Question 13. Which of the following would help reduce audit risk to an acceptably low level? (1) Increasing sample sizes for substantive tests of details (2) Increasing sample sizes for tests of controls (3) Obtaining external confirmations at or near the period end (4) Conducting more audit procedures at an interim date rather than at the period end (1) and (2) only (1) and (3) only (2) and (4) only (1), (3) and (4) Question 14. In which of the following circumstances would an external confirmation of accounts receivable balances be most likely to take the form of a negative confirmation request? The total trade receivables balance is immaterial A large number of small balances is involved and control risk is low The majority of customers are located overseas There is a tight timetable for the completion of the audit Question 15. The auditor of Dockett Co has discovered a fraud by a cashier involving petty cash. The amount involved is immaterial to the financial statements. To which of the following should the auditor report the fraud according to ISA 240 The Auditor's Responsibilities relating to Fraud in and Audit of Financial Statement? () The management of Dockett Co (1) Those charged with governance of Dockett Co (II) The shareholders of Dockett Co by including in the auditor's report Question 16. The auditor of Dent Co has concluded that two matters have been accounted for incorrectly in the financial statements but management refuse to make the necessary adjustments. The matters are 1. Inventory should be reduced in value by $10,000. 2. An accrual should be made for electricity expenses of $2,500. Dent Co's draft profit before tax is $30,000, What is the most appropriate audit opinion that should be expressed? Adverse opinion Qualified opinion Unmodified opinion Question 17. Which of the following statements relating to the determination of the size of a sample for a substantive procedures is correct? Increase the sample size if the population is to be stratified Increase the sample size if the measure of tolerable error for a specific audit objective is reduced Decrease the sample size if the expected size and frequency of errors is increased Decrease the sample size if the inherent risk is increased Question 18. What are the advantages for auditors of using standardised working papers? It ensures that essential procedures are not overlooked (11) It encourages the use of professional judgement (111) It allows easier delegation of tasks (iv) it is efficient 0.01) and (11 010).() and (1) 0.01) and (iv) ().Gill) and () Question 19.ISA 580 'written representations requires that management provides a written representation to the auditor confirming its responsibility for the preparation of the financial statements, and that all relevant information has been provided to the auditor. In the event that management refuses to provide this representation, what course of action is the auditor required to take? Resign from the audit with immediate effect Disclaim an opinion on the financial statements Request a Request a meeting with shareholders Issue a qualified opinion due to inability to obtain sufficient appropriate evidence Question 20. Which of the following are subsequent events in accordance with ISA 560 Subsequent Events? () Events during the reporting period that are material to the prior period's financial statements (1) All events that provide evidence of conditions that existed at the reporting date (1) Events occurring between the reporting date and the date of the auditor's report (iv) Facts that become known after the date of the auditor's report (1) and (1) () and (iv) (lt) and (1) (II) and (1)