Audit and Assurance Practice Questions
Course Introduction
Audit and Assurance is a course that explores the principles and practices of auditing, focusing on both the theoretical and practical aspects of the profession. Students will learn about the regulatory framework, ethical considerations, and standards that govern the audit process. The course covers the planning and execution of audits, evaluation of internal controls, gathering and assessing audit evidence, and the formation of audit opinions. Additionally, students will gain insight into the role of auditors in enhancing the reliability and credibility of financial information, and understand the assurance services provided beyond traditional financial statement audits.
Recommended Textbook
Auditing and Assurance Services 6th Edition by Grant Gay
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14 Chapters
681 Verified Questions
681 Flashcards
Source URL: https://quizplus.com/study-set/2630
Page 2
Chapter 1: Assurance and Auditing: An Overview
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45 Verified Questions
45 Flashcards
Source URL: https://quizplus.com/quiz/52502
Sample Questions
Q1) An audit of the financial report of Campbell Ltd, an Australian listed company, is being conducted by an external auditor.The external auditor is expected to:
A)express an opinion as to the attractiveness of Campbell for investment purposes.
B)express an opinion as to whether the financial report is prepared in accordance with an applicable financial reporting framework.
C)make a 100% examination of Campbell's records.
D)certify the correctness of Campbell's financial report.
Answer: B
Q2) When an auditor expresses an opinion on the financial report, the auditor's responsibilities extend to:
A)an ongoing responsibility for the entity's solvency in accordance with the requirements of the Corporations Act 2001.
B)the underlying wisdom of the management's decisions.
C)active participation in the implementation of advice given.
D)whether the entity's results are fairly presented in the financial report in accordance with approved accounting standards.
Answer: D
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3
Chapter 2: Audit Regulation, Structure of the Profession and Auditors Liability
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45 Verified Questions
45 Flashcards
Source URL: https://quizplus.com/quiz/52501
Sample Questions
Q1) Contributory negligence:
A)has always been available as a defence to the auditor.
B)indicates the auditor has played no part in the plaintiff's loss.
C)will result in an apportionment of damages arising from the plaintiff's loss between the defendant and the plaintiff.
D)is used to describe the causal relationship between the actions of the auditor and any loss suffered by a plaintiff.
Answer: C
Q2) An auditor's duty of care to a client would most likely be breached if the auditor failed to:
A)meet their reporting deadline.
B)detect all of a client's fraudulent activities.
C)conduct the audit for the most competitive price.
D)comply with all relevant auditing standards.
Answer: D
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Chapter 3: Ethics, Independence and Corporate Governance
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45 Verified Questions
45 Flashcards
Source URL: https://quizplus.com/quiz/52500
Sample Questions
Q1) Under APES 110, an auditor may not:
A)be a member of the same club as any directors of an audit client.
B)perform bookkeeping services for any audit client.
C)perform advisory services for any audit client.
D)have any joint, closely held investment with any director of an audit client.
Answer: D
Q2) To emphasise auditor independence from management, many entities follow the practice of:
A)appointing a partner of the audit firm conducting the audit to the entity's audit committee.
B)having the auditor report to the entity's audit committee.
C)requesting that a representative of the auditor is on hand at the annual general meeting.
D)establishing a policy of discouraging social contact between employees of the entity and the audit staff.
Answer: B
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Chapter 4: Overview of Elements of the Financial Report
Audit Process
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71 Verified Questions
71 Flashcards
Source URL: https://quizplus.com/quiz/52499
Sample Questions
Q1) As the acceptable level of detection risk decreases, an auditor may change the:
A)substantive tests of details to substantive analytical procedures.
B)nature of substantive tests from less effective to more effective procedures.
C)number of tests of controls.
D)assessed level of inherent risk to a higher amount.
Q2) Which of the following items is an example of professional scepticism?
A)Determining a low level of materiality.
B)Determining a high level of risk.
C)Being alert to conditions that may indicate risks of fraud.
D)All of the answers given are correct.
Q3) Who is responsible for the preparation of the financial report?
A)Auditor.
B)Management.
C)Both auditor and management.
D)None of the answers given are correct.
Q4) Original accounting data comprises:
A)the basic data related to entity transactions.
B)information contained in the financial report.
C)depreciation and amortisation of the entity's assets.
D)all entries made in an entity's general ledger.
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Chapter 5: Planning, Understanding the Entity and Assessing Business Risk
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45 Verified Questions
45 Flashcards
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Sample Questions
Q1) An auditor compares this year's revenues and expenses with those of the previous year and investigates all changes exceeding 10 per cent.By carrying out this procedure the auditor would be most likely to learn that:
A)an increase in property tax rates has not been recognised in the client's accrual.
B)the provision for uncollectible accounts is inadequate because of worsening economic conditions.
C)fourth-quarter payroll taxes were not paid.
D)the client changed its capitalisation policy for small non-current assets.
Q2) Audit planning assists the auditor to:
A)identify and resolve potential problems on a timely basis.
B)devote appropriate attention to important areas of the audit.
C)perform the audit effectively and efficiently.
D)All of the given answers are correct.
Q3) Analytical procedures may be classified as being primarily:
A)tests of control.
B)detailed tests of balances.
C)tests of ratios.
D)substantive tests.
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Chapter 6: Assessing Inherent Risk, and Other Specific
Business Risks
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35 Verified Questions
35 Flashcards
Source URL: https://quizplus.com/quiz/52497
Sample Questions
Q1) With respect to illegal acts, the auditor's responsibility is to:
A)uncover all illegal acts.
B)design the audit to provide reasonable assurance of detecting illegal acts that are material to the financial report.
C)plan the audit to search for illegal acts that could be material to the financial report.
D)rely on the client's solicitor to identify illegal acts that should be disclosed.
Q2) The relevant period that the auditor needs to consider when assessing the appropriateness of the going concern assumption is:
A)up to the next balance date.
B)up to the expected date of the annual general meeting
C)up to the expected date of the date of the auditor's report on the following financial year.
D)None of the given answers are correct.
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8
Chapter 7: Understanding and Assessing Internal Control
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70 Verified Questions
70 Flashcards
Source URL: https://quizplus.com/quiz/52496
Sample Questions
Q1) In updating a computerised accounts receivable file, which one of the following would be used as a batch control to verify the accuracy of the postings of cash receipts remittances?
A)The sum of the cash deposits, plus the discounts, less the sales returns.
B)The sum of the cash deposits.
C)The sum of the cash deposits, less the discounts taken by customers.
D)The sum of the cash deposits, plus the discounts taken by customers.
Q2) An auditor assesses the level of control risk to:
A)determine whether the entity is a going concern.
B)determine the extent of substantive tests to be performed.
C)ascertain whether irregularities are probable.
D)ascertain whether any employees have incompatible duties.
Q3) The ultimate purpose of assessing control risk is to contribute to the auditor's evaluation of the:
A)factors that raise doubts about the auditability of the financial report.
B)operating effectiveness of internal control policies and procedures.
C)risk that material misstatements exist in the financial report.
D)possibility that the nature and extent of substantive tests may be reduced.
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Chapter 8: Tests of Controls
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60 Verified Questions
60 Flashcards
Source URL: https://quizplus.com/quiz/52495
Sample Questions
Q1) Which of the following is not among the errors that an auditor might include in the test data when auditing a client's IT system?
A)Authorisation code.
B)Numeric characters in alphanumeric fields.
C)Illogical entries in fields whose logic is tested by programmed consistency checks.
D)Differences in description of units of measure.
Q2) An auditor selects a sample from the file of shipping documents to determine whether invoices were prepared.This test is performed to assess which assertion for sales?
A)Valuation and allocation.
B)Completeness.
C)Cut-off.
D)Occurrence.
Q3) When goods are received, the receiving clerk should match the goods with:
A)the receiving report and the supplier shipping document.
B)the supplier shipping document and the purchase order.
C)the supplier invoice and the receiving report.
D)the purchase order and the requisition form.
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Chapter 9: Substantive Tests of Transactions and Balances
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80 Verified Questions
80 Flashcards
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Sample Questions
Q1) In the audit of Cassie Ltd, a medium-sized manufacturing company, which one of the following areas would be expected to require the least amount of audit time?
A)Revenue.
B)Owners' equity.
C)Liabilities.
D)Assets.
Q2) Which of the following analytical procedures should be applied to the income statement?
A)Ascertain that the net income amount in the statement of cash flow agrees with the net income amount in the income statement.
B)Select sales and expense items and trace amounts to related supporting documents.
C)Compare the actual revenues and expenses with the corresponding figures of the previous year and investigate significant differences.
D)Obtain from the proper client representatives the beginning and ending inventory amounts that were used to determine costs of sales.
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11
Chapter 11: Completion and Review
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30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/52493
Sample Questions
Q1) Which of the following audit procedures is most likely to assist an auditor in identifying conditions and events that may indicate substantial doubt about an entity's ability to continue as a going concern?
A)Review compliance with the terms of debt agreements.
B)Confirm accounts receivable from principal customers.
C)Reconcile interest expense with outstanding debt.
D)Confirm bank balances.
Q2) Orange Ltd's directors voted immediately after the year-end of 30 June 20X0 to double its advertising budget for the coming year and authorised a change in advertising agencies.What is the effect of this event on the 30 June 20X0 financial report?
A)Disclosure by means of supplemental, pro-forma financial information.
B)Adjustment of the financial report.
C)Disclosure in a footnote to the financial report.
D)No disclosure or adjustment necessary.
Q3) Which of the following auditing procedures is ordinarily performed last?
A)Reading the minutes of the directors' meetings.
B)Confirming accounts payable.
C)Obtaining a management representation letter.
D)Testing the purchasing function.
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Chapter 12: The Auditors Reporting Obligations
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60 Verified Questions
60 Flashcards
Source URL: https://quizplus.com/quiz/52492
Sample Questions
Q1) On 2 July 20X0 Fluro Paint Ltd received a notice from its primary suppliers that all wholesale prices would be increased by 10 per cent, to be effective immediately.On the basis of the notice Fluro Paint Ltd revalued its 30 June 20X0 inventory to reflect the higher costs.The details of the adjustment were disclosed in the notes to the financial report.The inventory adjustment was material.The auditor of the 30 June 20X0 financial report would issue:
A)an unmodified opinion with an Emphasis of Matter of disclosure.
B)a disclaimer of opinion.
C)a qualified opinion.
D)an unmodified opinion.
Q2) When restrictions are imposed by the client that significantly limit the auditor's ability to audit fixed assets (a material part of the balance sheet), the auditor generally should issue which of the following opinions?
A)Unmodified with an Emphasis of Matter.
B)Qualified.
C)Disclaimer.
D)Adverse.
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Page 13
Chapter 13: Other Assurance Services and Advanced Topics
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45 Verified Questions
45 Flashcards
Source URL: https://quizplus.com/quiz/52491
Sample Questions
Q1) Following is a list of engagements that an assurance provider may undertake:
I.compiling financial reports
II)agreed-upon procedures
III)review of interim financial information.
For which of these engagements is assurance not provided?
A)I only.
B)II only.
C)III only.
D)I and II only.
Q2) Forensic audits include all of the following except:
A)employee fraud.
B)criminal investigations.
C)matrimonial disputes.
D)manufacturers' claims about product quality.
Q3) An assurance report on internal control structures is least likely to be issued as a result of a:
A)review of the annual financial report of a large company.
B)performance audit of a government agency.
C)special study of related party transactions.
Page 14
D)special study of a proposed system involving the internal control structure.
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Chapter 14: Internal Auditing
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25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/52490
Sample Questions
Q1) Which of the following statements best describes internal auditing?
A)An activity located within an entity, primarily to detect fraud.
B)An accounting function located within an entity.
C)An activity located within an entity that determines the fiscal integrity of a financial report.
D)An independent and objective assurance activity within an entity.
Q2) Which of the following is a performance standard of the Institute of Internal Auditors?
A)Engagement planning.
B)Independence and objectivity.
C)Quality assurance and improvement program.
D)Proficiency and due professional care.
Q3) Which of the following is not explicitly a part of the IIA's definition of internal auditing?
A)Internal auditing is an objective assurance activity.
B)Internal auditors should help external auditors complete the annual financial statement audit.
C)Internal auditing should help an organisation accomplish its objectives.
D)Internal auditing is designed to add value and improve an organisation's operations.
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Chapter 15: Audit and Assurance Services in the Public Sector
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25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/52489
Sample Questions
Q1) Which of the following objectives would not be a primary purpose of a performance audit?
A)A means of assurance that internal controls are functioning as planned.
B)A measure of management performance in meeting organisation goals.
C)Providing the results of internal examinations of financial and accounting matters to a company's top-level management.
D)An aid to the external auditor who is conducting the examination of the financial report.
Q2) A determination of cost savings is most likely to be an objective of a:
A)regularity audit.
B)compliance audit.
C)performance audit.
D)financial audit.
Q3) Governmental auditing includes:
A)financial report auditing.
B)performance auditing.
C)compliance auditing.
D)All of the given answers are correct.
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