5An example of a high-risk condition that may provide a fraudulent financial reporting opportunity includes:

		accounting and information systems that are not effective, including situations involving significant deficiencies in internal control.
		significant declines in customer demand and increasing business failures in either the industry or overall economy.
		the owner-manager makes no distinction between personal and business transactions.
		management failing to remedy known significant deficiencies in internal control on a timely basis.

6The audit partner is requested to represent the client in court. Which threat to fundamental ethical principles does the situation create?

		Intimidation
		Advocacy
		Self-interest
		Familiarity

7Which of the following is incorrect about a request that an auditor needs to have appropriate documentation of an audit?

		Documentation ensures the auditors due professional care throughout the audit process.
		Documentation helps maintain audit quality and avoid litigation.
		Documentation contains records of evidence collected, providing a basis for forming audit opinion.
		Documentation is most important at the end of an audit.

8Which of the following statements is incorrect about auditing standards?

		They are overseen by two bodies: the FRC and the AUASB.
		They are of crucial importance to clarify auditors responsibilities.
		They are all mandatory requirements, which are legally enforceable under the Corporations Act.
		Australian Auditing Standards (ASAs) are in line with International Standards on Auditing (ISAs).

9Which of the following is correct about trend analysis?

		Its base year changes over the period of analysis.
		It does not involve budget or forecast in the analysis.
		It is not part of analytical procedures.
		It removes any impacts of changes in a particular year on variances identified.