While performing services for their clients, auditors, as professionals, have a duty to provide a level of care which is

a) free from judgement errors.

b) superior to that of other auditors

c) reasonable.

d) greater than the average auditor.

Q 2. Which of the following is NOT one of the five classes of transactions in the sales and collection cycle?

a) cash receipts

b) sales on accounts

c) depreciation allowance

d) cash sales

Q 3. The auditor has a responsibility to review transactions and activities occurring after the balance sheet date to determine whether anything occurred that might affect the valuation or disclosure of the statements being audited. The auditing procedures required to verify these transactions are commonly referred to as the review for:

a) late unusual occurrences.

b) subsequent events

c) contingent liabilities

d) subsequent years transactions

Q 4. Why does a well-controlled IT system offer greater potential for reducing misstatements?

a) Because computers reduce the human error that is likely to occur in traditional manual environments

b) Because computers process information consistently

c) Because computers handle tremendous volumes of complex business transactions effectively

d) All the above

Q 5. Professional scepticism means the auditor:

a) makes a critical assessment of the audit evidence

b) has a questioning mind

c) both A and B

d) none of the above.

Q 6. An audit strategy will include increased reliance on test of controls when:

a) Inherent risk and control risk are high

b) Inherent risk and control risk are low

c) The auditor believes there is a high risk that their clients internal controls will not prevent or detect material misstatements.

d) None of the above

Q 7. ASA 570 requires the auditor to evaluate whether there is a substantial doubt about a client's ability to continue as a going concern. One of the most important types of evidence to assess the going concern question is:

a) analytical procedures

b) enquiries of its legal counsel

c) physical stocktake count

d) statistical sampling procedures

Q 8. Sampling risk (sampling error) is an inherent part of sampling which results from:

a) testing less than the entire population.

b) weaknesses in client's internal control system.

c) inappropriate audit procedures.

d) failure to recognise exceptions.

Q 9. Which of the following is not an auditing procedure?

a) Vouching

b) Analytical procedures

c) Disclosure.

d) Physical inspection

Q 10. The appropriate date for the audit report is the one on which the:

a) auditor signs the report.

b) auditor and client entered into a contract.

c) client's financial year ended.

d) auditor types and delivers the report to client.