

What does direction include in terms of engagement performance?

Answer 12

Informing team members of:
Their responsibilities
Objectives of the work to be performed
Nature of the business
Risks
Problems that may arise
The detailed approach to the performance of the engagement

Question 13

What does supervision include in terms of engagement performance?

Answer 13

Tracking the progress
Considering competence
Addressing matters arising
Identifying matters for consultation

Question 14

What does review include in terms of engagement performance?

Answer 14

• The work has been performed in accordance with professional standards
• Appropriate consultations have taken place
• The work performed supports the conclusions reached
• The evidence obtained is sufficient and appropriate to support the auditors report

Question 15

Listed entities and other high risk entities should be subject to what?

Answer 15

Engagement quality control review (hot review/pre insurance review)

Question 16

High risk clients include?

Answer 16

Those in the public interest, unusual circumstances and risks and those where laws and regulations require an EQCR

Question 17

What does a EQCR include?

Answer 17

• discussion of significant matters with partner
• review of FS and proposed auditors report
• review of selected audit docs relating to judgements and conclusions
• significant risks
• judgements in respect to materiality and significant risks
• uncorrected misstatements
• matters to be communicated to management
• conclusions reached

Question 18

What criteria must be met to be a engagement quality control reviewer?

Answer 18

Should have the technical qualifications to perform the role and should be objective

Question 19

What can a engagement quality reviewer be referred as?

Answer 19

Independent review partner

Question 20

During a cold review what is the purpose?

Answer 20

To assess whether the firms policies and procedures were implemented during an engagement and to identify any deficiencies

Question 21

When should a cold review take place?

Answer 21

After the auditors report has been signed

Question 22

What files should be selected during the cold review?

Answer 22

A selection of completed audit files for

Question 23

Who should a cold review be conducted by?

Answer 23

A dedicated compliance or quality department/a qualified external consultant/independent partner

Question 24

What should working papers demonstrate?

Answer 24

Sufficient appropriate evidence obtained

All matters were resolved before issuing the auditors report

Question 25

What do working papers provide a record of?

Answer 25

• The planning and performance of the engagement
• The supervision and review of the work performed
• The evidence obtained which the assurance provider considers necessary + arrived at their conclusion
• The quality control procedures carried out

Question 26

Working papers can be in what format?

Answer 26

Paper, film, electronic and other media

Question 27

Working papers should show?

Answer 27

Name of client, reporting date, file reference, name of preparer/reviewer/, dates, subject of working paper, objective, source, sample size, work performed, results and analysis of errors

Question 28

How long do auditors need to keep working papers?

Answer 28

For at least five years of the date of the auditors report