Topic 1

1. Examples of instances where a specific financial reporting standards is applicable to a

certain industry include:
I. PAS 41 Agriculture for companies operating in the agriculture sector
II.PFRS 7 Financial Instruments: Disclosure for companies operating in the banking
sector

Either I or II
2. Which of the following are considered important or relevant factors when planning an
audit in specialized industries?

all of the above

3. Consider the following statements related to auditing in specialized industries: Statement
I: Smaller audit firms are likely to meet the competence requirement for almost any type
of industry.
Statement II: Larger audit firms either already possess necessary skill and competence
through having existing clients in the particular industry or have the resource available to
bring in experts and/or provide any necessary staff training.
Only statement I is not true
4. Consider the following statements related to auditing in specialized industries: Statement
I: Code of Ethics for Professional Accountants requires, amongst any acceptance of a
new client being in line with ethical principles, that the auditor should have an
appropriate understanding of the nature and complexity of the client's business, but not
necessarily the knowledge of relevant industrial regulatory or reporting requirements.
Statement II: PSA 220 (Revised) Quality Management for an Audit of Financial
Statements requires the auditor to assess whether there are sufficient and appropriate
resources to perform the engagement and that there is the 'appropriate competence and
capabilities.'

Only statement II is not false

5. Consider the following statements related to auditing in specialized industries: Statement
I: Identification of the risk of material misstatement in a specialized industry should be
approached in the same was as in any other audit-by obtaining appropriate
understanding of the business and its environment.
Statement II: To assist audit team members assigned to a specialized industry client, the
audit firm is likely to have additional resources available.

Both statements are correct

6. What makes industries specialized is that they are likely to have:

I. specific financial reporting standards applicable to them,

II.distinct accounting policies which have been developed to account for specialized
transactions and balances which are based on the normally-applied financial reporting
standards
 Either I or II
7. Examples of specialized industries that require specific or unique application of
accounting standards include:
I.valuation of extracted oil in line with PAS 2 Inventories
II.valuation of apple trees, a bearer plant, under PAS 41 Agriculture
Only item I is correct
8. The following are the additional or extra factors to consider by an audit team when
auditing specialized industries, except:

Quality of the applicable standards

9. The following are the following relevant standards applicable when auditing in
specialized industries, which is the exception?

PSA 800 (Revised and Redrafted) Special Considerations-Audits of Financial

Statements Prepared in Accordance with Special Purpose Frameworks
10. Which of the following is/are true regarding auditor's reliance on expert related to
auditing in specialized industries?

The audit firm must adhere to the requirements and principles of PSA 620, Using the
Work of an Auditor's Expert which deals with matters including the evaluation of the
objectivity, competence and capabilities of the auditor's expert, determining and
communicating the scope and objectives of their work, and assessing their findings.
11.