1.

>auditor for financial year ending 30 June 2018

>engagement completed on 21 August 2018 and the report is due to be signed on 27 August 2018.

>On August 2018. the the market price for an investments declined marginally

>amount not material

Which of the following describes the most appropriate action:

a) Adjust the financial statements

b) No action required.

c) Disclose by way of subsequent event note in the financial statements

d) Disclose by way of contingent liability note to the balance sheet.

2.

>auditor for financial year ending June 2018

>Fieldwork completed on 21 August 2018 and the report Is due to be signed on 27 August 2018.

> On July 2018, a large sale was made to an overseas customer

>The sale was made at a substantial discount below cost of inventory

> recorded on balance dale.

Which the following describes the appropriate action:

a) Adjust the financial statements.

b) No action required.

c) Disclose by way of subsequent event note to the financial statements.

d) Provide a management representation letter that the amount is not material.

3.

>auditor for the financial year ending June 2018.

>On 27 July 2018 prior to signing the audit report, the warehouse was destroyed by a fire.

>the inventory lost was not covered by insurance

State the appropriate action:

a) Adjustment or the account balance In the financial report

b) Disclose by way of note to the financial report

c) Inform shareholders that the financier report can no longer be relied on

d) no action required

4.

>management engages an experienced valuer to perform an update of the valuation of the property

> report indicates that the property value has declined slightly.

>the amount in question is not material,

>management refuses to reflect the change in the financial statements.

Which of the following would be the most appropriate audit opinion:

a) Unmodified.

b) Qualified.

c) Adverse.

d) Disclaimer of opinion.

5.

Which of the following will increase inherent risk for a client?

a) The auditor does not possess expertise in valuation of some of the client's assets.

b) Credit limit checks for new customers were not undertaken when the accounts manager was on leave.

c) The client has recently acquired a technological start-up company specialising in home automation products.

d) The auditor has developed a relationship with the client's management and board over the length of their tenure.