Quiz 1 Flashcards
The subeject matter of an assurance engagement may be:
A. non-financial performance
B. financial position and performance
C. all of the given answers are correct
D. systems and processes
C. all of the given answers are correct
Which of the following best describes why an independent auditor reports on financial statements?
A. Different interests may exist between the company preparing the statements and the parties using the statements.
B. A management fraud may exist and it is more likely to be detected by independent auditors.
C. A management fraud may exist and it is more likely to be detected by independent auditors.
D. A poorly designed internal control system may be in place.
A. Different interests may exist between the company preparing the statements and the parties using the statements.
Which of the following is not a major expectation gap issue?
A. The auditor’s duty to detect fraud.
B. The meaning of auditor’s report messages.
C. The level of materiality used by the auditor.
D. The level of assurance being conveyed by the auditor.
C. The level of materiality used by the auditor.
In which of the following engagements would an auditor provide a report of factual findings?
A. Agreed-upon procedures engagements
B. Review engagement
C. Financial report audit
D. Performance engagement
A. Agreed-upon procedures engagements
The auditor’s responsibilities under the Corporations Act 2001 include:
A. The preparation of financial reports for presentation to shareholders
B. All of the given answers are correct
C. Providing an opinion as to whether the financial report gives a true and fair view
D. Certifying the accuracy of the financial report
C. Providing an opinion as to whether the financial report gives a true and fair view
Which of the following entities is responsible for monitoring auditor independence?
A. Financial Reporting Council (FRC)
B. Australian Auditing and Assurance Standards Board (AUASB)
C. Australian Securities and Investments Commission (ASIC)
D. Australian Securities Exchange (ASX)
A. Financial Reporting Council (FRC)
Corporate governance procedures aim to ensure that:
A. The company avoids lawsuits from shareholders
B. All of the given answers are correct
C. All members of the board of directors attend all directors’ meetings
D. The entity operates at high levels of efficiency and effectiveness
D. The entity operates at high levels of efficiency and effectiveness
An auditor has been assigned to audit the financial statements of a client company for the 10th consecutive year. Over this period, the auditor has developed a close personal relationship with the client’s chief financial officer (CFO), regularly meeting for informal lunches and maintaining frequent social interactions outside of work. What type of threat does this situation create?
A. Self-interest threat.
B. All of the given answers are correct.
C. Familiarity threat.
D. Advocacythreat.
C. Familiarity threat.
The auditor faces a conflict of interest situation if they:
A. served as an executor and trustee of the estate of an individual who owned the majority of the shares of a client.
B. joined a trade association of which a client is also a member.
C. accepted a small gift of the client’s products.
D. all of the given answersarecorrect.
A. served as an executor and trustee of the estate of an individual who owned the majority of the shares of a client.
An auditor would violate the principle of professional competence and due diligence if the auditor:
A. fails to stay updated with changes in auditing standards.
B. accepts weak evidence to support audit conclusions.
C. all of the given answers are correct.
D. rushes the audit process due to timeconstraints.
C. all of the given answers are correct.
