1) What does a signed audit report mean with respect to the 'possibility' of fraud within a company?

Select one:

a.An audit is not designed to detect fraud; therefore, an audit report gives no assurance as to whether fraud did not occur during the year.

b.There is a reasonable expectation that material irregularities due to fraud have been detected.

c.All fraud should have been detected.

d.It is unlikely that irregularities due to fraud have been detected.

2)Significant unexpected fluctuations identified by analytical procedures will necessitate a(n):

Select one:

a.Review of internal control.

b.Auditor investigation.

c.Explanation in the representation letter.

d.Qualified opinion.

3) The client has provided an allowance for doubtful debts of $300,000. Based on your audit assessment you have determined that the allowance should be $350,000. If materiality for the client has been set at $100,000, and you are satisfied in all other material respects, the audit opinion will be a(n):

Select one:

a.Unmodified.

b.Qualified.

c.Unqualified with an emphasis of matter.

d.Adverse.

4) Due to the widespread and remote location of inventories your firm did not attend the annual stocktake of BMT Limited. The inventory balance comprises 20% of total assets and you were unable to perform appropriate alternative audit procedures. The MOST appropriate audit opinion in these circumstances would be:

Select one:

a.Qualified.

b.Unmodified.

c.Unqualified with an emphasis of matter.

d.Disclaimer.

5) CKS Limited is a manufacturer of heavy duty machinery whose manufacturing operations are centred in one factory. Two weeks after the end of the financial year and before the audit report date, the factory and all manufacturing equipment was destroyed by fire. The loss of assets have been determined to be material. State the appropriate action, if any, the auditor of CKS Limited should require.

Select one:

a.Inform shareholders that the financial report can no longer be relied on.

b.Disclose by way of note to the financial report.

c.No action necessary.

d.Adjustment of the account balance in the financial report necessary.