MCQ Question

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Which of the following auditing procedures most likely would provide assurance about a manufacturing entity's assertion of accuracy, valuation and allocation of inventory?

Select one:

Testing the entity's computation of standard overhead rates.

Tracing test counts to the entity's inventory listing

Obtaining confirmation of inventories pledged under loan agreements

Reviewing shipping and receiving cut-off procedures for inventories

Which of the following is a necessary precondition for a practitioner to undertake an assurance engagement to examine and report on an entity's internal control over financial reporting?

Select one:

The practitioner is a continuing auditor who previously has audited the entity's financial report.

Management agrees not to present the practitioner's report in a general-use document to shareholders.

The practitioner anticipates relying on the entity's internal control in a financial report audit.

Management presents its written assertion about the effectiveness of internal control

When restrictions are imposed by the client that significantly limit the auditor's ability to audit fixed assets (a material part of the balance sheet), the auditor generally should issue which of the following opinions?

Select one:

Unmodified with an Emphasis of Matter

Disclaimer

Adverse

Qualified

A written representation from a client's management which, among other matters, acknowledges responsibility for the fair presentation of the financial report, should be signed by the:

Select one:

chief financial officer and the chairman of the board of directors

chairman of the audit committee of the board of directors

chief executive officer, the chairman of the board of directors, and the client's solicitor

chief executive officer and the chief financial officer

Tests designed to detect credit sales made before the end of the year that have been recorded in the subsequent year provide assurance about management's assertion of:

Select one:

Accuracy

Classification

Occurrence

Cut-off

In determining the adequacy of the allowance for uncollectible accounts, the least reliance should be placed upon which of the following?

Select one:

An ageing schedule of past due accounts.

The credit manager's opinion

Ratios calculated showing the past relationship of accounts receivable to net credit sales

Collection experience of the client's collection agency

Which combination of the following three possibilities for improving the communication effectiveness has been adopted in the revised standard form auditors report?

I) Giving the auditors opinion on the financial report greater emphasis by placing it at the beginning of the auditors report.

II) Allowing for changing the presentation and positioning of generically-worded paragraphs explaining the respective responsibilities of management (or those charged with governance) and of the auditor to make them more useful.

III) The auditor providing additional information about key audit matters.

Select one:

II and III only

I and III only

All of I, II and III

I and II only

A representation letter issued by a client

Select one:

is essential for the preparation of the audit program

does not reduce the auditor's responsibility

reduces the auditor's responsibility only to the extent that it is relied upon

is a substitute for testing

The statement that nothing came to our attention which would indicate that these statements are not fairly presented expresses which of the following?

Select one:

Negative confirmation.

Reasonable assurance.

Limited assurance.

Disclaimer of an opinion.

In auditing accounts payable, an auditor's procedures most likely would focus primarily on management's assertion of

Select one:

existence

completeness

occurrence

rights and obligations

In the examination of which of the following general ledger accounts will tests of controls be particularly appropriate?

Select one:

Equipment

Bank charges

Loans payable

Sales

Which of the following is not an assurance engagement?

Select one:

A review of historical financial information

An audit of the effectiveness of internal control

A consulting engagement to help an organisation meet its tax obligations

A performance audit

An auditor most likely would make enquiries of production and sales personnel concerning possible obsolete or slow-moving inventory to support management's account balance assertion of

Select one:

existence

rights and obligations

completeness

accuracy, valuation and allocation

Following is a list of engagements that an assurance provider may undertake:

I) compiling financial reports

II) agreed-upon procedures

III) review of interim financial information

For which of these engagements is assurance not provided?

Select one:

I only

II only

III only

I and II only

Mango Ltd.s directors voted immediately after the year-end of 30 June 2020 to triple its advertising budget for the coming year and authorised a change in advertising agencies. What is the effect of this event on the 30 June 2020 financial report?

Select one:

Disclosure by means of supplemental, pro-forma financial information

Disclosure in a footnote to the financial report.

No disclosure or adjustment necessary

Adjustment of the financial report