4.You are planning the audit of Bluechip Ltd, a company with investments in listed securities that you consider to have a low level of inherent risk. What is the most appropriate level of planning materiality for the 30 June 2021 audit given the following balances: (all amounts are in $'000)

Sales: 1470 (2021); 1323 (2020); 1176 (2019)

Profit: -21.5 (2021); -176.3 (2020): 150.5 (2019)

Current assets: 1950 (2021); 1755 (2020); 1560 (2019)

a.

1.1

b.

2.1

c.

19.5

d.

14.7

5.At your first meeting with the Finance Director of a new client, they tell you that "business is so good we can barely keep up with orders! Luckily we took on a short-term loan at the beginning of the year to upgrade our factory". Which of the following results of analytical procedures is least consistent with the Finance Director's statement?

a.

An increase in the net profit ratio from 0.12 to 0.13.

b.

An increase in the inventory turnover ratio from 5.6 to 7.00 times a year.

c.

An increase in the quick ratio from 0.73 to 0.80

d.

An increase in the gross profit ratio from 0.48 to 0.58

6.The public believes that auditors test 100% of transactions. A reasonable public expectation is 35% testing. Auditing standards require 15% testing. Denis the dodgy auditor tests 5%. Which of the following statements is true?

a.

The performance gap is 35%

b.

The gap due to deficient performance is 10%.

c.

The expectation gap is 70%, of which 20% are deficient standards

d.

The expectation gap is 95%, of which 10% are deficient standards

7.Which of the following is a control activity in relation to accuracy?

a.

The accountant compares the amount in the building repairs invoice with the repairs quotation.

b.

The accountant reviews rental income received around year-end to see which period it has been recorded in.

c.

The accountant reviews advertising payments around year-end to see which period they are recorded in.

d.

At the end of each month, the accountant reviews whether income has been received for all current rental agreements.