Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

AA Question Rote > Section A Rote (2) > Flashcards

Section A Rote (2) Flashcards

1
Q

What should annual report regarding work of audit committee include? (significant)

A

Significant issues relating to FSs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What should annual report regarding work of audit committee include? (Effectiveness external process)

A

Assess independence and effectiveness of external audit process

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What should annual report regarding work of audit committee include? (independence)

A

How auditor independence and objectivity are safeguarded, if external auditor provides non-audit services

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

How should NED renumeration be trated?

A

A set amount based on time committed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Which department does IA department report to?

A

The audit committee

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is a value for money audit for?

A

Assess economy, effectiveness and efficiency

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What should IA department not do? (design)

A

Design and implementing internal control procedures

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What should IA department not do? (transactions)

A

Authorising transactions and performing reconciliations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

How long is cooling off period for an engagement quality reviewer for a listed company?

A

5 years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Is it a rule-book or conceptual framework apporach for easy to know what is allowed or not allowed?

A

Rule book approach

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is the ethical issue with 40% of fee for last year’s audit still outstanding?

A

Self-interest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

When there are large outstanding fees?

A

Auditor’s report should not be issued until fees have been paid

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Should a 40% disocunt be rejected?

A

Yes, as it is not a trivial amount.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Does preparing tax returns create a self-review threat?

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Does provision of tax advice create a self-review threat?

A

YES

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Should all employees sign a confidentialty agreement?

A

NO, only audit teams of each client

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

When is partner rotation required for listed companies>

A

Only when one has been in place seven years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

When can payroll and bookkeeping services be provided to a non-listed audit client? (Routine)

A

If they are routine and mechancial in nature

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

When is confidentality not an issue for an audit of a listed company?

A

Info relates to same client and is not being provided to any other parties

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What threat does a contingent fee create?

A

A self-interest threat

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is likely a public interest matter

A

When a global company and issue r elates to environmental pollution

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What should be done on a board when executive directors are paid a fixed salary which increases annualy in line with inflation?

A

Introduce share options to align renumeration of executive directors with long-term success of the company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

When is independence on the board compromised from a director? (Time served)

A

Served on the board for more than 9 years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Should workforce renumeration be taken into consideration when setting renumeration of executive directors?

A

TRUE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Should company withhold bonuses and share awards whose performance is not acceptable?

A

TRUE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Example of advocacy threat and tax services?

A

Tax services whereby company would liaise with tax authority on another company’s behalf

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

What doesn’t address a self-interest threat from fee levels? (Teams)

A

Using separate teams

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

When there is a legal requirement to report a bad transaction?

A

Overrides disclosure done by law

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Which partner should take over an audit?

A

No ongoing relationship with company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Should a partner of a firm serve as a director of an audit client?

A

FUCK NO

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Methods taken by management for internal audit services (design)

A

Designing and maintaining internal control systems

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Methods taken by management for internal audit services (recommendations)

A

Determine which recommendations should take priority and implemented

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Methods taken by management for internal audit services (setting scope internal)

A

Setting scope of internal audit work to be carried out

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

How should matters affecting independence of listed client be disclosed

A

Must be disclosed to TWCG of a listed client. Also request pre-issuance review

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

When fees from a non-listed client represent 30% of firm’s total fees for five consecutive years? (independence)

A

Independence is threatened

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Example of a self-review threat for an auditor

A

Auditor responsible for auditing areas where they were responsible for

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

When should audit dpeartment resign from an engagement?

A

If there is no alternative engagement partner assigned to audit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

Most appropriate reason for previous aduit firm resigned without notice and several firms have declined engagement?

A

Management of Mickey may have lacked integrity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

Most appropriate reason if audit client is a competitor (objectivity)

A

Threats to objectivity and confidentiality

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

What must be done first for a conflict of interest in a firm?

A

Infrom company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
41
Q

What must be done last for a conflict of interest in a firm?

A

Perform engagement quality review

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
42
Q

What is done after obtaining consent to act? (Safe)

A

Implement safeguards

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
43
Q

Example of a self-interest threat (shares)

A

Receiving shares as part of his renumeration

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
44
Q

When are contingent fees not allowable according to ACCA Code of Ethics?

A

Not allowed for non-assurance services provided to audit clients if fee material to firm

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
45
Q

Does reviewing qualifications and assessing competence of applicants create a threat to objectivity?

A

NO

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
46
Q

Should the board chair be appointed externally or internally?

A

Externally

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
47
Q

What membership can board chair have?

A

Can’t sit on audit committee but can be a member of renumeration committee provided they are not the committee chair

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
48
Q

When is independence of non-exec director compromised (employed five)

A

Was employed by company less than five years ago

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
49
Q

When is independence of non-exec director compromised (shares)

A

Owned shares in the company within last three years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
50
Q

When is independence of non-exec director compromised (pension)

A

Receives a pension (or other renumeration not a fixed salary)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
51
Q

Why is a non-exec director committing to a three year contract a dsiadvantage? (re-election)

A

As all directors stand for re-election annually

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
52
Q

What should annual report explain for succession and evaluation of directors? (nomination process)

A

Annual report should explain work of nomination committee including process for making appointments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
53
Q

When should performance of board chair, board and directors be evaluated according to corporate governance guidelines?

A

Annually

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
54
Q

Are provisions and legal issues common with oil and gas companies?

A

YES

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
55
Q

When is detection risk greater?

A

If there is a lack of knowledge and experience of the client

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
56
Q

Materiality ranges for revenue?

A

0.5% to 1%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
57
Q

Profit before tax ranges for revenue?

A

5% to 10%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
58
Q

When is completeness a risk for revenue?

A

If revenue is lower than expected

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
59
Q

When is cut-off and occurence a risk for revenue?

A

If revenue is higher than expected

60
Q

Appropriate audit response for recoverability of receivables?

A

Review correspondence with customers

61
Q

Appropriate audit response for damage to non-current assets?

A

Perform an impairment review to determine if an impairment charge is required

62
Q

Appropriate audit response for calculating amortisation of non-current assets?

A

Calculating expected amortisation charge and comparing it with management’s figure

63
Q

Counter for increased detection risk? (quality)

A

It results in increased quality management procedures such as need for an engagement quality review

64
Q

When does risk of revenue cut-off occur for bonus?

A

Aim to maximise their current year bonus

65
Q

Analytical procedures for planning stage of an audit (MM)

A

Assist with identification of risks of material misstatement

66
Q

Analytical procedures for planning stage of an audit (transactions)

A

Assist in identifying unusual transactions and events

67
Q

What audit test is not reasonable for valuation of inventory and receivables?

A

Cut-off testing

68
Q

What does an increase in trade payables mean? (cash)

A

There are cash flow problems

69
Q

What is meant by performance materiality?

A

Amount which reduces probability that aggregate of uncorrected and undetected misstatements exceeds materiality for FSs as a whole

70
Q

What is meant by tolerable misstatement?

A

Maximum amount of misstatement auditor is willing to accept and still conclude that FSs are fairly stated

71
Q

Appropriate audit risk relates to increase in useful of non-current assets (directors)

A

Discuss with directors the reason for change in useful life

72
Q

Issue if returned goods have not been recorded back into inventory?

A

Inventory may be misstated

73
Q

What needs to be done when there;s a lack of supplier statement reconciliations (misstatement)

A

Increased risk of misstatement of trade payables

74
Q

What needs to be done when there;s a lack of supplier statement reconciliations (accrual balance)

A

Misstatements in the purchase accrual balance may go undetected

75
Q

What needs to be done when there;s a lack of supplier statement reconciliations (substantive testing)

A

Increased substantive testing needs to be performed over purchases and payables

76
Q

How would a sale not occurring affect the revenue balance?

A

It would be overstated as gross profit margin will increase

77
Q

When the gross profit margin decreases?

A

It indicates that website sales may not be completely recorded

78
Q

Is detecting material misstatements relevant for planning stage of an audit?

A

No

79
Q

What audit strategy section is risk of MM including the risk of fraud?

A

Significant factors, preliminary engagement activities and knowledge gained on other engagements

80
Q

What audit strategy section is use of professional scepticism?

A

SIgnificant factors, preliminary engagement activities

81
Q

What audit strategy section is selection of audit team?

A

Nature, timing and extent of resources

82
Q

What audit strategy section is use of automated tools and audit techniques?

A

Characteristics of the engagement

83
Q

What happens to detection and control risk if there’s a misappropriation of assets?

A

Detection risk decreases as control risk is higher

84
Q

Best way to go about securing segragation of duties control?

A

People working in the payroll department

85
Q

Can internal control questionnaires and narrative notes be prepared in advance?

A

Internal control questionnaires

86
Q

Can internal control questionnaires and narrative notes be easy to udnerstand?

A

Yes

87
Q

Can internal control questionnaires and narrative notes overstate controls?

A

Just internal control questionnaires

88
Q

Can internal control questionnaires and narrative notes miss controls?

A

Both

89
Q

Is goods are counted and agreed to supplier’s delivery note before signing the delivery note to accept the goods a strength or deficiency?

A

Deficiency as should be agreed before signing the delivery notes

90
Q

What is the benefit of reviewing a payment list?

A

Identifies any unusual or duplicate names

91
Q

When there’s greater emphasis on internal controls, what is the trade off>

A

Decreased sample sizes when performing substantive testing

92
Q

Do discounts received relate to purchase or sales system?

A

Purchase system

93
Q

What should be done to increase independence of internal auditors when reporting deficiencies?

A

Reporting directly to board of directors not the finance director

94
Q

Is tracing a transaction through system to ensure it is recorded in detailed sales listing test of control or substantive procedure?

A

Substantive procedure of completeness

95
Q

Difference between general and information processing?

A

General: Covers everything

Information processing: More specific

96
Q

When a control is a computerised control?

A

Can be used to place a dummy sales order

97
Q

What can’t the auditor simply assume with the presence of an audit committee?

A

Work of the internal auditor will be reliable, must assess the work to ensure it is appropriate for audit purposes

98
Q

What type of control is internal audit department agrees the physical assets to the asset register to ensure completeness?

A

Reconciliation

99
Q

What type of control is variances between actual and budgeted expenditure are analysed in quarterly management accounts?

A

Verification

100
Q

What is persuasive evidence assets purchased during the year have been authorised?

A

Requisition

Order

Minutes of asset expenditure committee meetings

101
Q

When there;s a comparison of actual to budget. Is it a test of control or a substantive procedure?

A

A substantive procedure

102
Q

When an internal audit employee wants to provide direct assistance with external audit procedures?

A

Do what doesn’t require significant judgement (e.g. cash counts)

103
Q

When a supplier has a low balance at year-end but with a high volume of transactions during the year. What does this indicate?

A

That not all liabilities have been recorded at year-end date

104
Q

When there’s a liability to pay for goods at the date of receipt?

A

An accrual should be created for goods received but not yet received

105
Q

Are accruals recorded separately from trade payables?

A

YES

106
Q

What is most reliable evidence in accuracy of wages and salaries calculation?

A

Proof-in-total calculation

107
Q

What procedure does a proof-in-total relate to?

A

A substantive procedure

108
Q

What substantive procedure does review the treatment of a sample of post-year-end returns relate to?

A

Occurrence

109
Q

What substantive procedure does select a sample of GDNs and agree to invoices in detailed sales listing relate to?

A

Completeness

110
Q

What substantive procedure does select a sample of invoices from the detailed sales listing and agree to GDNs relate to?

A

Occurrence

111
Q

What substantive procedure does select a sample of invoicess and recalculate the invoiced amount agreeing to price list?

A

Accuracy

112
Q

What shouldn’t be done when completeness is the key assertion for trade payables testing?

A

Suppliers where the statement agrees to the balance on the list of individual suppliers

113
Q

How to determine whether a payables balance is understated? (GRN)

A

Use GRN to determine when the goods were received

114
Q

Which documents need to be examined to confirm trade payables balance?

A

Inspect pre-year-end GRN

Inspect post-year-end bank ledger

115
Q

Is it appropriate to project a one-off error across the popuilation?

A

NO, as it is not representative of the population

116
Q

What is meant by test data?

A

Inputting dummy transactions into the client’s system to test how the transactions are processed

117
Q

When is it most beneficial to review post-year-end receipts?

A

Confirms actual recoverability of outstanding balance, therefore provides the most reliable evidence

118
Q

What substantive procedure does performing a receivables circularisation relate to?

A

Existence

119
Q

What substantive procedure does reviewing post-year-end cash receipts from customers?

A

Existence

120
Q

What is the result of a decrease in selling price?

A

May result in cost of inventory being higher than NRV

121
Q

When an inventory turnover decreases (valuation)

A

It indicates valuation issues

122
Q

What is the effect of inclusion of third-party inventory?

A

Overstates inventory quantities but not overvaluation

123
Q

Ins inspecting the inventory for evidence of damage test of control or substantive procedure?

A

Substantive procedure

124
Q

Audit responce to a lawsuit? (inspect)

A

Inspect correspondence between client and their legal advisors

125
Q

Audit responce to a lawsuit? (review)

A

Review board minutes to understand management’s view about the claim

126
Q

When must an external auditor attend an inventory count?

A

If inventory is a material balance

127
Q

Primary reason for maintaining an inventory count timetable for the perpetual inventory counting system?

A

Ensure all areas are counted during the year

128
Q

What procedure does agreeing the items listed on the count sheets to the physical inventory confirm?

A

Existence

129
Q

What procedure does agreeing the physical inventory quantities to the count sheet confirm?

A

Completeness

130
Q

Should the external auditors attend at least one count?

A

Yes, to ensure adequate controls are applied

131
Q

When the team prints inventory quantities from system and these records are then compared to the inventory physically present a strength or deficiency?

A

Deficiency

132
Q

Should all lines of inventory be counted at least twice in a year?

A

It is not necessary

133
Q

Do external auditors need to request a surprise inventory count?

A

False

134
Q

When should sampling be used (Appropriateness)

A

Appropriateness of the population

135
Q

When should sampling be used (Size)

A

Size of the population

136
Q

When should sampling be used (Completeness)

A

Completeness of the population

137
Q

What does sampling always have to be?

A

RANDOM

138
Q

What is meanr by a systematic sampling?

A

Where a sample is chosen with a constant interval

139
Q

Is assertion of occurence relevant to payables or purchases

A

Just purchases

140
Q

What is meant by client generated evidence?

A

Individual supplier balances

Accruals listing

Bank ledger account

GRNs

141
Q

Priority of third-party generated evidence or client generated evidence?

A

Third party takes priority

142
Q

What should be done if several misstatements have been found?

A

Increase the amount of testing

143
Q

When direct evidence can’t be obtained, what is the issue?

A

Difficult to determine why the errors occurred

144
Q

Can audit software slow systems down?

A

YES

145
Q

What year is an audit more costly to setup?

A

In the initial year

146
Q

Issue if an audit partner advises which accounting system to choose?

A

It is a self-review threat

147
Q

What must audit firm do when a new computerised accounting system is implemented?

A

Audit firm should dealy use of audit software to ensure designed to effectively work with the new system

AA Question Rote (29 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions