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Questions on INTOSAI and ISSAI

1. Which of the following statements does NOT describe conduct required of an

auditor under ISSAI 30 the INTOSAI Code of Ethics?

A. Auditors should refuse gifts or gratuities which could be perceived as

influencing their independence and integrity.

B. Auditors should not disclose information obtained in the

auditing process to third parties under any circumstances.

C. Auditors should maintain their independence from political influence

in order to discharge their audit responsibilities in an impartial way.

D. Auditors should update and improve the skills required for the

discharge of their professional duties.

2. Which of the following duties is only likely to be carried out by an auditor of a

public sector body, and not by an auditor of a private company?

A. The identification of errors detected in the financial statements.

B. The review of the effectiveness of internal controls relating to the

financial statements.

C. The assessment of the impact of fraud and error on the financial

statements.

D. A review of reported performance indicators.

3. Which of the following is NOT a valid consequence of carrying out an interim

audit?

A. The overall amount of audit testing required will be reduced.

B. Audit testing can be better focused on key risk areas in the final audit.

C. Changes may be made to internal controls that will reduce

the level of control risk by the time of the final audit.

D. Where the results of interim controls testing are satisfactory, the

amount of substantive testing in the final audit can be reduced.


4. Which of the following statements about the external auditor’s responsibilities

with respect to fraud in financial statements is true?

A. An auditor’s suspicions of fraud in financial statements should always

be reported to the police.

B. An auditor’s suspicions of fraud in financial statements should always

be reported to the audit client’s senior management.

C. Audit planning is not intended to ensure that all fraud will be

detected.

D. All suspicions of fraud, whether deliberate or accidental, should be

investigated thoroughly.

5. Which of the following would NOT form part of the review carried out by a

senior member of the audit team or the audit engagement partner at the end

of the audit as part of the quality control process under ISSAI 1220?

A. Ensuring that the evidence obtained is sufficient and appropriate to

support the auditor’s report.

B. Consideration of whether there is a need to revise the nature, timing

and extent of work performed.

C. Consideration of whether appropriate consultations have taken place


and the resulting conclusions have been documented and

implemented.

D. Ensuring that all matters raised by the audit team have been

addressed by the client management in the final version of

the financial statements.

6. Maintaining independence and objectivity is vital to effective reporting of

internal audit findings. With this objective in mind, place the following four

options for internal audit reporting in order of preference from most to least

preferred. 

1) The operational manager whose service has been audited;


2) The Chief Executive of the organisation;

3) The Finance Director of the organisation;

4) The audit committee.

A. 1, 2, 3, 4.

B. 4, 3, 2, 1.

C. 4, 2, 3, 1.

D. 2, 4, 1, 3.

7. Which of the following would be an appropriate test for efficiency in a value

for money audit?

A. Benchmarking the prices paid for raw materials against those achieved

by organisations of a similar size and delivering similar services in the

same area.

B. Scrutinising management performance reports detailing the

achievement of key organisational objectives in a municipality.

C. Establishing and applying performance indicators based on

the percentage of available operating theatre hours used in a


public hospital.

D. Comparing annual salaries of teaching staff at various grades between

public colleges in the same geographical area.

8. Which of the following is NOT an internal audit objective when investigating a

suspected fraud?

A. To collect sufficient evidence to prove or disprove the suspicion of

fraud.

B. To provide evidence admissible for a disciplinary hearing and/or

criminal proceedings.

C. To minimise possible losses to the organisation, where a fraud is

suspected to be on-going.
D. To implement appropriate control measures to ensure that

similar frauds do not occur in the future.

9. Which of the following is NOT an advantage of data retrieval?

A. It is a non-destructive form of testing, that is it uses data without

changing it.

B. The output from such data retrieval is audit evidence; if a test discovers

faulty data, the auditor has proved that a weakness has affected the

data in the system.

C. It potentially represents long-term processing; data in the system may

have been there for the whole accounting period under review, and

potentially for much longer.

D. It reduces the intervention an auditor needs to make to

obtain useful audit information from the live system.

10. Which of the following are ALL identified by ISSAI 1315 as assertions about

classes of transactions and events for the period?

A. Occurrence; completeness; cut-off; valuation and allocation.

B. Existence; rights and obligations; completeness; classification.

C. Occurrence; completeness; accuracy; classification.


D. Classification and understandability; completeness; existence;

accuracy.

11. Which one of the following factors would lead an auditor to question the

appropriateness of audit evidence obtained?

A. When interviewed, a payroll manager states that receipts are always

issued to staff collecting expense payments in cash.

B. The validity of payroll payments has been tested by checking

that all staff on the client’s staff list have received a payment

for a particular period.

C. There is no link in the audit schedule between the risks of material

misstatement and the amount of audit testing undertaken.


D. Audit matters classified as highly material are not subject to more types

of audit testing than those classified as of average materiality.

12. You are testing the valuation of the trade payables balance in an audit client’s

statement of financial position. Which of the following tests would provide the

most reliable audit evidence?

A. Carry out a check of the outstanding balances to details of

invoices issued by the creditors in the payables ledger and

payments made to them by the client.

B. Ask the audit client to provide details of payments made to creditors in

the first four weeks after the accounting year-end.

C. Inspect the audit client’s records of the monthly reconciliation carried

out on the payables balance.

D. Inquire about the procedures for checking statements issued by

suppliers with the payables section manager.

13. Which of the following does NOT describe a category of sampling risk?

A. The sample selected is too small and therefore the auditor does not

have sufficient evidence to form a conclusion relating to the population.

B. The auditor selects a population that does not provide evidence to


support the audit objectives.

C. The auditor fails to spot errors in the sample of items that

they test.

D. The auditor selects a sample from an incomplete population.

14. On reviewing audit evidence obtained an auditor discovers errors and

omissions which they consider could reasonably be expected to influence the

economic decisions of users taken on the basis of the financial statements and

which are confined to specific elements, accounts or items of the financial

statements. Which of the following statements best describes these errors and

omissions?

A. They are material but not pervasive.


B. They are material and pervasive.

C. They are material and may be pervasive.

D. They are neither material nor pervasive.

15. A public hospital has failed to apply accounting standards correctly in that it

has not made provisions for cost overruns in respect of a building scheme

which commenced during the financial year. Which of the following responses

is LEAST likely to be chosen by the auditor?

A. Adverse opinion.

B. An unqualified audit opinion.

C. Qualified opinion on the basis of misstatement.

D. Disclaimer opinion.

16. Which one of the following statements about International Standards for

Supreme Audit Institutions (ISSAIs) and International Standard on Auditing

(ISAs) is correct?

A. Each ISSAI contains the full verbatim text of the related ISA

plus a supporting Practice Note (PN) which deals with

specific considerations relating to the audit of public sector

entities.
B. Each ISSAI is an adaptation of the relevant ISA to suit the

requirements of public audits.

C. Each ISSAI contains some general commentary on the differences

between audits of public and other entities.

D. The main purpose of auditing guidelines is ‘to provide INTOSAI

members with a comprehensive set of instructions for the audit of

financial statements of public sector entities.

17. Which of the following types of risk assessment procedures are NOT required

by ISSAI 1315?

A. Inquiries of management and others within the audited body.

B. Observation and inspection.


C. Risk indexation.

D. Analytical procedures.

18. Which of the following are ALL matters which must be considered when

evaluating the objectivity of the internal audit function under ISSAI 1610?

A. The status of the internal audit function within the organisation;

freedom to communicate with external audit; freedom from operating

responsibility; restrictions on activity; management action on

recommendations made.

B. The status of the internal audit function within the

organisation; internal audit reporting lines; freedom from

operating responsibility; restrictions on activity;

management action on recommendations made.

C. The status of the internal audit function within the organisation;

internal audit reporting lines; freedom to communicate with external

audit; restrictions on activity; management action on

recommendations made.

D. The status of the internal audit function within the organisation;

internal audit reporting lines; freedom from operating responsibility;


freedom to communicate with external audit; management action on

recommendations made.

19. According to ISSAI 1500 which of the following techniques can ALL be used to

carry out tests of control AND substantive procedures?

A. Inspection; observation; inquiry; external confirmation;

recalculation.

B. Inspection; observation; inquiry; reperformance; recalculation.

C. Analytical procedures; observation; inquiry; external confirmation;

recalculation.
D. Inspection; reperformance; inquiry; external confirmation; analytical

procedures.

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