PLEASE TYPE YOUR ANSWERS IMMEDIATELY FOLLOWING EACH QUESTION none or e-boc Part A Multiple Choice Questions 10 Marks Q1 Which of the following statements best describes internal auditing: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a an activity to reduce risk b an activity located within an entity, primarily to detect fraud. an independent and objective assurance activity within an entity. d an accounting function located within an entity. Unanswered Save Q2 The least costly form of audit testing is usually: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a analytical procedures. b tests of controls. tests of detail of transactions. d tests of detail of balances, Unanswered Q3 auditors for Q3 Save Internal control has been recognised as important to management and external auditors for many years. Which of the following is likely to be cited as a major factor contributing to this importance? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a The operations of the business entity have become so unwieldy that management must rely on the chief financial officer to effectively control operations. b Checks and reviews protect against employee collusion and reduce the chance of employee fraud. Internal control procedures must be utilised to maintain accurate accounting records. d It is impractical for auditors to audit most companies within economic fee limitations without relying client's system of internal controls. Unanswered 04 Which of the following statements is incorrect?: The external auditor: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a may coordinate their audit work with that of the internal auditor. b may use the internal auditors to provide direct assistance with some types of audit work. C may delegate some of the substantive testing to the internal auditor. d none of the statements is incorrect, i.e. all are correct statements. Unanswered Q5 The following are all part of which audit stage? setting materiality levels, assessing audit risk and its components and obtaining an understanding of the internal control structure Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. Audit planning. b Client evaluation. C Issuing the audit report. d Collecting audit evidence. Unanswered Q6 Which of the following are characteristics of an effective audit committee? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a improves the credibility and objectivity of the accountability process. b assists the directors in discharging their responsibilities with due care, diligence and skill. fosters an ethical culture throughout the organisation. d all of the above. Unanswered Q7 Unanswered Q7 Save In regards to fraud, errors, irregularities and illegal acts, the auditor should plan the audit with an attitude of: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a adversarial pursuit. b cautious mistrust. seasoned pessimism. d professional scepticism. ad Q8 Which of the following statements about auditor independence is true?: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a statutory law does not recognise the need for audit independence. b statutory law recognises the need for audit independence. all auditor appointments must be made by the shareholders in the AGM. d the auditor has no right to be heard at the AGM. Unanswered Q9 Save When an auditor audits small clients it is often more efficient to adopt the predominantly substantive approach. Which of the following is a reason for this? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a They may not have adequate resources to implement all appropriate controls. b Controls may not be effective. The size of the entity may make it inefficient for the auditor to rely on these controls. d All of the above. Unanswered d All of the above. Unanswered Save Q10 What is the key benefit to management of there being a strong internal audit function? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a It provides assurance to management that the organisation is complying with its legal requirements. b External audit costs are reduced. C It provides assurance to management that fraudulent activities will be detected. d It aids management in the areas of risk management, control and governance processes. Unanswered