q1.

Complete statement: If the risk of material misstatement for a client is low, then

A.The detection risk will be set as low and more substantive testing will be required.

B.The detection risk will be set as high and less substantive testing will be required.

C.The detection risk will be set as high and more substantive testing will be required.

D.The detection risk will be set as low and less substantive testing will be required.

q2.

Which of the following are part of the risk response phase of an audit?

A.Risk and materiality assessment

B.Understanding the client

C.Substantive testing

D.Tests of controls

q3.

Verbal evidence is useful for which of the following audit objectives:

A.To verify that all cash on the balance sheet is held by the client.

B.To corroborate the results of inspecting documentation.

C.To gain an understanding of the client's internal controls.

D.To corroborate the results of analytical procedures.

q4.

Given a desired audit risk level, an increase in the assessed level of control risk means:

A.The auditor should decrease detection risk.

B.The auditor should decrease inherent risk.

C.The auditor should increase detection risk.

D.The auditor should increase inherent risk.

q5.

If inherent risk is medium and control risk is low, then:

A.Detection risk is medium.

B.Detection risk is high.

C.Detection risk is low.

D.The acceptable level of audit risk is high.

q6.

Which of the following statements about the existence assertion relating to inventory are correct?

A.It tests whether the entity has right of ownership of inventory held

B.This assertion is most important when there is a risk of overstatement of inventory

C.This assertion is important where there is inventory that is held but not owned by the entity

D.It tests whether all inventory that exists has been recorded

q7.

Which is the control activity where the responsibility for executing a transaction, recording the transaction and maintaining custody of the assets resulting from the transaction are assigned to different individuals or departments?

A.Independent checks.

B.Physical controls.

C.Segregation of duties.

D.Performance reviews.

q8.

Which one of the following correctly describes the two types of external confirmation request for trade receivables?

A.Positive: only reply if balances agree; negative: only reply if balances do not agree.

B.Positive: reply irrespective of agreement; negative: only reply if balances do not agree.

C.Positive: reply only if balances disagree; negative; reply irrespective of agreement

D.Positive: only reply if balances do not agree; negative: only reply if balances agree.

q9.

What is defined as a process, effected by an entity's board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance?

A.External audit.

B.Corporate governance

C.Internal control.

D.Audit sampling.

q10.

Which one of the following is NOT a main reason why auditors can only provide reasonable assurance for a financial report audit?

A.Judgement on materiality.

B.Sampling error.

C.Audit fees are too low.

D.Fraud is difficult to detect