Fraud means ________ act by any person to conceal truth and obtain illegal advantage.

a.

erroneous

b.

intentional

c.

innocent

d.

unintentional

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Question 36

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Which of the following aspects is not required to be included in the basis for opinion section in the auditors report?

a.

Statement that the auditor is independent of the entity in accordance with the relevant ethical requirements relating to the audit

b.

Statement that the auditor believes that the audit evidence they obtained is sufficient and appropriate to provide a basis for the auditors opinion

c.

Statement that the financial statements have been audited

d.

Statement that the audit was conducted in accordance with International Standards on Auditing

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Question 37

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Which of the following topics are not covered in the Auditor Responsibilities paragraphs?

a.

A Statement that misstatements can arise from fraud or error.

b.

A statement that the objectives of the audit is to obtain reasonable assurance about whether the financial statements are free of material misstatement.

c.

A statement that management is responsible for the preparation and fair presentation of the financial statements

d.

A statement that reasonable assurance is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.

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Question 38

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Which of the following statements is correct about date of auditors report:

a.

The date of the auditors report cannot be before the date on which sufficient appropriate audit evidence has been obtained.

b.

Date of auditors report can be earlier than the date of approval of financial statements.

c.

Date of auditors report is the date of the last day of audit.

d.

Date of auditors report can be earlier than the date the audit report has been approved by the engagement partner.

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Question 39

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The statement that the auditor believes that the audit evidence obtained is sufficient and appropriate to provide a basis for the auditors opinion is in what section of the new auditors report?

a.

Responsibilities for the Financial Statements.

b.

Opinion Paragraph.

c.

Basis for Opinion.

d.

Auditors responsibility.

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Question 40

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Which one of the following describes the auditor's responsibilities in evaluating the appropriateness of the going concern assumption?

a.

The auditor should predict future events or conditions that may affect the entity.

b.

The auditor should collect audit evidence and make his conclusion on the appropriateness of management's use of the going concern basis of accounting.

c.

It is the auditor's responsibility to make a specific assessment of the entitys ability to continue as a going concern and make the financial statement disclosures in connection with going concern.

d.

The auditor's responsibility is to consider the going concern assumption only when potential problems appear.

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Question 41

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Which of the statements is/are correct? I. If the directors have any material uncertainties as to the going concern of the business they must disclose them in the financial statements. II. If there are going concern issues, the auditor must ensure that sufficient disclosures are made

a.

Both are correct

b.

Both are false

c.

Only I is correct

d.

Only II is correct

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Question 42

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Which of the following statements is/are True?

I. An entitys inability to pay creditors on due dates or inability to comply with the terms of loan agreements may signify that a material uncertainty about the entitys ability to continue as a going concern exists.

II. The absence of any reference to a material uncertainty about the entitys ability to continue as a going concern in an auditors report means a guarantee as to the entitys ability to continue as a going concern.

a.

Neither I nor II is true

b.

Only I is true

c.

Both I and II are true

d.

Only II is true

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Question 43

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Which one of the following fraudulent activities constitutes misappropriation of assets?

a.

engaging in complex transactions that misrepresent the financial position of the entity

b.

omitting, advancing or delaying recognition of events and transactions in the FS

c.

concealing, or not disclosing, facts that affects the recorded amounts in the FS

d.

causing an entity to pay for goods and services not received

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Question 44

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Which of the following is an example of fraudulent financial reporting?

a.

The cashier diverts customer payments to his personal account reporting the customer account as uncollectible.

b.

An employee steals inventory and reports them as lost.

c.

An employee steals small tools from the company and neglects to return them.

d.

Company management changes inventory count and overwrites ending inventory amount so that cost of goods sold will be understated.

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Question 45

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Which of the following statements is correct with regards to auditors responsibility concerning fraud?

a.

The auditor is responsible for obtaining reasonable assurance that the financial statements are free from material statement, whether caused by fraud or error.

b.

Fraud detection is the objective of an audit.

c.

It is the auditors responsibility to prevent fraud.

d.

When fraud is discovered by the auditor they must withdraw from the engagement.

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Question 46

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Risk assessment procedures relating to fraud include inquiries of management regarding:

a.

If there are any relatives of the executives employed in the entity.

b.

Whether management knows of any fraud in the entity.

c.

Effectiveness of their business strategies.

d.

If there is fraud elsewhere in their industry.

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