Concerning errors, irregularities and illegal acts, the auditor should plan the audit with an attitude of:

Select one:

professional scepticism.

cautious mistrust.

adversarial pursuit.

seasoned pessimism.

Management is responsible for implementing effective controls to control risks identified in a risk assessment. Which of these would not be considered to impact on management's risk assessment?

Select one:

Changing the external auditor.

New personnel.

New technology.

Expanding foreign exchange operations

In general, as an account balance decreases, the amount of evidence required will:

Select one:

remain the same.

increase.

decrease.

change in an unpredictable fashion.

'Enquiring' is a control test used by auditors. It requires the auditor to:

Select one:

observe client personnel perform their duties.

inspect documents for signatures that indicate the control was performed.

question client personnel about the performance of their duties.

re-perform the control.

Which of these would not necessarily be considered to be a risk factor for potential misstatements?

Select one:

Profit margin has increased and inventory turnover days has decreased.

There is intense price competition in the industry of operation.

An employee in the cash office was passed over for a promotion.

Segregation of duties is not practiced.

If the sample supports the conclusion that the recorded account balance is materially misstated when it is actually not materially misstated, this is the:

Select one:

risk of assessing control risk too high.

risk of incorrect rejection.

risk of incorrect acceptance.

risk of assessing control risk too low.

For subsequent events occurring during the post-audit period, auditors have a responsibility to:

Select one:

examine only events that come to their attention.

examine only events that come to their attention and that existed at the date of the auditor's report.

discover and evaluate all subsequent events that may have a material effect on the financial statements.

none of the options are correct.

When auditing for fraud the auditors should do all of the following except:

Select one:

conduct a brainstorming session to discuss the risk of fraud.

only investigate areas where all three fraud risk factors are present.

examine journal entries and other adjustments for evidence of possible material fraud.

consider any unusual or unexpected relationships that have been identified in performing analytical procedures

Restricting the use of the information system to particular authorised personnel by use of passwords is an example of:

Select one:

systems development and maintenance controls.

data and procedural controls.

organisational controls.

access controls.

An auditor has obtained an understanding of the internal control structure and has decided that the appropriate controls are ineffective. The most appropriate audit strategy is:

Select one:

the analytical procedures approach.

a combination of the lower assessed level of control risk approach and the predominantly substantive approach.

the lower assessed level of control risk approach.

the predominantly substantive approach.

External auditors have a duty to communicate in writing significant deficiencies in internal control to those charged with governance. Which of the following is unlikely to be relevant when determining whether a 'significant deficiency' exists?

Select one:

The importance of controls to the financial reporting process.

The susceptibility to loss or fraud of the related asset.

The likelihood of deficiencies leading to material misstatements in the financial statements in the future.

The extent of substantive procedures performed.

Confirmation and direct knowledge by the auditor are most associated with:

Select one:

test of details of transactions.

test of controls.

analytical procedures

tests of details of balances.

The greatest impact on audit efficiency comes from the risk(s) of:

Select one:

underreliance and incorrect acceptance.

overreliance and incorrect rejection.

underreliance and incorrect rejection.

overreliance and incorrect acceptance.

For subsequent events occurring during the post-audit period, auditors have a responsibility to:

Select one:

examine only events that come to their attention.

examine only events that come to their attention and that existed at the date of the auditor's report.

discover and evaluate all subsequent events that may have a material effect on the financial statements.

none of the above.

Which of the following is not a consideration in the planning phase of the audit?

Select one:

Considering audit risk.

Assessing competence to perform the audit.

Obtaining an understanding of the entity's business and industry.

Making preliminary judgements about materiality levels.

Which of these would be considered a limitation of internal controls?

Select one:

Internal control systems focus on routine transactions.

Management participating in the supervision of operations.

They compare actual performance with budgeted performance.

All of the options

The auditor has assessed control risk as high. Which of the following isnottrue?

Select one:

A predominantly substantive approach will be used.

The auditor is not placing reliance on the internal controls.

The extent of substantive procedures will result in a costly audit.

The auditor will conduct extensive tests of controls.

Testing the work of the internal auditors isleastlikely when the external auditor has decided that:

Select one:

the internal auditors are full-time employees of the client.

the internal auditors have operating responsibilities as well as their auditing role.

the internal auditors will be used to directly assist in the conduct of the audit.

the reports of the internal auditors are consistent with the results of the work performed.

If the predominantly substantive approach preliminary audit strategy is used, planned detection risk will be:

Select one:

low or very low.

at the higher level.

moderate or high.

high or very high

Audit sampling is involved whenever an auditor:

Select one:

performs substantive tests.

examines 100% of the population.

forms a conclusion about the population from which the sample is drawn.

performs tests of controls.