The so-called 'deep-pockets' theory in relation to alleged audit failures, refers to:

		the auditor being the only party left with sufficient funds to indemnify the plaintiff's losses.
		the requirement to hold a public practice certificate.
		several widely reported business failures that resulted in significant loss to investors. b. the gap between the potential liability and the available insurance cover.

Which of these is not a primary element of a fiduciary relationship?

		the fiduciary has undertaken to act in the interests of another.
		the fiduciary is properly certified.
		the person to whom the fiduciary duty is owed is vulnerable to the fiduciary's abuse of his or her position.
		all of the above are primary elements of a fiduciary relationship

What is the term used when a failure on the part of a plaintiff to meet certain required standards of care is a factor leading to a loss by the plaintiff?

		reasonable foreseeability.
		contributory negligence.
		damages.

As a result of the rulings in Kingston Cotton Mill and the London and General Bank cases:

		overall audit quality improved.
		too literal an interpretation has retarded the development of improved auditing practices.
		auditors stopped designing procedures that would detect fraud.
		auditors became more vigilant in the detection of fraud.

The passage in the judgment by Cardozo, CJ in the Ultramares case, ' a liability in an indeterminate amount for an indeterminate time to an indeterminate class' refers to:

		an auditor's liability to exercise due care.
		an auditor's liability to the client.
		an auditor's liability to third parties.

An auditors statutory liability

Which of these would not be a basis for disciplinary action by the National Council of the CPA Australia?

An auditor failed to observe a proper standard of professional care and skill

An auditor has become insolvent under administration

An auditor has breached the By-Laws of the CPA Australia

An auditor has resigned due to a dispute with a client over accounting policies

7. Which of these is a type of safeguard against threats to auditor independence?

Safeguards created by the profession

Safeguards within the audit firms own systems

Safeguards within the assurance clients own firm

All of the above

The group which has the legal responsibility for removal of the auditor is:

		the board of directors
		management.
		the shareholders.
		the audit committee.

The words that best describes the relationship which should exist between the external auditor and the management of the client company are:

		adversarial relationship.
		mutual trust and respect.
		advocacy of management's position.
		skeptical vigilance.

An engagement letter contains express or implied terms of the contractual arrangement with the client. Which of the following is not one of those terms?

to exercise a reasonable degree of skill and care.

to report the duties of the auditor.

to be independent of the company.

to give an opinion on the truth and fairness of the financial statements of the company.

11.

S.294 of the Corporations Act requires a Directors' Declaration. Which of these is not an inclusion in that declaration?

		that the financial statements and notes comply with accounting standards.
		that the financial statements and notes are correct and accurate.
		that the financial statements and notes comply with the Corporations Act.
		all are included in the declaration.

The body that prepares the auditing standards that apply in Australia is:

		the AUASB.
		the ASIC.
		the AASB.
		the IFAC.

S. 308 of the Corporations Act requires certain implied conditions to be reported on in an audit report if there is any deficiency, or failure to comply. Which of the following is one of those implied conditions?

		whether the auditor has obtained all information, explanation and assistance required.
		whether an audit has been carried out.
		whether the auditor is independent of the company.
		whether the financial statements are properly drawn up so as to give a true and fair view of the company's financial affairs.