Hi can u pls help me to find out the auditing MCQ questions answer .I attach a file.please.My email id is (ruhin_1986@yahoo.com)

1 Marks: 1 When an auditor calculates the gross margin as a percent of sales and compares it with previous periods, this type of evidence is called: Choose one answer. a. physical examination. b. analytical procedures. c. observation. d. inquiry. Question 2 Marks: 1 Which of the following eliminates voluminous details from the auditor's working trial balance by classifying and summarising similar or related items? Choose one answer. a. Lead schedules b. Account analyses c. Control accounts d. Supporting schedules Question 3 Marks: 1 The objective of the ordinary examination by the independent auditor is the expression of an opinion on: Choose one answer. a. the accuracy of the annual report. b. the accuracy of the financial statements. c. the fairness of the financial statements. d. the statement of financial position and the statement of financial performance. Question 4 Marks: 1 Which of the following is not a category of Auditing Standards: Choose one answer. a. general principles and responsibilities. b. ethical requirements. c. risk assessment and response to assessed risks. d. audit conclusions and reporting. Question 5 Marks: 1 The largest portion of the auditor's working papers is the: Choose one answer. a. working trial balance. b. adjusting and reclassification entries. c. supporting schedules. d. lead schedules. Question 6 Marks: 1 A system of internal accounting control normally would include procedures that are designed to provide reasonable assurance that: Choose one answer. a. collusive activities would be detected by segregation of employee duties. b. transactions are executed in accordance with management's general or specific authorisation. c. unusual transactions are accurately recorded. d. employees act with integrity when performing their assigned tasks. Question 7 Marks: 1 The auditor need not be concerned with all three areas of internal control that apply to management. The auditor's primary concerns are with the system's ability to: Choose one answer. a. promote efficiency and encourage adherence to policy. b. ensure reliability of financial reporting. c. provide reliable data and promote efficiency. d. provide reliable data, safeguard assets and comply with the Corporations Act. Question 8 Marks: 1 The study of the client's internal control by the auditor is: Choose one answer. a. recommended by the Corporations Act. b. required by accounting standards. c. required by the ASX for listed companies. d. required by auditing standards. Question 9 Marks: 1 Unusual fluctuations occur when: Choose one answer. a. significant differences are not expected but do exist. b. significant differences are expected but do not exist. c. significant differences are expected and do exist. d. either A or B is true. Question 10 Marks: 1 Most audits of a company are done annually by the same audit firm. Except for initial engagements, the auditor begins the audit with a great deal of information about the client's internal controls developed in prior years. Because systems and controls usually don't change frequently: Choose one answer. a. it is sufficient for the auditor just to inquire of the client whether the controls have been changed since last year. b. it eases the burden on the auditor's requirement to do a complete study of the controls this year. c. this information can be updated and carried forward to the current year's audit. d. the auditor can skip the evaluation of this area on repeat engagements. Question 11 Marks: 1 Tests of details of balances are specific procedures intended to: Choose one answer. a. prove that the accounts with material balances are classified correctly. b. prove that the trial balance is in balance. c. identify the details of the internal control system. d. test for monetary errors in the financial statements. Question 12 Marks: 1 Auditors often make and help implement recommendations that improve profitability by: Choose one answer. a. reduction of errors and fraud b. by improving operational controls c. enhancing revenue or reducing costs d. all of the above Question 13 Marks: 1 The most important type of protective measure for safeguarding assets and records is: Choose one answer. a. proper authorisation of transactions. b. adequate documentation. c. the use of physical precautions. d. adequate separation of duties among personnel. Question 14 Marks: 1 The most common analytical procedure to assess liquidity is the: Choose one answer. a. quick ratio. b. debt to equity ratio. c. inventory turnover ratio. d. net profit margin. Question 15 Marks: 1 Narratives, flowcharts and internal control questionnaires are three common methods of: Choose one answer. a. documenting the auditor's understanding of client's organisational structure. b. documenting the auditor's understanding of internal controls. c. testing the internal controls. d. designing the audit manual and procedures. Question 16 Marks: 1 Risk in auditing means that the auditor accepts some level of uncertainty in performing the audit function. An effective auditor will: Choose one answer. a. perform the audit procedures first and quantitatively set the risk level before forming an opinion and writing the report. b. set the risk level between 5% and 10%. c. take any means available to reduce the risk to the lowest possible level. d. recognise that risks exist and deal with those risks in an appropriate manner. Question 17 Marks: 1 Which of the following forms of evidence is least reliable? Choose one answer. a. Monthly bank statement b. Positive confirmation of customer's balance c. Client's file copy of a purchase requisition d. A letter from the client's solicitor stating that there are no known lawsuits pending against the client. Question 18 Marks: 1 Which one of the following statements is not true about audit reports? Choose one answer. a. They are prepared as the final stage of the audit process. b. They all follow the same form. c. They communicate the auditor's findings to users. d. They differ in nature. Question 19 Marks: 1 Auditors begin their assessments of inherent risk during the planning phase. Which of the following would not be a topic of the planning phase that would also help to assess inherent risk? Choose one answer. a. Obtaining client's agreement on the engagement letter b. Identifying related parties c. Touring the client's plant and offices d. Obtaining knowledge about the client's business and industry Question 20 Marks: 1 Which of the following is not one of the four phases in the audit process? Choose one answer. a. Test controls and transactions. b. Plan and design an audit approach. c. Inform client of any adjustments or corrections to be made to the financial statements. d. Complete the audit and issue the report. Question 21 Marks: 1 Which of the following can be regarded as being solely 'compliance' audits? Choose one answer. a. Australian Taxation Office's examinations of the returns of taxpayers b. An internal auditor's review of his employer's payroll authorisation procedures c. An independent public accounting firm's audit of a local sporting association d. Auditor-General's examinations of the returns of taxpayers Question 22 Marks: 1 The auditor can conclude that control risk is low: Choose one answer. a. after identifying specific controls that will reduce control risk and making an assessment of control risk. b. after testing the controls for effectiveness. c. after obtaining an understanding of the control environment and the accounting system at a fairly detailed level. d. only after all three steps above are completed. Question 23 Marks: 1 Providing quantitative information that management and others can use to make decisions is the function of: Choose one answer. a. management information systems. b. finance. c. auditing. d. accounting. Question 24 Marks: 1 An examination of part of an organisation's procedures and methods for the purpose of evaluating efficiency and effectiveness in the manufacturing department is what type of audit? Choose one answer. a. Financial statement audit b. Production audit c. Compliance audit d. Performance audit Question 25 Marks: 1 Publicly traded companies have annual financial statement audits: Choose one answer. a. to obtain financing from banks b. external users rely on it c. because they are required to under the Corporations Act d. all of the above Question 26 Marks: 1 Competence of audit evidence can only be improved by: Choose one answer. a. Selecting a larger sample size. b. Selecting different population items. c. Selecting audit procedures that contain a higher quality competence. d. None of the above. Question 27 Marks: 1 Which of the following would not be classified as a related-party transaction? Choose one answer. a. Exchanges of equipment between two companies owned by the same person b. Loans or credit sales to the principal owner or client c. Sales of merchandise between affiliated companies d. An advance of one week's salary to an employee Question 28 Marks: 1 A major limitation in the application of the audit risk model is: Choose one answer. a. the difficulty in understanding the effect on other factors in the model when one factor is changed. b. the failure of the Auditing and Assurance Standards Board to accept it and incorporate it into the standards. c. the difficulty in defining the terms of the model. d. the difficulty in measuring the components of the model. Question 29 Marks: 1 Which one of the following statements regarding inherent risk is correct? Choose one answer. a. The inherent risk assigned in the audit risk model is dependent upon the strengths in client's internal control system. b. The inherent risk assigned in the audit risk model is unaffected by the auditor's experience with client's organisation. c. Most auditors set a low inherent risk in the first year of an audit and increase it if experience shows that it was incorrect. d. Most auditors set a high inherent risk in the first year of an audit and reduce it in subsequent years as they gain experience, even when there is inherent risk. Question 30 Marks: 1 The essence of an effectively controlled organisation lies in the: Choose one answer. a. effectiveness of its internal auditor. b. attitude of its employees. c. attitude of its management. d. effectiveness of its independent auditor. Question 31 Marks: 1 Statements of Auditing Standards (ASAs) are issued by: Choose one answer. a. CPA Australia. b. the Australian Stock Exchange. c. the Institute of Chartered Accountants in Australia. d. none of the above. Question 32 Marks: 1 One means of informing the client that the auditor is not responsible for the discovery of all acts of fraud is the: Choose one answer. a. engagement letter. b. representation letter. c. client letter. d. responsibility letter. Question 33 Marks: 1 Which of the following would not be a consideration of an audit firm in deciding whether to accept a new client? Choose one answer. a. Client's standing in the business community b. Client's relation with its previous audit firm c. Client's probability of achieving an unqualified opinion d. Client's financial stability Question 34 Marks: 1 If an auditor has determined that the client has an excellent internal control structure: Choose one answer. a. the auditor can conclude that there is reasonable assurance that the financial statements do not contain material misstatements. b. business risk is significantly reduced. c. the type of evidence required changes, but not the quantity. d. the amount of audit evidence to be collected might be reduced relative to a situation where the control structure is not adequate. Question 35 Marks: 1 An audit objective to determine whether the provision for doubtful debts is adequate relates to which assertion? Choose one answer. a. Completeness b. Valuation or allocation c. Rights and obligations d. Existence or occurrence Question 36 Marks: 1 After the general balance-related objectives are understood, specific objectives for each account balance on the financial statements can be developed. Which of the following statements is true? Choose one answer. a. There should be at least one specific objective for each relevant general objective. b. There will be many specific objectives developed for each relevant general objective. c. There must be two specific objectives for each general objective. d. There will be only one specific objective for each relevant general objective. Question 37 Marks: 1 Which one of the following is not a means of reducing information risk? Choose one answer. a. independent verification by the user b. implementing a system of quality control c. sharing the risk with management d. providing audited financial statements Question 38 Marks: 1 An internal auditor should ideally report to: Choose one answer. a. the external auditors. b. the chief finance officer. c. the ASIC. d. the audit committee. Question 39 Marks: 1 The most important aspect of any system of controls is: Choose one answer. a. regular review by top management. b. separation of duties. c. competent trustworthy personnel. d. proper authorisation procedures. Question 40 Marks: 1 When discussing planned detection risk (PDR) and the audit risk model, which of the following statements is not true? Choose one answer. a. PDR is a measure of the risk that audit evidence will fail to detect errors exceeding a tolerable amount, should such errors exist. b. When PDR is changed from low to medium, the required accumulation of evidence would be increased. c. PDR determines the amount of evidence the auditor plans to accumulate, inversely with the size of planned detection risk. d. PDR is dependent on the other three factors in the model, i.e. it will change only if another changes. Question 41 Marks: 1 Auditing standards (ASAs): Choose one answer. a. establish mandatory requirements that should be looked upon as minimum standards. b. are issued by the AUASB. c. have the 'force of law' under the Corporations Act 2001. d. all of the above. Question 42 Marks: 1 When discussing acceptable audit risk (AAR) and the audit risk model, which one of the following statements is true? Choose one answer. a. AAR is objectively determined by the auditor. b. The terms audit assurance, overall assurance or level of assurance are synonyms for AAR. c. When the auditor decides on a lower acceptable audit risk, it means the auditor wants to be more certain that the financial statements are not materially misstated. d. AAR is the risk that the auditor is willing to take that the financial statements are fairly stated after the audit is completed and an unqualified opinion has been reached. Question 43 Marks: 1 Knowledge of the auditee's business can be obtained in a variety of ways. Which one of the following is not usually one of those ways? Choose one answer. a. From textbooks b. From technical magazines c. From Internet resources d. All of the above are usual sources Question 44 Marks: 1 An extensive understanding of the client's business and industry and knowledge about the company's operations are essential because: Choose one answer. a. the increased importance of intangible assets has increased accounting complexity. b. the increased importance of human resources has increased accounting complexity. c. there is a risk the business may impact on the environment. d. all of the above. Question 45 Marks: 1 An essential characteristic of the persons performing internal verification procedures is: Choose one answer. a. a thorough knowledge of accounting. b. independence from the original data preparer. c. an analytical and inquisitive mind. d. all of the above. Question 46 Marks: 1 The responsibility of management includes: Choose one answer. a. making fair representations in the financial statements b. adopting sound accounting policies c. maintaining adequate internal controls d. All of the above. Question 47 Marks: 1 Transaction cycles begin and end: Choose one answer. a. at the origin and final disposition of the company. b. at the balance sheet date. c. at the beginning and end of the financial year. d. at January 1 and December 31. Question 48 Marks: 1 When using the cycle approach to segmenting the audit, the reason for treating capital acquisition and repayment separately from the acquisition of goods and services is that: Choose one answer. a. the transactions are related to financing a company rather than to its operations. b. most capital acquisition and repayment cycle accounts involve few transactions, but each is often highly material and therefore should be audited extensively. c. both A and B above. d. neither A nor B above. Question 49 Marks: 1 The three categories of attestation services are: Choose one answer. a. audits, reviews and compilations. b. audits, compilations and 'other' attestation services. c. audits, reviews and 'other' attestation services. d. reviews, compilations and 'other' attestation services. Question 50 Marks: 1 If the auditor wants a lower assessed control risk: Choose one answer. a. larger sample sizes for the tests of control would be appropriate. b. more tests must be conducted on each control. c. a greater number of controls must be tested. d. all of the above would apply. Question 51 Marks: 1 Which one of the following is not one of the six objectives of quality control? Choose one answer. a. professional development b. leadership responsibilities c. ethical requirements d. monitoring Question 52 Marks: 1 The predominant type of attestation service performed by public accountants is: Choose one answer. a. compilation. b. management consulting. c. audit. d. review. Question 53 Marks: 1 Internal controls can never be regarded as completely effective. Even if systems personnel could design an ideal system, its effectiveness depends on the: Choose one answer. a. adequacy of the computer system. b. proper implementation by management. c. ability of the internal audit staff to maintain it. d. competency and dependability of the people using it. Question 54 Marks: 1 For an internal audit function to be effective, it is essential that the internal audit staff: Choose one answer. a. report directly to a high level of authority within the organisation. b. be independent of the accounting department. c. be independent of the operating departments. d. achieve all of the above. Question 55 Marks: 1 Which one of the following statements about the existence and completeness objectives is not true? Choose one answer. a. The completeness objective deals with unrecorded transactions. b. The existence and completeness objectives emphasise opposite audit concerns. c. Existence deals with understatements and completeness deals with overstatements. d. Existence deals with overstatements and completeness deals with understatements. Question 56 Marks: 1 When setting a preliminary judgment about materiality at the planning stage, auditors may have to subsequently change this preliminary assessment. The new assessment is called: Choose one answer. a. planned materiality. b. revised assessment of materiality. c. allocated materiality. d. segment materiality. Question 57 Marks: 1 Physical examination of assets is not a sufficient form of evidence when the auditor wants to determine the: Choose one answer. a. quantity and description of the asset. b. existence of the asset. c. ownership of the asset. d. condition or quality of the asset. Question 58 Marks: 1 It is important for the auditor to consider the competence of the audit clients' employees because their competence bears directly and importantly upon the: Choose one answer. a. comparison of recorded accountability with assets. b. cost/benefit relationship of the system of internal control. c. achievement of the objectives of the system of internal control. d. timing of the tests to be performed. Question 59 Marks: 1 An auditor may compensate for a weakness in the internal control by increasing the: Choose one answer. a. extent of substantive tests. b. level of detection risk. c. preliminary judgment about audit risk. d. extent of tests of controls. Question 60 Marks: 1 The auditor plans the engagement to avoid misunderstandings with the client. This is essential to: Choose one answer. a. All of the above. b. Facilitate good client relations. c. Minimise legal liability and maintain for the firm a good reputation in the business community. d. Help the firm remain competitive. Question 61 Marks: 1 When there is a high degree of engagement risk, auditors can factor this into the audit risk model by: Choose one answer. a. reducing the acceptable audit risk. b. reducing the planned detection risk. c. increasing the assessment of inherent risk. d. all of the above. Question 62 Marks: 1 Control risk is a measure of the auditor's expectation that the internal controls: Choose one answer. a. will neither prevent material misstatements nor detect and correct them. b. will either prevent material misstatements or detect and correct them. c. will detect and correct material misstatements. d. will prevent material misstatements from occurring. Question 63 Marks: 1 When planning an audit, the auditor's assessed level of control risk is: Choose one answer. a. calculated by using the formulas provided in ASA 315. b. calculated by using the audit risk model. c. an economic issue, trading off the costs of testing controls against the cost of testing balances. d. determined by using actuarial tables. Question 64 Marks: 1 Which one of the following is not typically a type of audit evidence the auditor would use in obtaining and understanding of internal controls? Choose one answer. a. Observation b. Inquiry c. Documentation d. Reperformance. Question 65 Marks: 1 Which of the following can be significantly affected by an audit? Choose one answer. a. Business risk b. The risk-free interest rate c. Information risk d. All of the above Question 66 Marks: 1 Traditionally, confirmations are used to verify: Choose one answer. a. fixed asset additions. b. individual transactions between organisations, such as sales transactions. c. bank balances and accounts receivables. d. all three of the above. Question 67 Marks: 1 A working trial balance is: Choose one answer. a. a listing of the general ledger accounts and their year-end balances. b. a list of the opening subsidiary ledger account balances. c. the set of lead schedules. d. a summary of the effect of the auditor's reclassification entries. Question 68 Marks: 1 The two determinants of the persuasiveness of evidence are: 1. competence 2. sufficiency 3. materiality 4. independence Choose one answer. a. 1 and 2 b. 1 and 3 c. 2 and 4 d. 2 and 3 Question 69 Marks: 1 Record keeping is typically included in a separate department under the financial controller to protect the company primarily against: Choose one answer. a. Unbiased information. b. Defalcation. c. Error. d. Non-compliance with accounting standards. Question 70 Marks: 1 Risk is: Choose one answer. a. Measured by tolerable error. b. A measure of uncertainty. c. To be avoided in the audit. d. All of the above. Question 71 Marks: 1 An audit of financial statements is conducted to determine whether the: Choose one answer. a. organisation is operating efficiently and effectively. b. overall financial statements are stated in accordance with specified criteria. c. auditee is following specific procedures or rules set down by a peer group authority. d. none of the above Question 72 Marks: 1 Which of the following characteristics of the client's management effects the risk of material misstatements in the financial report: Choose one answer. a. philosophy and operating style. b. ability to respond to risk. c. ability to identify risk. d. all three of the above. Question 73 Marks: 1 An audit program is: Choose one answer. a. A computer program to assist the audit. b. The list of analytical procedures to be performed. c. The list of audit procedures for an audit area or an entire audit. d. All of the above. Question 74 Marks: 1 Which of the following services provides no assurances about the client's financial statements? Choose one answer. a. Audit b. Compliance c. Review d. None of the above; all provide some level of assurance. Question 75 Marks: 1 Which one of the following is most likely to contribute directly to increased information risk? Choose one answer. a. unexpected increased competition within the industry b. remunerating management with a bonus scheme linked to reported income c. poor decisions by management d. ineffective quality control within the public accounting firm Question 76 Marks: 1 Which of the following is not an assertion relating to 'general presentation and disclosurerelated audit objectives'? Choose one answer. a. Occurrence b. Cut off c. Accuracy d. Completeness Question 77 Marks: 1 Which one of the following is not a component of an entity's internal control? Choose one answer. a. The control environment b. Control risk c. Control procedures d. The accounting system Question 78 Marks: 1 Which of the following is not typically one of management's concerns in designing effective internal controls? Choose one answer. a. Efficiency and effectiveness of operations b. Reliability of financial reporting c. Obtaining the best internal control system possible d. Compliance with applicable laws and regulations Question 79 Marks: 1 When making decisions about evidence for a given audit, the auditor's goal is to obtain a sufficient amount of timely, reliable evidence that is relevant to the information being verified, and to do so: Choose one answer. a. no matter what the cost involved in obtaining such evidence. b. at the lowest possible cost. c. only if the cost is reasonable. d. at any cost because the costs are billed to the client. Question 80 Marks: 1 The process of recording, classifying and summarising economic events in a logical manner for the purpose of providing financial information for decision-making is: Choose one answer. a. finance. b. economics. c. auditing. d. accounting. 1 Marks: 1 When an auditor calculates the gross margin as a percent of sales and compares it with previous periods, this type of evidence is called: Choose one answer. a. physical examination. b. analytical procedures. c. observation. d. inquiry. Question 2 Marks: 1 Which of the following eliminates voluminous details from the auditor's working trial balance by classifying and summarising similar or related items? Choose one answer. a. Lead schedules b. Account analyses c. Control accounts d. Supporting schedules Question 3 Marks: 1 The objective of the ordinary examination by the independent auditor is the expression of an opinion on: Choose one answer. a. the accuracy of the annual report. b. the accuracy of the financial statements. c. the fairness of the financial statements. d. the statement of financial position and the statement of financial performance. Question 4 Marks: 1 Which of the following is not a category of Auditing Standards: Choose one answer. a. general principles and responsibilities. b. ethical requirements. c. risk assessment and response to assessed risks. d. audit conclusions and reporting. Question 5 Marks: 1 The largest portion of the auditor's working papers is the: Choose one answer. a. working trial balance. b. adjusting and reclassification entries. c. supporting schedules. d. lead schedules. Question 6 Marks: 1 A system of internal accounting control normally would include procedures that are designed to provide reasonable assurance that: Choose one answer. a. collusive activities would be detected by segregation of employee duties. b. transactions are executed in accordance with management's general or specific authorisation. c. unusual transactions are accurately recorded. d. employees act with integrity when performing their assigned tasks. Question 7 Marks: 1 The auditor need not be concerned with all three areas of internal control that apply to management. The auditor's primary concerns are with the system's ability to: Choose one answer. a. promote efficiency and encourage adherence to policy. b. ensure reliability of financial reporting. c. provide reliable data and promote efficiency. d. provide reliable data, safeguard assets and comply with the Corporations Act. Question 8 Marks: 1 The study of the client's internal control by the auditor is: Choose one answer. a. recommended by the Corporations Act. b. required by accounting standards. c. required by the ASX for listed companies. d. required by auditing standards. Question 9 Marks: 1 Unusual fluctuations occur when: Choose one answer. a. significant differences are not expected but do exist. b. significant differences are expected but do not exist. c. significant differences are expected and do exist. d. either A or B is true. Question 10 Marks: 1 Most audits of a company are done annually by the same audit firm. Except for initial engagements, the auditor begins the audit with a great deal of information about the client's internal controls developed in prior years. Because systems and controls usually don't change frequently: Choose one answer. a. it is sufficient for the auditor just to inquire of the client whether the controls have been changed since last year. b. it eases the burden on the auditor's requirement to do a complete study of the controls this year. c. this information can be updated and carried forward to the current year's audit. d. the auditor can skip the evaluation of this area on repeat engagements. Question 11 Marks: 1 Tests of details of balances are specific procedures intended to: Choose one answer. a. prove that the accounts with material balances are classified correctly. b. prove that the trial balance is in balance. c. identify the details of the internal control system. d. test for monetary errors in the financial statements. Question 12 Marks: 1 Auditors often make and help implement recommendations that improve profitability by: Choose one answer. a. reduction of errors and fraud b. by improving operational controls c. enhancing revenue or reducing costs d. all of the above Question 13 Marks: 1 The most important type of protective measure for safeguarding assets and records is: Choose one answer. a. proper authorisation of transactions. b. adequate documentation. c. the use of physical precautions. d. adequate separation of duties among personnel. Question 14 Marks: 1 The most common analytical procedure to assess liquidity is the: Choose one answer. a. quick ratio. b. debt to equity ratio. c. inventory turnover ratio. d. net profit margin. Question 15 Marks: 1 Narratives, flowcharts and internal control questionnaires are three common methods of: Choose one answer. a. documenting the auditor's understanding of client's organisational structure. b. documenting the auditor's understanding of internal controls. c. testing the internal controls. d. designing the audit manual and procedures. Question 16 Marks: 1 Risk in auditing means that the auditor accepts some level of uncertainty in performing the audit function. An effective auditor will: Choose one answer. a. perform the audit procedures first and quantitatively set the risk level before forming an opinion and writing the report. b. set the risk level between 5% and 10%. c. take any means available to reduce the risk to the lowest possible level. d. recognise that risks exist and deal with those risks in an appropriate manner. Question 17 Marks: 1 Which of the following forms of evidence is least reliable? Choose one answer. a. Monthly bank statement b. Positive confirmation of customer's balance c. Client's file copy of a purchase requisition d. A letter from the client's solicitor stating that there are no known lawsuits pending against the client. Question 18 Marks: 1 Which one of the following statements is not true about audit reports? Choose one answer. a. They are prepared as the final stage of the audit process. b. They all follow the same form. c. They communicate the auditor's findings to users. d. They differ in nature. Question 19 Marks: 1 Auditors begin their assessments of inherent risk during the planning phase. Which of the following would not be a topic of the planning phase that would also help to assess inherent risk? Choose one answer. a. Obtaining client's agreement on the engagement letter b. Identifying related parties c. Touring the client's plant and offices d. Obtaining knowledge about the client's business and industry Question 20 Marks: 1 Which of the following is not one of the four phases in the audit process? Choose one answer. a. Test controls and transactions. b. Plan and design an audit approach. c. Inform client of any adjustments or corrections to be made to the financial statements. d. Complete the audit and issue the report. Question 21 Marks: 1 Which of the following can be regarded as being solely 'compliance' audits? Choose one answer. a. Australian Taxation Office's examinations of the returns of taxpayers b. An internal auditor's review of his employer's payroll authorisation procedures c. An independent public accounting firm's audit of a local sporting association d. Auditor-General's examinations of the returns of taxpayers Question 22 Marks: 1 The auditor can conclude that control risk is low: Choose one answer. a. after identifying specific controls that will reduce control risk and making an assessment of control risk. b. after testing the controls for effectiveness. c. after obtaining an understanding of the control environment and the accounting system at a fairly detailed level. d. only after all three steps above are completed. Question 23 Marks: 1 Providing quantitative information that management and others can use to make decisions is the function of: Choose one answer. a. management information systems. b. finance. c. auditing. d. accounting. Question 24 Marks: 1 An examination of part of an organisation's procedures and methods for the purpose of evaluating efficiency and effectiveness in the manufacturing department is what type of audit? Choose one answer. a. Financial statement audit b. Production audit c. Compliance audit d. Performance audit Question 25 Marks: 1 Publicly traded companies have annual financial statement audits: Choose one answer. a. to obtain financing from banks b. external users rely on it c. because they are required to under the Corporations Act d. all of the above Question 26 Marks: 1 Competence of audit evidence can only be improved by: Choose one answer. a. Selecting a larger sample size. b. Selecting different population items. c. Selecting audit procedures that contain a higher quality competence. d. None of the above. Question 27 Marks: 1 Which of the following would not be classified as a related-party transaction? Choose one answer. a. Exchanges of equipment between two companies owned by the same person b. Loans or credit sales to the principal owner or client c. Sales of merchandise between affiliated companies d. An advance of one week's salary to an employee Question 28 Marks: 1 A major limitation in the application of the audit risk model is: Choose one answer. a. the difficulty in understanding the effect on other factors in the model when one factor is changed. b. the failure of the Auditing and Assurance Standards Board to accept it and incorporate it into the standards. c. the difficulty in defining the terms of the model. d. the difficulty in measuring the components of the model. Question 29 Marks: 1 Which one of the following statements regarding inherent risk is correct? Choose one answer. a. The inherent risk assigned in the audit risk model is dependent upon the strengths in client's internal control system. b. The inherent risk assigned in the audit risk model is unaffected by the auditor's experience with client's organisation. c. Most auditors set a low inherent risk in the first year of an audit and increase it if experience shows that it was incorrect. d. Most auditors set a high inherent risk in the first year of an audit and reduce it in subsequent years as they gain experience, even when there is inherent risk. Question 30 Marks: 1 The essence of an effectively controlled organisation lies in the: Choose one answer. a. effectiveness of its internal auditor. b. attitude of its employees. c. attitude of its management. d. effectiveness of its independent auditor. Question 31 Marks: 1 Statements of Auditing Standards (ASAs) are issued by: Choose one answer. a. CPA Australia. b. the Australian Stock Exchange. c. the Institute of Chartered Accountants in Australia. d. none of the above. Question 32 Marks: 1 One means of informing the client that the auditor is not responsible for the discovery of all acts of fraud is the: Choose one answer. a. engagement letter. b. representation letter. c. client letter. d. responsibility letter. Question 33 Marks: 1 Which of the following would not be a consideration of an audit firm in deciding whether to accept a new client? Choose one answer. a. Client's standing in the business community b. Client's relation with its previous audit firm c. Client's probability of achieving an unqualified opinion d. Client's financial stability Question 34 Marks: 1 If an auditor has determined that the client has an excellent internal control structure: Choose one answer. a. the auditor can conclude that there is reasonable assurance that the financial statements do not contain material misstatements. b. business risk is significantly reduced. c. the type of evidence required changes, but not the quantity. d. the amount of audit evidence to be collected might be reduced relative to a situation where the control structure is not adequate. Question 35 Marks: 1 An audit objective to determine whether the provision for doubtful debts is adequate relates to which assertion? Choose one answer. a. Completeness b. Valuation or allocation c. Rights and obligations d. Existence or occurrence Question 36 Marks: 1 After the general balance-related objectives are understood, specific objectives for each account balance on the financial statements can be developed. Which of the following statements is true? Choose one answer. a. There should be at least one specific objective for each relevant general objective. b. There will be many specific objectives developed for each relevant general objective. c. There must be two specific objectives for each general objective. d. There will be only one specific objective for each relevant general objective. Question 37 Marks: 1 Which one of the following is not a means of reducing information risk? Choose one answer. a. independent verification by the user b. implementing a system of quality control c. sharing the risk with management d. providing audited financial statements Question 38 Marks: 1 An internal auditor should ideally report to: Choose one answer. a. the external auditors. b. the chief finance officer. c. the ASIC. d. the audit committee. Question 39 Marks: 1 The most important aspect of any system of controls is: Choose one answer. a. regular review by top management. b. separation of duties. c. competent trustworthy personnel. d. proper authorisation procedures. Question 40 Marks: 1 When discussing planned detection risk (PDR) and the audit risk model, which of the following statements is not true? Choose one answer. a. PDR is a measure of the risk that audit evidence will fail to detect errors exceeding a tolerable amount, should such errors exist. b. When PDR is changed from low to medium, the required accumulation of evidence would be increased. c. PDR determines the amount of evidence the auditor plans to accumulate, inversely with the size of planned detection risk. d. PDR is dependent on the other three factors in the model, i.e. it will change only if another changes. Question 41 Marks: 1 Auditing standards (ASAs): Choose one answer. a. establish mandatory requirements that should be looked upon as minimum standards. b. are issued by the AUASB. c. have the 'force of law' under the Corporations Act 2001. d. all of the above. Question 42 Marks: 1 When discussing acceptable audit risk (AAR) and the audit risk model, which one of the following statements is true? Choose one answer. a. AAR is objectively determined by the auditor. b. The terms audit assurance, overall assurance or level of assurance are synonyms for AAR. c. When the auditor decides on a lower acceptable audit risk, it means the auditor wants to be more certain that the financial statements are not materially misstated. d. AAR is the risk that the auditor is willing to take that the financial statements are fairly stated after the audit is completed and an unqualified opinion has been reached. Question 43 Marks: 1 Knowledge of the auditee's business can be obtained in a variety of ways. Which one of the following is not usually one of those ways? Choose one answer. a. From textbooks b. From technical magazines c. From Internet resources d. All of the above are usual sources Question 44 Marks: 1 An extensive understanding of the client's business and industry and knowledge about the company's operations are essential because: Choose one answer. a. the increased importance of intangible assets has increased accounting complexity. b. the increased importance of human resources has increased accounting complexity. c. there is a risk the business may impact on the environment. d. all of the above. Question 45 Marks: 1 An essential characteristic of the persons performing internal verification procedures is: Choose one answer. a. a thorough knowledge of accounting. b. independence from the original data preparer. c. an analytical and inquisitive mind. d. all of the above. Question 46 Marks: 1 The responsibility of management includes: Choose one answer. a. making fair representations in the financial statements b. adopting sound accounting policies c. maintaining adequate internal controls d. All of the above. Question 47 Marks: 1 Transaction cycles begin and end: Choose one answer. a. at the origin and final disposition of the company. b. at the balance sheet date. c. at the beginning and end of the financial year. d. at January 1 and December 31. Question 48 Marks: 1 When using the cycle approach to segmenting the audit, the reason for treating capital acquisition and repayment separately from the acquisition of goods and services is that: Choose one answer. a. the transactions are related to financing a company rather than to its operations. b. most capital acquisition and repayment cycle accounts involve few transactions, but each is often highly material and therefore should be audited extensively. c. both A and B above. d. neither A nor B above. Question 49 Marks: 1 The three categories of attestation services are: Choose one answer. a. audits, reviews and compilations. b. audits, compilations and 'other' attestation services. c. audits, reviews and 'other' attestation services. d. reviews, compilations and 'other' attestation services. Question 50 Marks: 1 If the auditor wants a lower assessed control risk: Choose one answer. a. larger sample sizes for the tests of control would be appropriate. b. more tests must be conducted on each control. c. a greater number of controls must be tested. d. all of the above would apply. Question 51 Marks: 1 Which one of the following is not one of the six objectives of quality control? Choose one answer. a. professional development b. leadership responsibilities c. ethical requirements d. monitoring Question 52 Marks: 1 The predominant type of attestation service performed by public accountants is: Choose one answer. a. compilation. b. management consulting. c. audit. d. review. Question 53 Marks: 1 Internal controls can never be regarded as completely effective. Even if systems personnel could design an ideal system, its effectiveness depends on the: Choose one answer. a. adequacy of the computer system. b. proper implementation by management. c. ability of the internal audit staff to maintain it. d. competency and dependability of the people using it. Question 54 Marks: 1 For an internal audit function to be effective, it is essential that the internal audit staff: Choose one answer. a. report directly to a high level of authority within the organisation. b. be independent of the accounting department. c. be independent of the operating departments. d. achieve all of the above. Question 55 Marks: 1 Which one of the following statements about the existence and completeness objectives is not true? Choose one answer. a. The completeness objective deals with unrecorded transactions. b. The existence and completeness objectives emphasise opposite audit concerns. c. Existence deals with understatements and completeness deals with overstatements. d. Existence deals with overstatements and completeness deals with understatements. Question 56 Marks: 1 When setting a preliminary judgment about materiality at the planning stage, auditors may have to subsequently change this preliminary assessment. The new assessment is called: Choose one answer. a. planned materiality. b. revised assessment of materiality. c. allocated materiality. d. segment materiality. Question 57 Marks: 1 Physical examination of assets is not a sufficient form of evidence when the auditor wants to determine the: Choose one answer. a. quantity and description of the asset. b. existence of the asset. c. ownership of the asset. d. condition or quality of the asset. Question 58 Marks: 1 It is important for the auditor to consider the competence of the audit clients' employees because their competence bears directly and importantly upon the: Choose one answer. a. comparison of recorded accountability with assets. b. cost/benefit relationship of the system of internal control. c. achievement of the objectives of the system of internal control. d. timing of the tests to be performed. Question 59 Marks: 1 An auditor may compensate for a weakness in the internal control by increasing the: Choose one answer. a. extent of substantive tests. b. level of detection risk. c. preliminary judgment about audit risk. d. extent of tests of controls. Question 60 Marks: 1 The auditor plans the engagement to avoid misunderstandings with the client. This is essential to: Choose one answer. a. All of the above. b. Facilitate good client relations. c. Minimise legal liability and maintain for the firm a good reputation in the business community. d. Help the firm remain competitive. Question 61 Marks: 1 When there is a high degree of engagement risk, auditors can factor this into the audit risk model by: Choose one answer. a. reducing the acceptable audit risk. b. reducing the planned detection risk. c. increasing the assessment of inherent risk. d. all of the above. Question 62 Marks: 1 Control risk is a measure of the auditor's expectation that the internal controls: Choose one answer. a. will neither prevent material misstatements nor detect and correct them. b. will either prevent material misstatements or detect and correct them. c. will detect and correct material misstatements. d. will prevent material misstatements from occurring. Question 63 Marks: 1 When planning an audit, the auditor's assessed level of control risk is: Choose one answer. a. calculated by using the formulas provided in ASA 315. b. calculated by using the audit risk model. c. an economic issue, trading off the costs of testing controls against the cost of testing balances. d. determined by using actuarial tables. Question 64 Marks: 1 Which one of the following is not typically a type of audit evidence the auditor would use in obtaining and understanding of internal controls? Choose one answer. a. Observation b. Inquiry c. Documentation d. Reperformance. Question 65 Marks: 1 Which of the following can be significantly affected by an audit? Choose one answer. a. Business risk b. The risk-free interest rate c. Information risk d. All of the above Question 66 Marks: 1 Traditionally, confirmations are used to verify: Choose one answer. a. fixed asset additions. b. individual transactions between organisations, such as sales transactions. c. bank balances and accounts receivables. d. all three of the above. Question 67 Marks: 1 A working trial balance is: Choose one answer. a. a listing of the general ledger accounts and their year-end balances. b. a list of the opening subsidiary ledger account balances. c. the set of lead schedules. d. a summary of the effect of the auditor's reclassification entries. Question 68 Marks: 1 The two determinants of the persuasiveness of evidence are: 1. competence 2. sufficiency 3. materiality 4. independence Choose one answer. a. 1 and 2 b. 1 and 3 c. 2 and 4 d. 2 and 3 Question 69 Marks: 1 Record keeping is typically included in a separate department under the financial controller to protect the company primarily against: Choose one answer. a. Unbiased information. b. Defalcation. c. Error. d. Non-compliance with accounting standards. Question 70 Marks: 1 Risk is: Choose one answer. a. Measured by tolerable error. b. A measure of uncertainty. c. To be avoided in the audit. d. All of the above. Question 71 Marks: 1 An audit of financial statements is conducted to determine whether the: Choose one answer. a. organisation is operating efficiently and effectively. b. overall financial statements are stated in accordance with specified criteria. c. auditee is following specific procedures or rules set down by a peer group authority. d. none of the above Question 72 Marks: 1 Which of the following characteristics of the client's management effects the risk of material misstatements in the financial report: Choose one answer. a. philosophy and operating style. b. ability to respond to risk. c. ability to identify risk. d. all three of the above. Question 73 Marks: 1 An audit program is: Choose one answer. a. A computer program to assist the audit. b. The list of analytical procedures to be performed. c. The list of audit procedures for an audit area or an entire audit. d. All of the above. Question 74 Marks: 1 Which of the following services provides no assurances about the client's financial statements? Choose one answer. a. Audit b. Compliance c. Review d. None of the above; all provide some level of assurance. Question 75 Marks: 1 Which one of the following is most likely to contribute directly to increased information risk? Choose one answer. a. unexpected increased competition within the industry b. remunerating management with a bonus scheme linked to reported income c. poor decisions by management d. ineffective quality control within the public accounting firm Question 76 Marks: 1 Which of the following is not an assertion relating to 'general presentation and disclosurerelated audit objectives'? Choose one answer. a. Occurrence b. Cut off c. Accuracy d. Completeness Question 77 Marks: 1 Which one of the following is not a component of an entity's internal control? Choose one answer. a. The control environment b. Control risk c. Control procedures d. The accounting system Question 78 Marks: 1 Which of the following is not typically one of management's concerns in designing effective internal controls? Choose one answer. a. Efficiency and effectiveness of operations b. Reliability of financial reporting c. Obtaining the best internal control system possible d. Compliance with applicable laws and regulations Question 79 Marks: 1 When making decisions about evidence for a given audit, the auditor's goal is to obtain a sufficient amount of timely, reliable evidence that is relevant to the information being verified, and to do so: Choose one answer. a. no matter what the cost involved in obtaining such evidence. b. at the lowest possible cost. c. only if the cost is reasonable. d. at any cost because the costs are billed to the client. Question 80 Marks: 1 The process of recording, classifying and summarising economic events in a logical manner for the purpose of providing financial information for decision-making is: Choose one answer. a. finance. b. economics. c. auditing. d. accounting. 1 Marks: 1 When an auditor calculates the gross margin as a percent of sales and compares it with previous periods, this type of evidence is called: Choose one answer. a. physical examination. b. analytical procedures. c. observation. d. inquiry. Question 2 Marks: 1 Which of the following eliminates voluminous details from the auditor's working trial balance by classifying and summarising similar or related items? Choose one answer. a. Lead schedules b. Account analyses c. Control accounts d. Supporting schedules Question 3 Marks: 1 The objective of the ordinary examination by the independent auditor is the expression of an opinion on: Choose one answer. a. the accuracy of the annual report. b. the accuracy of the financial statements. c. the fairness of the financial statements. d. the statement of financial position and the statement of financial performance. Question 4 Marks: 1 Which of the following is not a category of Auditing Standards: Choose one answer. a. general principles and responsibilities. b. ethical requirements. c. risk assessment and response to assessed risks. d. audit conclusions and reporting. Question 5 Marks: 1 The largest portion of the auditor's working papers is the: Choose one answer. a. working trial balance. b. adjusting and reclassification entries. c. supporting schedules. d. lead schedules. Question 6 Marks: 1 A system of internal accounting control normally would include procedures that are designed to provide reasonable assurance that: Choose one answer. a. collusive activities would be detected by segregation of employee duties. b. transactions are executed in accordance with management's general or specific authorisation. c. unusual transactions are accurately recorded. d. employees act with integrity when performing their assigned tasks. Question 7 Marks: 1 The auditor need not be concerned with all three areas of internal control that apply to management. The auditor's primary concerns are with the system's ability to: Choose one answer. a. promote efficiency and encourage adherence to policy. b. ensure reliability of financial reporting. c. provide reliable data and promote efficiency. d. provide reliable data, safeguard assets and comply with the Corporations Act. Question 8 Marks: 1 The study of the client's internal control by the auditor is: Choose one answer. a. recommended by the Corporations Act. b. required by accounting standards. c. required by the ASX for listed companies. d. required by auditing standards. Question 9 Marks: 1 Unusual fluctuations occur when: Choose one answer. a. significant differences are not expected but do exist. b. significant differences are expected but do not exist. c. significant differences are expected and do exist. d. either A or B is true. Question 10 Marks: 1 Most audits of a company are done annually by the same audit firm. Except for initial engagements, the auditor begins the audit with a great deal of information about the client's internal controls developed in prior years. Because systems and controls usually don't change frequently: Choose one answer. a. it is sufficient for the auditor just to inquire of the client whether the controls have been changed since last year. b. it eases the burden on the auditor's requirement to do a complete study of the controls this year. c. this information can be updated and carried forward to the current year's audit. d. the auditor can skip the evaluation of this area on repeat engagements. Question 11 Marks: 1 Tests of details of balances are specific procedures intended to: Choose one answer. a. prove that the accounts with material balances are classified correctly. b. prove that the trial balance is in balance. c. identify the details of the internal control system. d. test for monetary errors in the financial statements. Question 12 Marks: 1 Auditors often make and help implement recommendations that improve profitability by: Choose one answer. a. reduction of errors and fraud b. by improving operational controls c. enhancing revenue or reducing costs d. all of the above Question 13 Marks: 1 The most important type of protective measure for safeguarding assets and records is: Choose one answer. a. proper authorisation of transactions. b. adequate documentation. c. the use of physical precautions. d. adequate separation of duties among personnel. Question 14 Marks: 1 The most common analytical procedure to assess liquidity is the: Choose one answer. a. quick ratio. b. debt to equity ratio. c. inventory turnover ratio. d. net profit margin. Question 15 Marks: 1 Narratives, flowcharts and internal control questionnaires are three common methods of: Choose one answer. a. documenting the auditor's understanding of client's organisational structure. b. documenting the auditor's understanding of internal controls. c. testing the internal controls. d. designing the audit manual and procedures. Question 16 Marks: 1 Risk in auditing means that the auditor accepts some level of uncertainty in performing the audit function. An effective auditor will: Choose one answer. a. perform the audit procedures first and quantitatively set the risk level before forming an opinion and writing the report. b. set the risk level between 5% and 10%. c. take any means available to reduce the risk to the lowest possible level. d. recognise that risks exist and deal with those risks in an appropriate manner. Question 17 Marks: 1 Which of the following forms of evidence is least reliable? Choose one answer. a. Monthly bank statement b. Positive confirmation of customer's balance c. Client's file copy of a purchase requisition d. A letter from the client's solicitor stating that there are no known lawsuits pending against the client. Question 18 Marks: 1 Which one of the following statements is not true about audit reports? Choose one answer. a. They are prepared as the final stage of the audit process. b. They all follow the same form. c. They communicate the auditor's findings to users. d. They differ in nature. Question 19 Marks: 1 Auditors begin their assessments of inherent risk during the planning phase. Which of the following would not be a topic of the planning phase that would also help to assess inherent risk? Choose one answer. a. Obtaining client's agreement on the engagement letter b. Identifying related parties c. Touring the client's plant and offices d. Obtaining knowledge about the client's business and industry Question 20 Marks: 1 Which of the following is not one of the four phases in the audit process? Choose one answer. a. Test controls and transactions. b. Plan and design an audit approach. c. Inform client of any adjustments or corrections to be made to the financial statements. d. Complete the audit and issue the report. Question 21 Marks: 1 Which of the following can be regarded as being solely 'compliance' audits? Choose one answer. a. Australian Taxation Office's examinations of the returns of taxpayers b. An internal auditor's review of his employer's payroll authorisation procedures c. An independent public accounting firm's audit of a local sporting association d. Auditor-General's examinations of the returns of taxpayers Question 22 Marks: 1 The auditor can conclude that control risk is low: Choose one answer. a. after identifying specific controls that will reduce control risk and making an assessment of control risk. b. after testing the controls for effectiveness. c. after obtaining an understanding of the control environment and the accounting system at a fairly detailed level. d. only after all three steps above are completed. Question 23 Marks: 1 Providing quantitative information that management and others can use to make decisions is the function of: Choose one answer. a. management information systems. b. finance. c. auditing. d. accounting. Question 24 Marks: 1 An examination of part of an organisation's procedures and methods for the purpose of evaluating efficiency and effectiveness in the manufacturing department is what type of audit? Choose one answer. a. Financial statement audit b. Production audit c. Compliance audit d. Performance audit Question 25 Marks: 1 Publicly traded companies have annual financial statement audits: Choose one answer. a. to obtain financing from banks b. external users rely on it c. because they are required to under the Corporations Act d. all of the above Question 26 Marks: 1 Competence of audit evidence can only be improved by: Choose one answer. a. Selecting a larger sample size. b. Selecting different population items. c. Selecting audit procedures that contain a higher quality competence. d. None of the above. Question 27 Marks: 1 Which of the following would not be classified as a related-party transaction? Choose one answer. a. Exchanges of equipment between two companies owned by the same person b. Loans or credit sales to the principal owner or client c. Sales of merchandise between affiliated companies d. An advance of one week's salary to an employee Question 28 Marks: 1 A major limitation in the application of the audit risk model is: Choose one answer. a. the difficulty in understanding the effect on other factors in the model when one factor is changed. b. the failure of the Auditing and Assurance Standards Board to accept it and incorporate it into the standards. c. the difficulty in defining the terms of the model. d. the difficulty in measuring the components of the model. Question 29 Marks: 1 Which one of the following statements regarding inherent risk is correct? Choose one answer. a. The inherent risk assigned in the audit risk model is dependent upon the strengths in client's internal control system. b. The inherent risk assigned in the audit risk model is unaffected by the auditor's experience with client's organisation. c. Most auditors set a low inherent risk in the first year of an audit and increase it if experience shows that it was incorrect. d. Most auditors set a high inherent risk in the first year of an audit and reduce it in subsequent years as they gain experience, even when there is inherent risk. Question 30 Marks: 1 The essence of an effectively controlled organisation lies in the: Choose one answer. a. effectiveness of its internal auditor. b. attitude of its employees. c. attitude of its management. d. effectiveness of its independent auditor. Question 31 Marks: 1 Statements of Auditing Standards (ASAs) are issued by: Choose one answer. a. CPA Australia. b. the Australian Stock Exchange. c. the Institute of Chartered Accountants in Australia. d. none of the above. Question 32 Marks: 1 One means of informing the client that the auditor is not responsible for the discovery of all acts of fraud is the: Choose one answer. a. engagement letter. b. representation letter. c. client letter. d. responsibility letter. Question 33 Marks: 1 Which of the following would not be a consideration of an audit firm in deciding whether to accept a new client? Choose one answer. a. Client's standing in the business community b. Client's relation with its previous audit firm c. Client's probability of achieving an unqualified opinion d. Client's financial stability Question 34 Marks: 1 If an auditor has determined that the client has an excellent internal control structure: Choose one answer. a. the auditor can conclude that there is reasonable assurance that the financial statements do not contain material misstatements. b. business risk is significantly reduced. c. the type of evidence required changes, but not the quantity. d. the amount of audit evidence to be collected might be reduced relative to a situation where the control structure is not adequate. Question 35 Marks: 1 An audit objective to determine whether the provision for doubtful debts is adequate relates to which assertion? Choose one answer. a. Completeness b. Valuation or allocation c. Rights and obligations d. Existence or occurrence Question 36 Marks: 1 After the general balance-related objectives are understood, specific objectives for each account balance on the financial statements can be developed. Which of the following statements is true? Choose one answer. a. There should be at least one specific objective for each relevant general objective. b. There will be many specific objectives developed for each relevant general objective. c. There must be two specific objectives for each general objective. d. There will be only one specific objective for each relevant general objective. Question 37 Marks: 1 Which one of the following is not a means of reducing information risk? Choose one answer. a. independent verification by the user b. implementing a system of quality control c. sharing the risk with management d. providing audited financial statements Question 38 Marks: 1 An internal auditor should ideally report to: Choose one answer. a. the external auditors. b. the chief finance officer. c. the ASIC. d. the audit committee. Question 39 Marks: 1 The most important aspect of any system of controls is: Choose one answer. a. regular review by top management. b. separation of duties. c