Which of the following is a test of control in the audit of tangible non-current assets?

Review authorisation of the depreciation rates used

Walk-through the process for authorising capital expenditure

Physically inspect a sample of tangible non-current assets

Reperform a sample of depreciation calculations

Which of the following is LEAST likely to be used as a benchmark for determining a threshold level of materiality?

1% of revenue

10% of profit before tax

2% of net assets

2% of total assets

As part of the audit of tangible non-current assets, the auditor of Lowe Co has performed an audit procedure which involved the physical inspection of a sample of the company's fixtures and fittings for signs of impairment. The audit procedure provides evidence on which of the following assertions? (i) Existence (ii) Rights and obligations (iii) Valuation

(i) only

(i) and (ii)

(ii) and (iii)

(i) and (iii)

Cobble Co is your audit client, and you are drafting the audit opinion on its financial statements for the year ended 31 December 20X9. You have requested a written representation from management regarding the potential outcome of a court case, but management has refused to provide the representation. The court case relates to damages claimed against Cobble Co of $350,000, for which a provision has been made, based on lawyer's correspondence. This is material to Cobble's profit before tax. What is the most likely impact of this on the auditor's report?

Adverse opinion

Qualified due to inability to obtain sufficient appropriate evidence

Disclaimer of opinion

Qualified due to material misstatement

At the planning stage of an audit for a new client, the level of materiality needs to be set. Which of the following pieces of information will allow the auditor to increase the level of materiality?

The company operates in a highly competitive environment.

The company's management structure has changed during the year.

The company has a stable structure with a strong internal control environment.

The company does not have an internal audit function.

Which of the following would be a test of control in the audit of trade receivables?

Reviewing an aged receivables list obtained from the audit client to identify potential irrecoverable debts

A walk-through test of the sales system

Agreeing a sample of trade receivables balances to cash received after the year end

Confirming that a sample of discounts offered to credit customers have been approved

Weedy Co is your audit client, and you are drafting the audit opinion on its financial statements. You have concluded that revenue is overstated by $50,000, due to a fraud which was discovered operating during the year. Management has refused to adjust for the error. The materiality level has been set at $175,000. What is the most likely impact of this on the auditor's opinion?

Adverse opinion

Unmodified opinion

Disclaimer of opinion

Qualified due to material misstatement

Which of the following statements regarding inventory counts is correct?

Where inventory is material, the auditor is required to attend the inventory count unless this is impracticable

When attending an inventory count, the auditor only observes the counting and does not perform any testing

There is no legal requirement for an annual inventory count to take place

Failing to perform an inventory count at the year end, when inventory is managed using a perpetual system, leads to a high risk of material misstatement of inventory

Which of the following statements about using the work of internal auditors is NOT correct?

The external auditor should consider the effectiveness of internal audit even if not planning to place any reliance on it

The external auditor should direct, supervise and review any work carried out by internal audit on behalf of the external auditor

The external auditor should refer to any reliance placed on the work of internal audit in the auditor's report

Internal auditors cannot provide direct assistance to perform procedures that involve making significant judgments

Max Co is a small owner-managed company with simple transaction processes and procedures. Which of the following would be most suitable for documenting the auditor's understanding of Max Co's internal control?

Internal control questionnaires

Flowcharts

Narrative notes

Internal control evaluations

The auditor of Margo Co compares the amounts disclosed for each category of expense in the notes to the financial statements against the amounts disclosed in the prior year. What type of audit procedure is this?

A substantive analytical procedure

Trend analysis

A test of controls

A walk-through test

The following are examples of documents related to an audit. Which is not regulated by an ISA?

External confirmation of a trade receivables balance

An audit strategy

An audit proposal (tender document)

A summary of matters to discuss with those charged with governance

An error that arises from an isolated event and is therefore not representative of errors in the population as a whole is which type of error, according to ISA 530 "audit sampling"?

Tolerable error

Anomalous error

Sampling error

Stratification error

Which of the following statements about the use of an Emphasis of Matter paragraph in an auditor's report are correct? (i) It refers to a specific note to the financial statements. (ii) It is used to highlight matters that have been accounted for correctly. (iii) Its placement in the report is a matter of auditor judgement. (iv) It is used to explain a qualified opinion.

(ii) and (iv)

(i), (ii) and (iv)

(i) and (iii)

(i), (ii) and (iii)