26.

Which of the following statements is true?

• auditors are allowed to be busisness partners of the company directors

  auditors are allowed to be busisness partners of the company directors

• the directors are the stewards of the company responsible for looking after the company on behalf of the owners

  the directors are the stewards of the company responsible for looking after the company on behalf of the owners

• the shareholders of most companies will also be directors

  the shareholders of most companies will also be directors

• directors will always have a vested interest in the company doing well because they own shares in the company they work for

27.

Which of the following is NOT a benefit of an audit?

• increased credibility of the financial statements

  increased credibility of the financial statements

• deficiencies in controls may be identified during testing

  deficiencies in controls may be identified during testing

• fraud maybe detected during the audit

  fraud maybe detected during the audit

• sampling is used

28.

Which of the following is NOT one of the five elements of an assurance engagement?

• written report

  written report

• subject matter

  subject matter

• suitable criteria

  suitable criteria

• assurance file

28.

Why do auditors need to be independent?

• to ensure the financial statements give them a true and fair view

  to ensure the financial statements give them a true and fair view

• because the law requires it

  because the law requires it

• to ensure users of the auditor's report can place reliance on it and have faith it is not biased

  to ensure users of the auditor's report can place reliance on it and have faith it is not biased

• to provide more regulation for auditors to increase the pereception of quality

  to provide more regulation for auditors to increase the pereception of quality

29.

Which of the following provided guidance on the establishment and operations of the audit committee?

• IFRAC

  IFRAC

• Sarbanes Oxley Act

  Sarbanes Oxley Act

• Combined Code

  Combined Code

• Companies Act

  Companies Act

30.

Which ethical threat would be created if the audit manager attends the social event where the client will outline a new rights issue to shareholders?

• familiarity

  familiarity

• self-review

  self-review

• self-interest

  self-interest

• advocacy

31.

Which of the following is NOT a threat to objectivity?

• intimidation

  intimidation

• self-review

  self-review

• advocacy

  advocacy

• independence

  independence

32.

Which of the following is NOT a benefit of an audit?

• increased credibility of the financial statements

  increased credibility of the financial statements

• deficiencies in controls may be identified during testing

  deficiencies in controls may be identified during testing

• fraud maybe detected during the audit

  fraud maybe detected during the audit

• sampling is used

33.

Which of the following is NOT a threat to objectivity?

• intimidation

  intimidation

• self-review

  self-review

• advocacy

  advocacy

• independence

  independence

34.

The Enron accounting scandal made stakeholders more aware of the consequences and audit implications of:

• having an effective audit committee

  having an effective audit committee

• the roles of the iinternal audit function

  the roles of the iinternal audit function

• collusion and the agency issue

  collusion and the agency issue

• keeping proper books and records

34.

Which of the following statement is false?

• auditing standards are laws which must be followed during all audits

  auditing standards are laws which must be followed during all audits

• auditing standards are professional regulations

  auditing standards are professional regulations

• auditing standards should be followed during all audits unless there are exceptional circumstances which would mean the audit objective would not be met

  auditing standards should be followed during all audits unless there are exceptional circumstances which would mean the audit objective would not be met

• auditing standards maybe different in different countries even those using ISAs