Task Bank Questions Flashcards
An external audit report by an independent professional gives ________ assurance on the financial statements of an organisation.
Positive
Which of these is not a key element of an assurance engagement?
a) Appropriate subject matters e.g. financial statements
b) A report by an independent professional
c) The use of a spreadsheet to analyse data
d) Agreed criteria for the preparation of the subject matter e.g. IFRS’s
c) is not a key element.
Which of the following is required in an assurance engagement?
a) Subject matter on which to report
b) A deadline for reporting
c) A positive assurance report
a) Subject matter on which to report is required in an assurance engagement
What is the primary purpose of International Standards on Auditing?
a) Promote high quality audit work world wide
b) Charge consistent audit fees
c) Improve company profits
d) To ensure consistent accounting treatments
a) Promoting high quality audit work world wide is a primary purpose of International Standards on Auditing.
Which professional body is responsible for setting international standards auditing (ISAs)?
The International Audit and Assurance Standards Boards (IAASB)
ISA 230 states that audit documentation should be sufficient that an experienced auditor with no previous knowledge of the company could follow and understand the work carried out.
True or false
True
Which two are likely impacts of a successful negligence claim against the audit firm?
a) Increased staff bonuses
b) Payment of damages
c) Bad publicity for the firm
d) Increased tax liability
b) and c)
An auditor owes a duty of care to the directors of the company.
True or false
False
An auditor owes a duty of care to the shareholders of the company.
True or false
True
Which two are recognised ways for auditors to reduce the impact of negligence claim?
a) Obtain professional indemnity insurance
b) Increase the audit fee
c) Not document audit evidence
d) Agree a limitation of liability with the shareholders
a) and d)
What ethical threat is present if a client takes 3 members of staff to a football match with VIP tickets, 5 star hotel and premium airline tickets? How would you remove the threat?
Familiarity threat.
Ensure those 3 members of staff do not work on that clients audit.
If a client says he will find another auditor next year if the audit report is not signed tomorrow, when the audit partner has not reviewed the file, what is the ethical threat and how would it be resolved?
Intimidation threat.
Review the file and ensure there is sufficient and appropriate evidence before signing the audit report, no matter how long it takes.
If a member of the audit team worked for the client as a subcontractor within the year to help the client and then the client asks for them to work on the audit what is the ethical threat and how should it be resolved?
Self review threat.
Explain to the client that that member of staff cannot work on the audit due to the ethical threat.
True or false
Auditor generated evidence poses less confidentiality risks than obtaining 3rd party confirmations.
True
True or false
Trade receivable circularisation should be sent on the audit firms letter head paper.
False
