01/ ISA 580 Written Representations requires the auditor to obtain written representations to support other audit evidence if determined necessary by the auditor or required by other ISAS. Which of the following matters would NOT normally require written representation? Going concern matters The outcome of a court case Inventory held at third party locations Related party transactions IU + BIU A GD E E 1 I 2 3 4 Inventory held at third party locations Related party transactions Q2/Which of the following would increase the risk of material misstatement, indicating that more evidence should be collected by the auditor? The knowledge that the audit working papers will be reviewed by a parent company auditor from another firm The use of audit staff who are unfamiliar with the client The use of judgement sampling rather than statistical sampling A client-imposed reporting deadline which is unusually soon after the year end Question 4. In a file of audit planning working papers, which of the following would NOT usually be included in the overall audit strategy? Calculation of performance materiality Ratios calculated on the draft financial statements Information on the extent to which internal audit may assist in obtaining evidence A detailed audit programme for a provision Question 5. Which of the following statements regarding inventory counts is correct? Where inventory is material, the auditor is required to attend the inventory count unless this is impracticable When attending an inventory count, the auditor only observes the counting and does not perform any testing There is no legal requirement for an annual inventory count to take place Failing to perform an inventory count at the year end, when inventory is managed using a perpetual system, leads Question 6. Which of the following fraud risk factors is most likely to indicate misappropriation of assets? Inadequate system of authorisation and approval of transactions High turnover of senior management Significant related party or complex transactions Operations in tax-haven jurisdictions Question 7. Which of the following, if performed by the internal audit function of an audited entity, could provide evidence relating to assessing the strength of the entity's control environment? Authorising capital expenditure requisitions exceeding than $5,000 Review of the implementation of corporate policies devised by the management board Preparation of weekly payroll reconciliations Performing a value for money audit on procurement Question 8. At the planning stage of an audit for a new client, the level of materiality needs to be set. Which of the following pieces of information will allow the auditor to increase the level of materiality? The company operates in a highly competitive environment. The company's management structure has changed during the year. The company has a stable structure with a strong internal control environment. T The company does not have an internal audit function Question 9. The external auditor of Apple Co is evaluating whether the company's internal audit function can be used for purposes of the audit In which the following av theoxtamlanditandataminton the wakalitha Question 9. The external auditor of Apple Co is evaluating whether the company's internal audit function can be used for purposes of the audit. In which of the following circumstances may the external auditor determine to use the work of the internal audit function? Its objectivity is not adequately supported with organisational status it lacks sufficient competence It does not apply a systematic and disciplined approach It has managerial or operational duties outside the internal audit Question 10. In planning to obtain sufficient appropriate audit evidence in respect of classes of transactions and account balances, the auditor must consider the relevant financial statement assertions. Which of the following assertions is NOT relevant to the audit of payroll transactions? Completeness Cut-off Classification Existence Question 11. As part of obtaining an understanding of the control environment, the auditor is required to evaluate which one of the following? The adequacy of management's external communications with regulatory authorities The results of the key performance indicators used in the business The adequacy of controls surrounding Journal entries Whether management has created and maintained a culture of horfety and ethical behaviour Question 12. Which of the following is NOT an audit procedure performed as part of the audit of going concern? Analysing the latest available financial information Confirming the existence of borrowing facilities Performing tests of control on capital expenditure Reviewing the latest minutes of management meetings