Independent professional services that improve the quality of information or its context for decision-makers are called:
A. Auditing services
B. Attestation services
C. Assurance services
D. Accounting services
Auditors that work for a company, assess and evaluate risk in that company and communicate their findings with management are best known as:
A. External auditors
B. Internal auditors
C. Forensic auditors
D. Government auditors
The Cadbury Report defined Corporate Governance as a system by which companies are:
A. Directed and controlled
B. Modified and re-structured
C. Managed and operated
D. Refinanced and re-geared
The UK corporate governance code requires a board to have:
A. Audit committee
B. Remuneration committee
C. Nomination committee
D. All of the above
Various individuals and parties are employed by a company to contribute to the preparation of the company’s financial statements. The party that has oversight of the reporting process, the parties involved in that process and has direct influence over proposing and hiring a firm of external auditors is:
A. The board of directors
B. The remuneration committee of the board of directors
C. The nomination committee of the board of directors
D. The audit committee of the board of directors
All the information, from whatever source, used an auditor to arrive at the conclusions on which the audit opinion is based is known as:
A. Audit evidence
B. Audit papers
C. Audit conclusions
D. Audit proof
A set of audit procedures prepared by an auditor to test management’s assertions for a component of the financial statements is referred to as:
A. Audit programme
B. Audit schedule
C. Audit cycle
D. Audit plan
Which one of the following is not a key objective of the UK’s Financial Reporting Council?
A. Establish high standards of auditing
B. Meet the developing needs of users of financial information
C. Establish systems to detect fraud in published financial statements
D. Ensure public confidence in the auditing process
Audit risk is comprised of two elements:
A. Control risk and inherent risk
B. Detection risk and engagement risk
C. Inherent risk and engagement risk
D. Control risk and detection risk
When an auditor observes his profession's technical and ethical standards and strives to continually improve his competence and quality of services, the part of the Ethical Code that he is compliant with is:
A. Integrity
B. Objectivity
C. Professional competence and due care
D. Confidentiality
A tour of the client's facilities provides the auditor an opportunity to:
A. Meet key personnel
B. Observe operations
C. Assess physical safeguards over assets
An independent review carried out for listed company audits and large and complex audits is called a:
A. Cold review
B. Black review
C. Hot review
D. Red review
The UK’s Financial Reporting Council (FRC) is similar to the US’s Securities and Exchange Commission (SEC). Which one of the following is most correct?
C. Ensure public confidence in the auditing process
6. Which of the following professional services is an assurance service:
A. External audit
B. Tax compliance
C. Insolvency
D. Consultancy
An auditor must observe his profession's technical and ethical standards in accordance with the accountant’s:
A. Ethical code
B. Governance code
C. Confidence code
D. Operational code
Before accepting a new audit engagement, an auditor must:
A. Contact the previous auditor
B. Perform relevant Know Your Client tasks
C. Put in place a signed engagement letter
Partners of a firm of auditors carry out hot reviews and cold reviews to ensure:
A. Compliance with Companies Act 2006
B. That quality control is maintained
C. That they are not in breach of their engagement letter
D. None of the above
For external audits of annual financial statements, auditors identify and assess the risks of material misstatements in those financial statements by...
A. performing ‘know your client’ (KYC) procedures
B. understanding the internal control environment of the client
C. performing preliminary analytical review procedures
D. assessing inherent risk
Professional scepticism involves...
A. a particular audit approach that is only necessary for the audits of public companies
B. auditors understanding that their clients seek opportunities to deceive them throughout the audit process
C. a critical assessment of the evidence
D. the implementation of specialist systems in accounting and auditing practices
When required to do so by the UK Code, company boards develop robust systems of corporate governance by (at least) appointing...
A. the company’s audit committee
B. the company’s chief financial officer
C. the company’s chief executive officer
D. the company’s external auditors
The risk category that is most likely to keep an audit engagement partner awake at night is...
A. audit risk
B. inherent risk
C. sustainability risk
D. employment risk
Why do most audit firms adopt segment-based audit approaches?
A. Most auditors are trained to audit segments as opposed to entire financial statements
B. The segment-based approach is required by auditing standards
C. The segment-based approach allows the auditor to detect illegal acts
D. The segment-based approach aids in the efficient assignment of tasks to different members of the audit team
The internal audit activity most directly contributes to an organization’s governance process by:
A. Evaluating the effectiveness of internal control over financial reporting
B. Identifying significant exposures to risk
C. Evaluating the design of ethics-related activities.
D. Promoting continuous improvement of control
When the executive management of an organization decided to form a team to investigate the adoption of an activity-based costing (ABC) system, an auditor was assigned to the team. The best reason for including an internal auditor is the internal auditor’s knowledge of (2 marks).
A. Information processing procedures
B. Activities and cost drivers.
C. Current product cost structures
D. Risk management processes
An employee with a good background and years of experience earns a salary at the top of his or her range. Under the company’s remuneration program, the employee must earn a promotion in order to increase his or her salary above the usual annual increase. Which of the following is most likely to be an effect on the employee’s behavior (2 marks)?
A. The employee may become less productive
B. The employee may refuse new duties or tasks.
C. The employee may seek a position with another company.
D. The employee may not be motivated to improve performance
10. Which of the following are not a criterion for the selection of an auditor (2 marks)? 1. The qualification of the auditor 2. The school the auditor attended 3. The experience of the auditor 4. The family background of the auditor
A. 1and2
B. 2and4
C. 2and3
D. 3and4
A situation where a company issue or witness a report on subject matter, or an assertion about subject matter, is the responsibility of the.
B. Assurance services
C. Attestation services
D. Inspection services
In the event that the external auditor of a company’s financial statements is unable to obtain sufficient and competent evidence about some component of those financial statements, the auditor would issue an audit opinion referred to as:
A. A limitation of scope audit opinion
B. An adverse audit opinion
C. A qualified audit opinion
D. An unqualified audit opinion
External audit services and internal audit services are similar. Which of the following statements is not correct?
A. Internal auditors report to the company’s Management
B. Internal auditors do not report to the company’s shareholders
C. External auditors report to all stakeholders
D. External auditors are appointed by the company’s shareholders
The most senior member of an audit team is called an:
A. Audit Partner
B. Audit Manager
C. Audit Associate
D. Audit Supervisor
A. Internal auditors do not report to the company’s shareholders
B. External auditors report to all stakeholders
C. Internal auditors report to the company’s Management
In the realm of audit and assurance, what does SOAPSPAM represent?
A. Strategic Objectives and Alignment for Performance Standards in Audit Management
B. Segregation of Duties, Organizational Controls, Authorization and Approval, Physical Controls, Supervision, Personnel, Arithmetical Procedures, Management
C. Segregation of Duties, Objectives, Authorization and Approval, Performance controls, Supervision, Personnel, Arithmetical Procedures, Management
D. Supervision, Organizational Controls, Amortisation, Physical Controls, Segragation of duties, Personnel, Arithmetical Procedures, Management
The theory that executive managers are reliable and trustworthy individuals and that they should be empowered to run firms because they are good stewards of the resources entrusted to them is called:
A. Shareholder theory
B. Stewardship theory
C. Agency theory
D. Stakeholder theory
The system designed and deployed by a company to ensure (i) that assets and records are safeguarded and (ii) that the company's financial reporting system generates reliable information for decision making, is called:
Financial management system
Internal control system
Sales order control system
Management control system
Nomination committee
Audit committee
Remuneration committee
All of the above
