1. Which of the following is not a source of evidence?

(a) Financing structure

(b) Prior year financial statements

(c) Client website

(d) Prior year audit file

2. Which of the following statements is false in relation to materiality?

(a). Materiality can be assessed by size or nature

(b). A balance which is omitted from the financial statements cannot be material to the financial statement.

(c). Materiality is a matter of professional judgment for the auditor

(d). There is an inverse relationship between risk and materiality. If the audit risk is high, the materiality level set by the auditor will be lower.

3. Professional scepticism must be applied by auditors during the audit. Which of the following is not an application of professional scepticism?

(a). Critical evaluation of the evidence

(b). Open and questioning mind

(c). Dont believe anything the client tells you

(d). Being alert to fraud and error

4. Which of the following is not a purpose of planning the audit?

(a). To enable the audit to be performed efficiently and effectively

(b). To enable the appropriate audit team to be assigned

(c). To ensure the audit is as profitable as possible

(d). To ensure that the appropriate opinion will be issued when the audit is complete

5. If material misstatements as a result of fraud is detected during the audit how will this be communicated to the shareholders?

(a). The auditor must send a letter to the shareholders informing them of the fraud.

(b). The auditor must speak at the annual general meeting and specifically inform them.

(c.). The auditor must report it to the police and the police will notify the shareholders

(d). Through the audit report as the opinion will be modified.