1. Which ONE of the following best describes the concept of assurance?

Assurance
refers to
A.An assurance firm’s high level of satisfaction as to the reliability of an assertion
being made by one party for the use of another party
B.A user’s satisfaction as to the reliability of an assertion being made by another
party
C.An assurance firm’s satisfaction as to the reliability of an assertion being made
by one party for the use of another party
D.An assurance firm’s limited level of satisfaction as to the reliability of an
assertion being made by one party for the use of another party
2. Which THREE of the following are benefits of an assurance report on financial
information?
A.An assurance report enhances the credibility of the information being reported
on
B.An assurance report reduces the risk of management bias in the information
being reported on
C.An assurance report draws the attention of the user to deficiencies in the
information being reported on
D.An assurance report attests to the correctness of the information being reported
on.
3. Audit risk can be split into three components: Inherent risk, control risk and
detection risk. For each of the following examples, select one example which
illustrated for control risk
A.The organization is seeking to raise finance for a new venture
B.The auditor will be using samples in testing
C.Management fails to meet up regularly for board meetings
D.Inventory balance is the largest balance in the account
4. Which TWO of the following statements correctly describe the auditors'
responsibilities in accordance with ISA 240 The auditor's responsibilities relating
to fraud in an audit of financial statements?
A.The auditor performs the audit with the aim of deterring fraud
B.The auditor must only obtain evidence regarding the risks of material
misstatement due to error
C.The auditor is responsible for obtaining reasonable assurance that the financial
statements are free from material misstatement whether caused by fraud or error
D.The auditor is not responsible for the prevention and detection of fraud and error
5. Application controls relate to procedures used to initiate, record, process and
report transactions and other financial data. Which two of the following are
application controls?
A.Complete testing procedures
B.Approval of changes by computer users and management
C.Document counts
D.Câu trả lời thứ 4
6. There are two main approaches to a code of professional ethics: rules-based
ethical code and a principles-based code. Which TWO of the following statements
are true?
A.Ethical guidance from ICAEW is in the form of rules rather than principles
B.Principles-based guidance may permit multiple correct responses in a given
situation
C.Rules-based codes offer a more straightforward ethical framework, as they cover
specific situations
D.A rules-based code requires a professional accountant to identify, evaluate and
address threats to compliance with fundamental ethical principles
7. Which THREE of the following threats to independence might arise on the
current audit when an audit team member is involved in employment negotiations
with an audit client during the course of the audit?
A.Self-interest
B.Self-review
C.Intimidation
D.Familiarity
8. When gaining an understanding of the investment operations of an audit client
which ONE of the following matters would an auditor need to consider?
A.Products or services and markets of the client's business
B.Acquisitions or disposals of the client's business activities
C.Leasing of property, plant or equipment for use in the client's business
D.Câu trả lời thứ 4
9. The auditor of Blue Co has set performance materiality at $200,000. Which
ONE of the following could be the materiality level set for the financial statements
as a whole for Blue Co?
A.$210,000
B.$200,000
C.$100,000
D.$120,000
10. Which TWO of the following are true in respect of related party transactions?
A.Related party transactions must be completely disclosed in the financial
statements
B.Related party transactions tend to be low-risk to the auditor
C.There may be a significant control risk in relation to related party transactions
D.Disclosure of related party transactions is unlikely to be material to the financial
statements
11. The following is an example of internal control which operates at Castle plc:
“The finance controller conducts a monthly review of authorization controls over
dispatch notes”. Select the type of control activity which is illustrated
A.Performance review
B.Information processing
C.Physical control
D.Segregation of duties
12. Which THREE of the following should an auditor consider if there is a threat to
independence?
A.Making disclosures to the client
B.Making disclosures to ICAEW
C.Applying specific safeguards
D.Withdrawing from the engagement
13. A private company has requested that its auditor prepare a valuation report on a
prospective acquisition target in order to help it obtain finance for the acquisition
from its bank. Which TWO of the following threats may arise if the auditor agrees
to take on this assignment?
A.Self-review threat
B.Familiarity threat
C.Advocacy threat
D.Self-interest threat
14. During the planning stages of the final audit, the auditor believes that the
probability of giving an inappropriate audit opinion is too high. Which ONE of the
following should the auditor amend the audit plan to resolve this issue?
A.Increase the materiality level
B.Decrease the inherent risk
C.Decrease the control risk
D.Decrease the detection risk
15. Which THREE of the following are benefits of an engagement letter in respect
of assurance services?
A.Clearly defines the extent of the assurance provider’s responsibilities
B.Confirms the scope of the engagement
C.Provides written confirmation of the acceptance of the engagemen
D.Certifies the assurance provider’s opinion
16. Which THREE of the following describe aspects of the expectations gap with
respect to the external audit?
A.Users do not understand the meaning of the audit opinion
B.Users are not aware of the limitations of the audit process
C.Users do not appreciate that reasonable assurance is a low level of assurance
D.Users do not understand what the audit process involves.
17. Which THREE of the following are benefits of assurance work
A.Assurance may act as a deterrent to error of fraud
B.An independent, professional opinion
C.Testing as a result of sampling is cheaper for the responsible party
D.Additional confidence given to other related parties
18. Which of the following is the most appropriate definition of the external audit?
A.The external audit is performed by management => (sai) to identify areas of
deficiency within a company and to make recommendations to mitigate those
deficiencies.
B.The external audit is an exercise carried out by auditors in order to give an
opinion on whether the financial statements of a company are materially misstated
C.The external audit is an exercise carried out in order to give an opinion on the
effectiveness of a company's internal control system.
D.The external audit provides negative assurance on the truth and fairness of a
company's financial statements.
19. ATC LLP, an assurance firm, has the following 4 clients among its client
portfolio. For below clients, select the client which has low inherent risk.
A.Blue Ltd has lack of finance director
B.White Ltd has few unusual transactions.
C.Grey Ltd is planning to list on the local stock exchange within the next two
years.
D.Green Ltd is currently facing financial difficulties and is seeking alternative
forms of finance.
20. Which ONE of the following procedures should be carried out before the audit
firm has decided to accept appointment as auditor?
A.Set up and submit a letter of engagement to the directors of the company
B.Ensure that a resolution has been passed at the general meeting to appoint the
new auditors
C.Ensure that the outgoing auditors’ removal/resignation has been properly
conducted
D.Communicate with the predecessor auditors to discover any reasons they should
not accept appointment.
21. Which THREE of the following statements relating to engagement letter are
false?
A.The engagement letter should be sent before acceptance of appointment
B.The engagement letter should be sent after the appointment and after the
commencement of the audit
C.The engagement letter should be sent after the appointment but before the
commencement of the audit
D.The engagement letter should be sent after the commencement of the audit but
before the signing of the auditor’s report
22. Audit risk can be split into three components: Inherent risk, control risk and
detection risk. For each of the following examples, select one example which
illustrated for inherent risk
A.Câu trả lời thứ 1
B.Directors’ pay is related to company profitability
C.Senior management regularly override the system of controls
D.The organization has a high turnover of staff in the accounts department
23. The auditor of Grey Co has set overall materiality level at $200,000. Which
ONE of the following could be the performance materiality set for the financial
statements for Grey Co?
A.$220,000
B.$250,000
C.$200,000
D.$100,000
24. Linda has obtained a list of items which make up the cash and cash equivalents
balance (£3,556) in the financial statements of Baker Ltd. Materiality has been set
at £3,800. Which ONE of the following items should not be tested by Linda?
A.Current account balance (overdrawn) £5,600
B.Petty cash float £750
C.Special directors’ cash account £794
D.Special managers’ cash account £500
25. Which THREE of the following are assertions used by the auditor about
account balances at the period end?
A.Occurrence
B.Existence
C.Accuracy, valuation and allocation
D.Completeness
26. ISA 705 Modification to the opinion in the independent auditor's report
identifies three possible types of modification. In which of the following
circumstances would a disclaimer of opinion be issued?
A.The auditor has not been able to obtain sufficient appropriate audit evidence on
which to base an opinion but has concluded that the possible effects of any
undetected misstatements could be material but not pervasive
B.The auditor concludes that the financial statements include misstatements which
are both material and pervasive to the financial statements
C.The auditor concludes that the financial statements include misstatements which
are material but not pervasive to the financial statements
D.The auditor has not been able to obtain sufficient appropriate audit evidence on
which to base an opinion and has concluded that the possible effects of any
undetected misstatements could be both material and pervasive.
27. Most entities make use of IT systems for financial reporting and operational
purposes. Controls operating in an IT environment can be split into general
controls and application controls. Which ONE of the following is an application
control?
A.Use of passwords
B.Testing of new systems
C.Disaster recovery plan
D.Authorisation of data for input.
28. The following are examples of computer controls which operate in the payroll
system at Hana Ltd. Which TWO of the following examples are the types of
computer control which illustrate for application control?
A.Manual checks to ensure that timesheets are authorised before details are
processed
B.Approval of new applications by a sample of users and by magagement
C.Range checks on payroll processing.
D.Password protection limiting access to data
29. Which ONE of the following methods of recording an accounting and controls
system is a series of questions used to determine whether controls exist which meet
specific control objectives?
A.Narrative notes
B.Questionnaire
C.Diagrams
D.Flowcharts
30. ISA 315 Identifying and assessing the risks of material misstatement through
understanding the entity and its environment sets out the five components of
internal control. Which THREE of the following are set out as a component of
internal control within ISA 315?
A.Monitoring of controls
B.Control activities
C.The information system relevant to financial reporting
D.Human resource policies and practices
1. Which TWO of the following are benefits of an engagement letter in respect of
assurance services?
A. Facilitate review of work
B. Defines the extent of the assurance provider’s responsibilities
C. Ensure that the audit is properly organized and managed
D. Provides written confirmation of the acceptance of the engagement
2. Audit risk can be split into three components: Inherent risk, control risk and
detection risk. For each of the following examples, select one example which
illustrated for control risk
A. The organization is seeking to raise finance for a new venture
B. The auditor will be using samples in testing
C. Management fails to meet up regularly for board meetings
D. Inventory balance is the largest balance in the account
3. Which TWO of the following statements correctly describe the auditors'
responsibilities in accordance with ISA 240 The auditor's responsibilities relating
to fraud in an audit of financial statements?
A. The auditor performs the audit with the aim of deterring fraud
B. The auditor must only obtain evidence regarding the risks of material
misstatement due to error
C. The auditor is responsible for obtaining reasonable assurance that the financial
statements are free from material misstatement whether caused by fraud or error
D. The auditor is not responsible for the prevention and detection of fraud and
error
4. The auditor of Blue Co has identified an unexpectedly high deviation rate when
carrying out tests of control on a sample of sales invoices. Which TWO of the
following would be a satisfactory course of action?
A. Ignore the deviations as they only affect some of the items tested
B. Extend the sample size
C. Replace the sample
D. Perform alternative substantive procedure
5. Which of the following is not a benefit of establishing an audit committee?
A. Reduced external audit fees, as the presence of the audit committee reduces
audit risk and consequently, the amount of audit procedures required
B. Greater external audit independence, as the audit committee can be responsible
for appointing the external auditors
C. Reduced opportunity of fraud, as the audit committee can advise the executive
directors on managing the risks in the financial reporting process
D. Monitor and review the effectiveness the effectiveness of the company’s
internal audit function.
6. Callinicos LLP is a 12-partner assurance firm which has been asked to consider
taking on the audit of the financial statements of two separate companies. The
following potential issues have been identified before acceptance of any such
appointments. Which ONE of the following clients must not be accepted?
A. Cliff plc, a listed company which will also require you to provide routine
bookkeeping work
B. Luxemburg Ltd, which will also require Callinicos LLP to provide a valuation
service in relation to some immaterial financial assets
C. Blue Ltd, which will also require Callinicos LLP to provide a training service in
relation to accounting standards
D. White Ltd, which will also require Callinicos LLP to provide a corporate
governance consulting services
7. The auditor of Blue Co has set performance materiality at $200,000. Which
ONE of the following could be the materiality level set for the financial statements
as a whole for Blue Co?
A. $210,000
B. $200,000
C. $100,000
D. $120,000
8. Which TWO of the following are true in respect of related party transactions?
A. Related party transactions must be completely disclosed in the financial
statements
B. Related party transactions tend to be low-risk to the auditor
C. There may be a significant control risk in relation to related party transactions
D. Disclosure of related party transactions is unlikely to be material to the financial
statements
9. The auditor of Blue Co has concluded that the use of the going concern
assumption is appropriate and that the material uncertainty has been adequately
disclosed. What is the impact of this conclusion on the auditor's report?
A. Qualified opinion
B. Adverse opinion
C. Unmodified opinion without an emphasis of matter paragraph
D. Unmodified opinion with an emphasis on the matter paragraph.
10. ISA 705 Modification to the opinion in the independent auditor's report
identifies three possible types of modification. In which of the following
circumstances would a disclaimer of opinion be issued?
A. The auditor has not been able to obtain sufficient appropriate audit evidence on
which to base an opinion but has concluded that the possible effects of any
undetected misstatements could be material but not pervasive.
B. The auditor concludes that the financial statements include misstatements which
are both material and pervasive to the financial statements
C. The auditor concludes that the financial statements include misstatements which
are material but not pervasive to the financial statements
D. The auditor has not been able to obtain sufficient appropriate audit evidence on
which to base an opinion and has concluded that the possible effects of any
undetected misstatements could be both material and pervasive
11. Which of the following statements best reflects the auditor's duty of
confidentiality?
A. Auditors may disclose any matters in relation to criminal activities to the police
or taxation authorities, if requested to do so by the police or a tax inspector
B. Auditors may only disclose matters to third parties without their client's consent
if the public interest or national security is involved
C. Auditors may disclose matters to third parties without their client's consent if it
is in the public interest, and they must do so if there is a statutory duty to do so.
D. Auditors must never, under any circumstances, disclose any matters of which
they become aware during the course of the audit to third parties, without the
permission of the client.
12. Which THREE of the following statements in respect of risk are true?
A. Auditors can impact on inherent risk to bring audit risk to an acceptable audit
risk
B. Auditors cannot impact on inherent risk to bring audit risk to an acceptable audit
risk
C. Identifying business risks is part of the company's risk assessment processes
D. Inherent and control risks are components of audit risk.
13. In the financial statement audit of independent auditor, which TWO of the
following would ordinarily be contained in the overall audit strategy?
A. The results of audit risk assessment
B. The contract between the audit firm and the client
C. List of staff to be involved with the audit
D. Detailed plan of audit procedures to be carried out
14. Which THREE of the following would be found in the overall audit strategy
document?
A. Timetable
B. Calculation of preliminary materiality thresholds
C. Detailed plan of audit procedures
D. Budget and fee
15. According to the Companies Act 2006 in UK, which THREE of the following
criteria can be used to decide the audit exemption?
A. Turnover <£10.2millions
B. Total assets <£5.1millions
C. Turnover <£10.1millions
D. Number of employees<50
16. According to Company Act 2006 in UK, which THREE of the following
statements are true
A. In UK, Financial Reporting Council (FRC) is responsible for issuing auditing
standards and guidance for auditing
B. An individual or firm is eligible for appointment as statutory auditor if the
individual or firm is a member of a recognized supervisory
C. Auditors in the UK are subject to both legal and professional requirements
D. A person who is an officer may act as a statutory auditor of a company
17. Which TWO of the following are benefits of an engagement letter in respect of
assurance services?
A. Câu trả lời thứ 1
B. Ensure that the audit is properly organized and managed
C. Ensure appropriate attention is devoted to important areas of the audit
D. Provides written confirmation of the acceptance of the engagement
18. Which ONE of the following might indicate that an assurance client could have
lower than normal inherent or control risk?
A. Lots of transactions with related parties
B. Significant unusual transactions
C. Conservative accounting policies (chính sách kiểm toán thận trong => rủi ro
tiềm tàng ít)
D. Evidence of questionable integrity, doubtful accounting policies
19. Which ONE of the following procedures should be carried out before the audit
firm has decided to accept appointment as auditor?
A. Set up and submit a letter of engagement to the directors of the company
B. Ensure that a resolution has been passed at the general meeting to appoint the
new auditors
C. Ensure that the outgoing auditors’ removal/resignation has been properly
conducted
D. Communicate with the predecessor auditors to discover any reasons they should
not accept appointment.
20. Which three of the following constitute analytical procedures?
A. Câu trả lời thứ 1
B. Consideration of whether a balance has been classified appropriately
C. Consideration of comparable information for prior periods
D. Consideration of relationships between elements of financial information that
are expected to conform to a predicted pattern
21. Which TWO of the following are not the purposes of planning the audit?
A. To identify clearly the management’s responsibility
B. To facilitate delegation of work to audit team members
C. To determine the scope of the engagement
D. To ensure appropriate attention is devoted to different areas of the audit
22. Which THREE of the following statements are true with respect to analytical
procedures?
A. Analytical procedures are compulsory procedures in the planning phase of the
financial statement audit.
B. Analytical procedures can be used throughout the audit
C. Analytical procedures must be used at the review stage of the audit.
D. Analytical procedures can be used in testing of controls.
23. The auditor of Grey Co has set overall materiality level at $200,000. Which
ONE of the following could be the performance materiality set for the financial
statements for Grey Co?
A. $220,000
B. $250,000
C. $200,000
D. $100,000
24. The financial statements of Green Co include a receivables balance of $30,000
which the auditors do not believe will be recovered. Materiality has been set at
$90,000. There are no other unadjusted misstatements. What form of audit opinion
would be issued by the auditor?
A. Qualified opinion due to overstatement of receivables
B. Adverse opinion
C. Disclaimer of opinion
D. Unmodified opinion.
25. Which TWO of the following describe manifestations of the expectations gap?
A. Users discovering that the directors refuse to cooperate in providing the auditor
with evidence he requests
B. Users blaming the auditors for a fraud discovered in a company subsequent to
an audit
C. Users believing that the amounts in the financial statements are stated precisely
D. Users believing that the audit firm must not sell other services to the audited
entity
26. The following is example of internal control which operates at Blue plc. Select
the type of control activity which is illustrated in the following example: “There
are two keys to the locked finance department safe: one held by the finance
director and the other by the managing director”
A. Authorisation
B. Information processing
C. Physical control.
D. Segregation of duties
27. Most entities make use of IT systems for financial reporting and operational
purposes. Controls operating in an IT environment can be split into general
controls and application controls. Which ONE of the following is an application
control?
A. Use of passwords
B. Testing of new systems
C. Disaster recovery plan
D. Authorisation of data for input.
1. Which ONE of the following statements best describes the evidence obtained
and the opinion given in a reasonable assurance engagement?
A. Sufficient appropriate evidence and a negatively worded opinion
B. Sufficient appropriate evidence and a positively worded opinion
C. A lower level of evidence and a negatively worded opinion
D. A lower level of evidence and a positively worded opinion
2. Which THREE of the following are benefits of an assurance report on financial
information?
A. An assurance report enhances the credibility of the information being reported
on
B. An assurance report reduces the risk of management bias in the information
being reported on
C. An assurance report draws the attention of the user to deficiencies in the
information being reported on
D. An assurance report attests to the correctness of the information being reported
on.
3. Which THREE of the following procedures should be carried out after the audit
firm has decided to accept appointment as auditor?
A. Set up and submit a letter of engagement to the directors of the company
B. Ensure that a resolution has been passed at the general meeting to appoint the
new auditors
C. Communicate with the predecessor auditors to discover any reasons they should
not accept appointment
D. Ensure that the outgoing auditors’ removal/resignation has been properly
conducted
4. Which ONE of the following correctly describes the period for which client
identification documents must be kept under money laundering regulations?
A. For a minimum of five years and until six years have elapsed since the
relationship with the client has ceased
B. For a minimum of six years and until five years have elapsed since the
relationship with the client has ceased
C. For a minimum of seven years and until five years have elapsed since the
relationship with the client has ceased
D. For a minimum of five years and until five years have elapsed since the
relationship with the client has ceased
5. Which ONE of the following statements is correct with regard to the relationship
between the audit plan and the audit strategy for an external audit engagement?
A. The audit strategy should be established before the audit plan is developed
B. The audit plan should be developed before the audit strategy is established
C. The audit plan and the audit strategy should be established and developed at the
same time.
D. The overall audit strategy should be more detailed than the audit plan.
6. The following are examples of computer controls which operate in the payroll
system at Hana Ltd. Which TWO of the following examples are the types of
computer control which illustrate application control?
A. Manual checks to ensure that timesheets are authorized before details are
processed
B. Approval of new applications by a sample of users and by magagement
C. Range checks on payroll processing
D. Password protection limiting access to data
7. The following is example of internal control which operates at Navy plc: “The
finance director compares monthly expenditure on consumables to budgeted
expenditure”. Select the type of control activity which is illustrated.
A. Performance review
B. Information processing
C. Physical control
D. Segregation of duties
8. Which TWO of the following are limitations of the provision of assurance?
Assurance work is carried out by people independent of the entity
A. Sampling is used in assurance work
B. Client systems have inherent limitations
C. Unqualified staff may be used on assurance engagements
9. When gaining an understanding of the investment operations of an audit client
which ONE of the following matters would an auditor need to consider?
A. Products or services and markets of the client's business
B. Acquisitions or disposals of the client's business activities
C. Leasing of property, plant or equipment for use in the client's business
D. Câu trả lời thứ 4
CÂU HỎI 10
The auditor of Blue Co has set performance materiality at $200,000. Which ONE
of the following could be the materiality level set for the financial statements as a
whole for Blue Co?
A. $210,000
B. $200,000
C. $100,000
D. $120,000
11. Auditors obtain evidence using procedures set out in ISA (UK) 500, Audit
Evidence. When audit the financial statements of Blue Ltd, the auditor is present
while a sales order is being processed to test if the controls are carried out. Which
ONE of the following procedures is being used?
A. Inspection
B. Observation
C. Inquiry
D. Re-performance
12. The auditor of Blue Co has concluded that the use of the going concern
assumption is appropriate and that the material uncertainty has been adequately
disclosed. What is the impact of this conclusion on the auditor's report?
A. Qualified opinion
B. Adverse opinion
C. Unmodified opinion without an emphasis of matter paragraph
D. Unmodified opinion with an emphasis on the matter paragraph.
13. ISA 705 Modification to the opinion in the independent auditor's report
identifies three possible types of modification. In which of the following
circumstances would a disclaimer of opinion be issued?
A. The auditor has not been able to obtain sufficient appropriate audit evidence on
which to base an opinion but has concluded that the possible effects of any
undetected misstatements could be material but not pervasive.
B. The auditor concludes that the financial statements include misstatements which
are both material and pervasive to the financial statements
C. The auditor concludes that the financial statements include misstatements which
are material but not pervasive to the financial statements
D. The auditor has not been able to obtain sufficient appropriate audit evidence on
which to base an opinion and has concluded that the possible effects of any
undetected misstatements could be both material and pervasive
14. The auditor may wish to draw the users' attention to a matter which is not
presented or disclosed in the financial statements but which is relevant to the users'
understanding of the auditor's report. How would this affect the auditor's report?
A. The auditor's report would not be affected as the auditor's report only refers to
matters presented or disclosed in the financial statements
B. An emphasis of matter paragraph would be included
C. The audit opinion would be qualified
D. An other matters paragraph would be included
15. Which THREE of the following statements in respect of risk are true?
A. Auditors can impact on inherent risk to bring audit risk to an acceptable audit
risk
B. Auditors cannot impact on inherent risk to bring audit risk to an acceptable audit
risk
C. Identifying business risks is part of the company's risk assessment processes
D. Inherent and control risks are components of audit risk.
16. Which THREE of the following describe aspects of the expectations gap with
respect to the external audit?
A. Users do not understand the meaning of the audit opinion
B. Users are not aware of the limitations of the audit process
C. Users do not appreciate that reasonable assurance is a low level of assurance
D. Users do not understand what the audit process involves.
17. Which ONE of the following statements is false
A. A positive assurance conclusion gives a reasonable level of assurance
B. Reasonable assurance is a high level of assurance, which allows a conclusion to
be expressed positively and negatively
C. A statutory audit gives reasonable assurance that the financial statements give a
true and fair view in all material respects
D. A negative assurance conclusions givens a limited level of assurance
18. Which THREE of the following are limitations of the provision of assurance?
A. The client’s staffs may collude in fraud that can be deliberately hidden from the
auditor
B. Most audit evidence is persuasive rather than conclusive
C. Assurance work is carried out by people independent of the entity
D. Assurance providers would not test every item in the subject matter
19. According to Company Act 2006 in UK, which THREE of the following
statements are true
A. In UK, Financial Reporting Council (FRC) is responsible for issuing auditing
standards and guidance for auditing
B. An individual or firm is eligible for appointment as statutory auditor if the
individual or firm is a member of a recognized supervisory
C. Auditors in the UK are subject to both legal and professional requirements
D. A person who is an officer may act as a statutory auditor of a company
20. Which THREE of the following are benefits of an engagement letter in respect
of assurance services?
A. Clearly defines the extent of the assurance provider’s responsibilities
B. Confirms the scope of the engagement
C. Provides written confirmation of the acceptance of the engagement
D. Certifies the assurance provider’s opinion.
21. Which TWO of the following are purposes of a letter of engagement?
A. Setting out the form of any report to be issued
B. Providing evidence on matters where other evidence is not expected to exist
C. Providing constructive suggestions to management concerning improvements in
internal control
D. Documenting and confirming acceptance of the appointment
22. Which ONE of the following must be included in an audit engagement letter?
A. Arrangements concerning the use of experts
B. Basis on which fees are computed
C. The reporting framework
D. Obligations to make audit working papers available to other parties
23. Which TWO of the following are benefits of an engagement letter in respect of
assurance services?
A. Câu trả lời thứ 1
B. Ensure that the audit is properly organized and managed
C. Ensure appropriate attention is devoted to important areas of the audit
D. Provides written confirmation of the acceptance of the engagement
24. Which ONE of the following might indicate that an assurance client could have
lower than normal inherent or control risk?
A. Lots of transactions with related parties
B. Significant unusual transactions
C. Conservative accounting policies (chính sách kiểm toán thận trong => rủi ro
tiềm tàng ít)
D. Evidence of questionable integrity, doubtful accounting policies
25. The auditor of Grey Co has set overall materiality level at $200,000. Which
ONE of the following could be the performance materiality set for the financial
statements for Grey Co?
A. $220,000
B. $250,000
C. $200,000
D. $100,000
26. Which TWO of the following statements correctly describe the auditors'
responsibilities in accordance with ISA 240 The auditor's responsibilities relating
to fraud in an audit of financial statements?
A. The auditor performs the audit with the aim of deterring fraud
B. The auditor must only obtain evidence regarding the risks of material
misstatement due to error
C. The auditor is responsible for obtaining reasonable assurance that the financial
statements are free from material misstatement whether caused by fraud or error.
D. The auditor is not responsible for the prevention and detection of fraud and
error
27. Linda has obtained a list of items which make up the cash and cash equivalents
balance (£3,556) in the financial statements of Baker Ltd. Materiality has been set
at £3,800. Which ONE of the following items should not be tested by Linda?
A. Current account balance (overdrawn) £5,600
B. Petty cash float £750
C. Special directors’ cash account £794
D. Special managers’ cash account £500
28. Which THREE of the following are assertions used by the auditor about
account balances at the period end?
A. Occurrence
B. Existence
C. Accuracy, valuation and allocation
D. Completeness
29. Which two of the following are reasons why segregation of duties is important
in an internal control system?
A. It improves efficiency
B. It improves the rate of detection of errors
C. It is a way of assigning roles within a large organisation
D. It helps to prevent fraud.
30. The following is example of internal control which operates at White plc: “The
finance controller reconciles the payables ledger with supplier statements on a
monthly basis”. Select the type of control activity which is illustrated.
A. Performance review
B. Information processing.
C. Physical control
D. Segregation of duties
1. Audit risk can be split into three components: Inherent risk, control risk and
detection risk. For each of the following examples, select one example which
illustrated for control risk
A. The organization is seeking to raise finance for a new venture
B. The auditor will be using samples in testing
C. Management fails to meet up regularly for board meetings
D. Inventory balance is the largest balance in the account
2. When gaining an understanding of the investment operations of an audit client
which ONE of the following matters would an auditor need to consider?
A. Products or services and markets of the client's business
B. Acquisitions or disposals of the client's business activities
C. Leasing of property, plant or equipment for use in the client's business
D. Accounting principles and industry specific practices relevant to the client's
business
3. Which TWO of the following statements correctly describe the auditors'
responsibilities in accordance with ISA 240 The auditor's responsibilities relating
to fraud in an audit of financial statements?
A. The auditor performs the audit with the aim of deterring fraud
B. The auditor must only obtain evidence regarding the risks of material
misstatement due to error
C. The auditor is responsible for obtaining reasonable assurance that the financial
statements are free from material misstatement whether caused by fraud or error
D. The auditor is not responsible for the prevention and detection of fraud and
error
4. Which of the following is not a benefit of establishing an audit committee?
A. Reduced external audit fees, as the presence of the audit committee reduces
audit risk and consequently, the amount of audit procedures required
B. Greater external audit independence, as the audit committee can be responsible
for appointing the external auditors
C. Reduced opportunity of fraud, as the audit committee can advise the executive
directors on managing the risks in the financial reporting process
D. Monitor and review the effectiveness the effectiveness of the company’s
internal audit function.
5. Application controls relate to procedures used to initiate, record, process and
report transactions and other financial data. Which two of the following are
application controls?
A. Complete testing procedures
B. Approval of changes by computer users and management
C. Document counts
D. Câu trả lời thứ 4
6. There are two main approaches to a code of professional ethics: rules-based
ethical code and a principles-based code. Which TWO of the following statements
are true?
A. Ethical guidance from ICAEW is in the form of rules rather than principles
B. Principles-based guidance may permit multiple correct responses in a given
situation
C. Rules-based codes offer a more straightforward ethical framework, as they
cover specific situations
D. A rules-based code requires a professional accountant to identify, evaluate and
address threats to compliance with fundamental ethical principles
7. Callinicos LLP is a 12-partner assurance firm which has been asked to consider
taking on the audit of the financial statements of two separate companies. The
following potential issues have been identified before acceptance of any such
appointments. Which ONE of the following clients must not be accepted?
A. Cliff plc, a listed company which will also require you to provide routine
bookkeeping work
B. Luxemburg Ltd, which will also require Callinicos LLP to provide a valuation
service in relation to some immaterial financial assets
C. Blue Ltd, which will also require Callinicos LLP to provide a training service in
relation to accounting standards
D. White Ltd, which will also require Callinicos LLP to provide a corporate
governance consulting services
8.The auditor may wish to draw the users' attention to a matter which is not
presented or disclosed in the financial statements but which is relevant to the users'
understanding of the auditor's report. How would this affect the auditor's report?
A. The auditor's report would not be affected as the auditor's report only refers to
matters presented or disclosed in the financial statements
B. An emphasis of matter paragraph would be included
C. The audit opinion would be qualified
D. An other matters paragraph would be included
9. The auditor of White Co is performing audit procedures to confirm the
completeness of recording the motor vehicles. Which ONE of the following would
provide the most persuasive evidence of this?
A. Inspection of vehicle registration documents
B. Review of vehicle insurance documentation
C. Physical inspection of the motor vehicles
D. Checking that the motor vehicles are recorded in the non-current asset register
10. A private company has requested that its auditor prepare a valuation report on a
prospective acquisition target in order to help it obtain finance for the acquisition
from its bank. Which TWO of the following threats may arise if the auditor agrees
to take on this assignment?
A. Self-review threat
B. Familiarity threat
C. Advocacy threat
D. Self-interest threat
11. Which of the following statements best reflects the auditor's duty of
confidentiality?
A. Auditors may disclose any matters in relation to criminal activities to the police
or taxation authorities, if requested to do so by the police or a tax inspector
B. Auditors may only disclose matters to third parties without their client's consent
if the public interest or national security is involved
C. Auditors may disclose matters to third parties without their client's consent if it
is in the public interest, and they must do so if there is a statutory duty to do so.
D. Auditors must never, under any circumstances, disclose any matters of which
they become aware during the course of the audit to third parties, without the
permission of the client.
12. In the financial statement audit of independent auditor, which TWO of the
following would ordinarily be contained in the overall audit strategy?
A. The results of audit risk assessment
B. The contract between the audit firm and the client
C. List of staff to be involved with the audit
D. Detailed plan of audit procedures to be carried out
13. For each of the following statements in relation to guidance on professional
ethics. Which THREE of the following statements are true?
A. It is in the public interest for accountants to follow a professional ethics
framework
B. Rules-based codes offer a more straightforward ethical framework, as they
cover specific situations
C. Ethical guidance from ICAEW is in the form of rules rather than principles
D. Principles-based guidance is more flexible than rules-based guidance.
14. Which TWO of the following are not elements of a general assurance
engagement?
A. A three-party relationship
B. Sufficient appropriate evidence
C. Determination of materiality
D. An engagement letter
15. According to the Companies Act 2006 in UK, which THREE of the following
criteria can be used to decide the audit exemption?
A. Turnover <£10.2millions
B. Total assets <£5.1millions
C. Turnover <£10.1millions
D. Number of employees<50
16. Which THREE of the following are benefits of an engagement letter in respect
of assurance services?
A. Clearly defines the extent of the assurance provider’s responsibilities
B. Confirms the scope of the engagement
C. Provides written confirmation of the acceptance of the engagemen
D. Certifies the assurance provider’s opinion
17. Which THREE of the following describe aspects of the expectations gap with
respect to the external audit?
A. Users do not understand the meaning of the audit opinion
B. Users are not aware of the limitations of the audit process
C. Users do not appreciate that reasonable assurance is a low level of assurance
D. Users do not understand what the audit process involves.
18. The level of assurance given by an assurance engagement will depend on the
type of engagement. Select the level of assurance you would expect to be given in
the statutory audit (kiểm toán theo luật định: kiểm toán full) (cho tình huốg soát xét
và hỏi là loại đảm bảo nào) Nếu thay bằng report on prospective => limited (chỉ
kiếm toán 1 vài chỉ tiêu)
A. Absolute
B. Reasonable
C. Limited
D. Unlimited if type of engagement is report on prospective financial information
19. In respect of given subject matter state, which ONE of the following party must
determine the suitable criteria?
A. Intended user
B. Responsible party
C. Shareholder
D. Practitioner
20. Which of the following is the most appropriate definition of the external audit?
A. The external audit is performed by management => (sai) to identify areas of
deficiency within a company and to make recommendations to mitigate those
deficiencies.
B. The external audit is an exercise carried out by auditors in order to give an
opinion on whether the financial statements of a company are materially misstated
C. The external audit is an exercise carried out in order to give an opinion on the
effectiveness of a company's internal control system.
D. The external audit provides negative assurance on the truth and fairness of a
company's financial statements.
21. Which TWO of the following are true of the auditor’s objectives in relation to
fraud, in line with ISA 240, The auditor's responsibilities relating to fraud in an
audit of financial statements?
A. The auditor must identify and assess the risks of material misstatement due to
fraud.
B. The auditor is not responsible for the prevention of fraud and error but is
responsible for detection
C. The auditor must obtain evidence regarding the risks of material misstatement
due to fraud.
D. The auditor must only obtain evidence regarding the risks of material
misstatement due to error
22. Which THREE of the following would be found in the overall audit strategy
document?
A. Consequent, nature, timing and extent of procedures
B. Detailed plan of audit procedures => detailed audit procedures
C. Calculation of preliminary materiality thresholds
D. The accounting policies adopted by the entity and changes in those policies
23. During the planning stages of the final audit, the auditor believes that the
probability of giving an inappropriate audit opinion is too high. Which ONE of the
following should the auditor amend the audit plan to resolve this issue?
A. Decrease the inherent risk
B. Decrease the control risk
C. Increase the sample size
D. Increase the materiality level
24. The financial statements of Green Co include a receivables balance of $30,000
which the auditors do not believe will be recovered. Materiality has been set at
$90,000. There are no other unadjusted misstatements. What form of audit opinion
would be issued by the auditor?
A. Qualified opinion due to overstatement of receivables
B. Adverse opinion
C. Disclaimer of opinion
D. Unmodified opinion.
25. Which ONE of the following statements regarding tests of controls is true?
A. Tests of controls are designed to detect material misstatements in the financial
statements
B. Tests of controls are used to collect audit evidence about effectiveness of
internal control
C. Tests of controls are implemented after implementing the substantive
procedures
D. Tests of controls must be used in auditing financial statements of all clients.
26. Most entities make use of IT systems for financial reporting and operational
purposes. Controls operating in an IT environment can be split into general
controls and application controls. Which ONE of the following is an application
control?
A. Use of passwords
B. Testing of new systems
C. Disaster recovery plan
D. Authorisation of data for input.
27. The following are examples of computer controls which operate in the payroll
system at Hana Ltd. Which TWO of the following examples are the types of
computer control which illustrate for application control?
A. Manual checks to ensure that timesheets are authorised before details are
processed
B. Approval of new applications by a sample of users and by magagement
C. Range checks on payroll processing.
D. Password protection limiting access to data
28. Which ONE of the following methods of recording an accounting and controls
system is a series of questions used to determine whether controls exist which meet
specific control objectives?
A. Narrative notes
B. Questionnaire
C. Diagrams
D. Flowcharts
29. ISA 315 Identifying and assessing the risks of material misstatement through
understanding the entity and its environment sets out the five components of
internal control. Which THREE of the following are set out as a component of
internal control within ISA 315?
A. Monitoring of controls
B. Control activities
C. The information system relevant to financial reporting
D. Human resource policies and practices
30. Which THREE of the following are true in respect of the limitations of any
system of internal control?
A. Standard controls may not be designed to deal with unusual transactions
B. The effectiveness of many controls rely on the integrity of those applying them
C. Internal controls are only applied to material items
D. The cost of implementing controls may be more expensive than the cost of any
potential risk arising
1. Which TWO of the following are benefits of an engagement letter in respect of
assurance services?
A. Facilitate review of work
B. Defines the extent of the assurance provider’s responsibilities
C. Ensure that the audit is properly organized and managed
D. Provides written confirmation of the acceptance of the engagement
2. Audit risk can be split into three components: Inherent risk, control risk and
detection risk. For each of the following examples, select one example which
illustrated for control risk
A. The organization is seeking to raise finance for a new venture
B. The auditor will be using samples in testing
C. Management fails to meet up regularly for board meetings
D. Inventory balance is the largest balance in the account
3. Which ONE of the following statements is correct with regard to the relationship
between the audit plan and the audit strategy for an external audit engagement?
A. The audit strategy should be established before the audit plan is developed
B. The audit plan should be developed before the audit strategy is established
C. The audit plan and the audit strategy should be established and developed at the
same time.
D. The overall audit strategy should be more detailed than the audit plan.
4. The following is example of internal control which operates at Navy plc: “The
finance director compares monthly expenditure on consumables to budgeted
expenditure”. Select the type of control activity which is illustrated.
A. Performance review
B. Information processing
C. Physical control
D. Segregation of duties
5. Callinicos LLP is a 12-partner assurance firm which has been asked to consider
taking on the audit of the financial statements of two separate companies. The
following potential issues have been identified before acceptance of any such
appointments. Which ONE of the following clients must not be accepted?
A. Cliff plc, a listed company which will also require you to provide routine
bookkeeping work
B. Luxemburg Ltd, which will also require Callinicos LLP to provide a valuation
service in relation to some immaterial financial assets
C. Blue Ltd, which will also require Callinicos LLP to provide a training service in
relation to accounting standards
D. White Ltd, which will also require Callinicos LLP to provide a corporate
governance consulting services
6. Which THREE of the following threats to independence might arise on the
current audit when an audit team member is involved in employment negotiations
with an audit client during the course of the audit?
A. Self-interest
B. Self-review
C. Intimidation
D. Familiarity
7. Which TWO of the following are limitations of the provision of assurance?
Assurance work is carried out by people independent of the entity
A. Sampling is used in assurance work
B. Client systems have inherent limitations
C. Unqualified staff may be used on assurance engagements
8. When gaining an understanding of the investment operations of an audit client
which ONE of the following matters would an auditor need to consider?
A. Products or services and markets of the client's business
B. Acquisitions or disposals of the client's business activities
C. Leasing of property, plant or equipment for use in the client's business
D. Câu trả lời thứ 4
9. Auditors obtain evidence using procedures set out in ISA (UK) 500, Audit
Evidence. When audit the financial statements of Blue Ltd, the auditor is present
while a sales order is being processed to test if the controls are carried out. Which
ONE of the following procedures is being used?
A. Inspection
B. Observation
C. Inquiry
D. Re-performance
10. ISA 705 Modification to the opinion in the independent auditor's report
identifies three possible types of modification. In which of the following
circumstances would a disclaimer of opinion be issued?
A. The auditor has not been able to obtain sufficient appropriate audit evidence on
which to base an opinion but has concluded that the possible effects of any
undetected misstatements could be material but not pervasive.
B. The auditor concludes that the financial statements include misstatements which
are both material and pervasive to the financial statements
C. The auditor concludes that the financial statements include misstatements which
are material but not pervasive to the financial statements
D. The auditor has not been able to obtain sufficient appropriate audit evidence on
which to base an opinion and has concluded that the possible effects of any
undetected misstatements could be both material and pervasive
11. Which TWO of the following are not elements of a general assurance
engagement?
A. A three-party relationship
B. Sufficient appropriate evidence
C. Determination of materiality
D. An engagement letter
12. Which THREE of the following are benefits of an assurance report on financial
information?
A. An assurance report enhances the credibility of the information being reported
on
B. An assurance report reduces the risk of management bias in the information
being reported on
C. An assurance report draws the attention of the user to deficiencies in the
information being reported on
D. An assurance report attests to the correctness of the information being reported
on. (saii. Trong kiểm toán chỉ dùng true and fair)
13. In respect of given subject matter state, which ONE of the following party must
determine the suitable criteria?
A. Intended user
B. Responsible party
C. Shareholder
D. Practitioner
14. Which of the following is the most appropriate definition of the external audit?
A. The external audit is performed by management => (sai) to identify areas of
deficiency within a company and to make recommendations to mitigate those
deficiencies.
B. The external audit is an exercise carried out by auditors in order to give an
opinion on whether the financial statements of a company are materially misstated
C. The external audit is an exercise carried out in order to give an opinion on the
effectiveness of a company's internal control system.
D. The external audit provides negative assurance on the truth and fairness of a
company's financial statements.
15. Which TWO of the following are purposes of a letter of engagement?
A. Setting out the form of any report to be issued
B. Providing evidence on matters where other evidence is not expected to exist
C. Providing constructive suggestions to management concerning improvements in
internal control
D. Documenting and confirming acceptance of the appointment
16. Which THREE of the following would be found in the overall audit strategy
document?
A. Consequent, nature, timing and extent of procedures
B. Detailed plan of audit procedures => detailed audit procedures
C. Calculation of preliminary materiality thresholds
D. The accounting policies adopted by the entity and changes in those policies
17. The auditor of AAT Co wishes to bring audit risk to acceptable audit risk.
Which TWO of the following actions could the auditor take to achieve this
A. Reduce control risk
B. Reduce risk of material misstatement
C. Assign more experienced staff to the engagement team
D. Increase sample sizes
18. When gaining an understanding of the specific business operations of an audit
client which ONE of the following matters would an auditor need to consider?
A. Products or services and markets of the client's business.
B. Accounting principles and industry specific practices relevant to the client's
business
C. Acquisitions or disposals of the client's business activities
D. Leasing of property, plant or equipment for use in the client's business
19. The auditor of Grey Co has set overall materiality level at $200,000. Which
ONE of the following could be the performance materiality set for the financial
statements for Grey Co?
A. $220,000
B. $250,000
C. $200,000
D. $100,000
20. White Ltd’s quick ratio has fallen from 1.8:1 to 1.6:1. Which TWO of the
following might help to explain this decline?
A. Credit control has been poor
B. Current liabilities have increased
C. The allowance for receivables has been reduced
D. The entity has purchased a number of inventories for cash.
21. The auditor of Grey Co has concluded that Grey Co is not a going concern. The
financial statements have been prepared on a going concern basis and management
has refused to change them. What form of audit opinion will be issued by the
auditor?
A. A qualified 'except for' opinion due to material misstatement
B. Câu trả lời thứ 2
C. An adverse opinion
D. A disclaimer
22. ISA 705 Modification to the opinion in the independent auditor's report
identifies three possible types of modification. In which of the following
circumstances would a disclaimer of opinion be issued?
A. The auditor has not been able to obtain sufficient appropriate audit evidence on
which to base an opinion but has concluded that the possible effects of any
undetected misstatements could be material but not pervasive
B. The auditor concludes that the financial statements include misstatements which
are both material and pervasive to the financial statements
C. The auditor concludes that the financial statements include misstatements which
are material but not pervasive to the financial statements
D. The auditor has not been able to obtain sufficient appropriate audit evidence on
which to base an opinion and has concluded that the possible effects of any
undetected misstatements could be both material and pervasive.
23. ISA 700 Forming an opinion and reporting on financial statements sets out the
basic elements of an auditor's report. Which THREE of the following must be
included in an unmodified auditor's report?
A. Addressee
B. Introductory paragraph
C. Auditors' responsibilities
D. Deficiencies of internal controls
24. Which ONE of the following statements regarding tests of controls is true?
A. Tests of controls are designed to detect material misstatements in the financial
statements
B. Tests of controls are used to collect audit evidence about effectiveness of
internal control
C. Tests of controls are implemented after implementing the substantive
procedures
D. Tests of controls must be used in auditing financial statements of all clients.
25. Which TWO of the following describe manifestations of the expectations gap?
A. Users discovering that the directors refuse to cooperate in providing the auditor
with evidence he requests
B. Users blaming the auditors for a fraud discovered in a company subsequent to
an audit
C. Users believing that the amounts in the financial statements are stated precisely
D. Users believing that the audit firm must not sell other services to the audited
entity
26. The majority of the books and records of Green Co have been destroyed by a
flood and the auditor has no other realistic means of obtaining sufficient,
appropriate audit evidence. Which form of opinion will the auditor issue?
A. Qualified opinion on the basis that sufficient appropriate evidence is not
available
B. A disclaimer of opinion
C. An adverse opinion
D. Unmodified opinion with an emphasis of matter paragraph explaining the
circumstances of the flood
27. Which ONE of the following statements is true regarding the audit committee?
A. An audit committee must comprise non-executive directors and executive
director
B. All companies are required to have an audit committee
C. Where there is no internal audit function the audit committee should consider
the need for one on an annual basis.
D. The role and responsibilities of the audit committee are set out in statute
28. The following is example of internal control which operates at White plc: “The
finance controller reconciles the payables ledger with supplier statements on a
monthly basis”. Select the type of control activity which is illustrated.
A. Performance review
B. Information processing.
C. Physical control
D. Segregation of duties
29. Which ONE of the following methods of recording an accounting and controls
system is a series of questions used to determine whether controls exist which meet
specific control objectives?
A. Narrative notes
B. Questionnaire
C. Diagrams
D. Flowcharts
30. An effective system of internal control requires segregation of basic functions.
Which TWO of the following functions should ideally be segregated?
A. Budgetary control
B. Preparation of financial statements
C. Custody or handling of assets
D. Recording of transactions
1. Which TWO of the following statements correctly describe the auditors'
responsibilities in accordance with ISA 240 The auditor's responsibilities
relating to fraud in an audit of financial statements?
A.The auditor performs the audit with the aim of deterring fraud
B.The auditor must only obtain evidence regarding the risks of material
misstatement due to error
C.The auditor is responsible for obtaining reasonable assurance that the financial
statements are free from material misstatement whether caused by fraud or error
D.The auditor is not responsible for the prevention and detection of fraud and error
2. Which of the following is not a benefit of establishing an audit committee?
A.Reduced external audit fees, as the presence of the audit committee reduces
audit risk and consequently, the amount of audit procedures required
B.Greater external audit independence, as the audit committee can be responsible
for appointing the external auditors
C.Reduced opportunity of fraud, as the audit committee can advise the executive
directors on managing the risks in the financial reporting process
D.Monitor and review the effectiveness the effectiveness of the company’s internal
audit function.
3. There are two main approaches to a code of professional ethics: rules-based
ethical code and a principles-based code. Which TWO of the following
statements are true?
A.Ethical guidance from ICAEW is in the form of rules rather than principles
B.Principles-based guidance may permit multiple correct responses in a given
situation
C.Rules-based codes offer a more straightforward ethical framework, as they cover
specific situations
D.A rules-based code requires a professional accountant to identify, evaluate and
address threats to compliance with fundamental ethical principles
4. ATC & Co is the statutory auditor of Blue Co, a public interest entity.Which
of the following services is ATC & Co prohibited from providing to Blue Co
under any circumstances?
A.Internal audit services
B.Assistance in the resolution of tax disputes
C.Preparing accounting records and financial statements
D.Valuation services
5. Which TWO of the following are true in respect of related party
transactions?
A.Related party transactions must be completely disclosed in the financial
statements
B.Related party transactions tend to be low-risk to the auditor
C.There may be a significant control risk in relation to related party transactions
D.Disclosure of related party transactions is unlikely to be material to the financial
statements
6. The following is an example of internal control which operates at Castle plc:
“The finance controller conducts a monthly review of authorization controls
over dispatch notes”. Select the type of control activity which is illustrated
A.Performance review
B.Information processing
C.Physical control
D.Segregation of duties
7. Which TWO of the following are the principal reasons why confidentiality
is so important to accountants?
A.Accountants need their clients to be comfortable to make full disclosure of
company affairs to them
B.It is a fundamental principle of all the major ethical code
C.It means that accountants can work for competitors
D.Failure to keep information confidential reflects badly on the account
8. In the financial statement audit of independent auditor, which TWO of the
following would ordinarily be contained in the overall audit strategy?
A.The results of audit risk assessment
B.The contract between the audit firm and the client
C.List of staff to be involved with the audit
D.Detailed plan of audit procedures to be carried out
9. Which THREE of the following would be found in the overall audit strategy
document?
A.Timetable
B.Calculation of preliminary materiality thresholds
C.Detailed plan of audit procedures
D.Budget and fee
10. The level of assurance given by an assurance engagement will depend on
the type of engagement. Select the level of assurance you would expect to be
given in the statutory audit (kiểm toán theo luật định: kiểm toán full) (cho
tình huốg soát xét và hỏi là loại đảm bảo nào) Nếu thay bằng report on
prospective => limited (chỉ kiếm toán 1 vài chỉ tiêu)
A.Absolute
B.Reasonable
C.Limited
D.Unlimited if type of engagement is report on prospective financial information
11. Which THREE of the following are benefits of assurance work
A.Assurance may act as a deterrent to error of fraud
B.An independent, professional opinion
C.Testing as a result of sampling is cheaper for the responsible party
D.Additional confidence given to other related parties
12. Which of the following is the most appropriate definition of the external
audit?
A.The external audit is performed by management => (sai) to identify areas of
deficiency within a company and to make recommendations to mitigate those
deficiencies.
B.The external audit is an exercise carried out by auditors in order to give an
opinion on whether the financial statements of a company are materially misstated
C.The external audit is an exercise carried out in order to give an opinion on the
effectiveness of a company's internal control system.
D.The external audit provides negative assurance on the truth and fairness of a
company's financial statements.
13. ATC LLP, an assurance firm, has the following 4 clients among its client
portfolio. For below clients, select the client which has low inherent risk.
A.Blue Ltd has lack of finance director
B.White Ltd has few unusual transactions.
C.Grey Ltd is planning to list on the local stock exchange within the next two
years.
D.Green Ltd is currently facing financial difficulties and is seeking alternative
forms of finance.
14. Which THREE of the following are benefits of an engagement letter in
respect of assurance services?
A.Clearly defines the extent of the assurance provider’s responsibilities
B.Confirms the scope of the engagement
C.Provides written confirmation of the acceptance of the engagement
D.Certifies the assurance provider’s opinion.
15. Which ONE of the following procedures should be carried out before the
audit firm has decided to accept appointment as auditor?
A.Set up and submit a letter of engagement to the directors of the company
B.Ensure that a resolution has been passed at the general meeting to appoint the
new auditors
C.Ensure that the outgoing auditors’ removal/resignation has been properly
conducted
D.Communicate with the predecessor auditors to discover any reasons they should
not accept appointment.
16. Audit risk can be split into three components: Inherent risk, control risk
and detection risk. For each of the following examples, select one example
which illustrated for inherent risk
A.Câu trả lời thứ 1
B.Directors’ pay is related to company profitability
C.Senior management regularly override the system of controls
D.The organization has a high turnover of staff in the accounts department
17. Which THREE of the following statements are true with respect to
analytical procedures?
A.Analytical procedures are compulsory procedures in the planning phase of the
financial statement audit.
B.Analytical procedures can be used throughout the audit
C.Analytical procedures must be used at the review stage of the audit.
D.Analytical procedures can be used in testing of controls.
18. Which THREE of the following would be found in the overall audit
strategy document?
A.Consequent, nature, timing and extent of procedures
B.Detailed plan of audit procedures => detailed audit procedures
C.Calculation of preliminary materiality thresholds
D.The accounting policies adopted by the entity and changes in those policies
19. During the planning stages of the final audit, the auditor believes that the
probability of giving an inappropriate audit opinion is too high. Which ONE
of the following should the auditor amend the audit plan to resolve this issue?
A.Decrease the inherent risk
B.Decrease the control risk
C.Increase the sample size
D.Increase the materiality level
20. White Ltd’s quick ratio has fallen from 1.8:1 to 1.6:1. Which TWO of the
following might help to explain this decline?
A.Credit control has been poor
B.Current liabilities have increased
C.The allowance for receivables has been reduced
D.The entity has purchased a number of inventories for cash.
21. Which TWO of the following statements correctly describe the auditors'
responsibilities in accordance with ISA 240 The auditor's responsibilities
relating to fraud in an audit of financial statements?
A.The auditor performs the audit with the aim of deterring fraud
B.The auditor must only obtain evidence regarding the risks of material
misstatement due to error
C.The auditor is responsible for obtaining reasonable assurance that the financial
statements are free from material misstatement whether caused by fraud or error.
D.The auditor is not responsible for the prevention and detection of fraud and error
22. Which THREE of the following are assertions used by the auditor about
account balances at the period end?
A.Occurrence
B.Existence
C.Accuracy, valuation and allocation
D.Completeness
23. Which TWO of the following are valid comments about the quality of
assurance evidence?
A.Evidence in the form of documents or written representation are more reliable
than oral representations
B.Evidence from external sources is more reliable than evidence obtained from the
entity’s records
C.Evidence from internal sources is more reliable when related internal controls
operate ineffectively
D.Evidence from internal sources is more reliable than evidence created by the
assurance provider
24. The following are items that might be included in an auditor's report.
Which TWO of the following are reported on by exception only? (không cần
trình bày trên BCKT)
A.Whether the financial statements are in agreement with the accounting records
and returns (BCTC đã nhất quan)
B.Whether details of directors' emoluments and other benefits have been correctly
disclosed in the financial statements. (thu nhập từ thù lao của director)
C.Whether the financial statements give a true and fair view of the state of the
company’s affairs at the end of the financial year
D.Information in the strategic report and the directors' report is consistent with the
financial statements
CÂU HỎI 25
ISA 700 Forming an opinion and reporting on financial statements sets out the
basic elements of an auditor's report. Which THREE of the following must be
included in an unmodified auditor's report?
A.Addressee
B.Introductory paragraph
C.Auditors' responsibilities
D.Deficiencies of internal controls
26. Which TWO of the following describe manifestations of the expectations
gap?
A.Users discovering that the directors refuse to cooperate in providing the auditor
with evidence he requests
B.Users blaming the auditors for a fraud discovered in a company subsequent to an
audit
C.Users believing that the amounts in the financial statements are stated precisely
D.Users believing that the audit firm must not sell other services to the audited
entity
27. Most entities make use of IT systems for financial reporting and
operational purposes. Controls operating in an IT environment can be split
into general controls and application controls. Which ONE of the following is
an application control?
A.Use of passwords
B.Testing of new systems
C.Disaster recovery plan
D.Authorisation of data for input.
28. The following is example of internal control which operates at White plc:
“The finance controller reconciles the payables ledger with supplier
statements on a monthly basis”. Select the type of control activity which is
illustrated.
A.Performance review
B.Information processing.
C.Physical control
D.Segregation of duties
29. Which ONE of the following methods of recording an accounting and
controls system is a series of questions used to determine whether controls
exist which meet specific control objectives?
A.Narrative notes
B.Questionnaire
C.Diagrams
D.Flowcharts
30. Which TWO of the following statements are true regarding the controls in
a small company?
A.The external auditor will assess the attitudes, awareness and actions of
management.
B.The external auditor can rely on- the controls in a small company.
C.Segregation of duties is often adequate in a small company
D.Evidence of the operation of controls is more likely to be available in
documentary form
1. Which ONE of the following best describes the concept of assurance?
Assurance refers to
A.An assurance firm’s high level of satisfaction as to the reliability of an assertion
being made by one party for the use of another party
B.A user’s satisfaction as to the reliability of an assertion being made by another
party
C.An assurance firm’s satisfaction as to the reliability of an assertion being made
by one party for the use of another party
D.An assurance firm’s limited level of satisfaction as to the reliability of an
assertion being made by one party for the use of another party
2. Which ONE of the following statements is true?
A.A negative assurance conclusions givens a reasonable level of assurance
B.Reasonable assurance is absolute assurance of the correctness of the subject
matter
C.A statutory audit gives reasonable assurance that the financial statements give a
true and fair view
D.A positive assurance conclusions givens a limited level of assurance
3. Which THREE of the following procedures should be carried out after the
audit firm has decided to accept appointment as auditor?
A.Set up and submit a letter of engagement to the directors of the company
B.Ensure that a resolution has been passed at the general meeting to appoint the
new auditors
C.Communicate with the predecessor auditors to discover any reasons they should
not accept appointment
D.Ensure that the outgoing auditors’ removal/resignation has been properly
conducted
4. When gaining an understanding of the investment operations of an audit
client which ONE of the following matters would an auditor need to consider?
A.Products or services and markets of the client's business
B.Acquisitions or disposals of the client's business activities
C.Leasing of property, plant or equipment for use in the client's business
D.Accounting principles and industry specific practices relevant to the client's
business
5. Which ONE of the following correctly describes the period for which client
identification documents must be kept under money laundering regulations?
A.For a minimum of five years and until six years have elapsed since the
relationship with the client has ceased
B.For a minimum of six years and until five years have elapsed since the
relationship with the client has ceased
C.For a minimum of seven years and until five years have elapsed since the
relationship with the client has ceased
D.For a minimum of five years and until five years have elapsed since the
relationship with the client has ceased
6. Grey Ltd’s quick ratio has fallen from 1.9:1 to 1.6:1. Which TWO of the
following might help to explain this decline?
A.Credit control has been poor
B.The entity has purchased a property for cash
C.The entity has purchased a batch of inventory for cash
D.The allowance for receivables has been reduced
7. In respect of conflicts of interest, Which TWO of the following statements
are true?
A.Where adequate safeguards are available the parties involved do not need to be
informed of the conflict of interest
B.Where a conflict of interest exists between two audit clients, the auditor must
cease to act for one party
C.If the effects of a conflict of interest can be mitigated by safeguards these should
be recorded
D.Where a conflict of interest exists between two audit clients, the auditor can
consider to cease to act for one party
8. ISA 705 Modification to the opinion in the independent auditor's report
identifies three possible types of modification. In which of the following
circumstances would a disclaimer of opinion be issued?
A.The auditor has not been able to obtain sufficient appropriate audit evidence on
which to base an opinion but has concluded that the possible effects of any
undetected misstatements could be material but not pervasive.
B.The auditor concludes that the financial statements include misstatements which
are both material and pervasive to the financial statements
C.The auditor concludes that the financial statements include misstatements which
are material but not pervasive to the financial statements
D.The auditor has not been able to obtain sufficient appropriate audit evidence on
which to base an opinion and has concluded that the possible effects of any
undetected misstatements could be both material and pervasive
9. Which TWO of the following represent weakness of a system of internal
controls?
A.Lack of controls over the purchases system
B.Lack of understanding of the purposes of controls
C.Lack of staff to ensure segregation of duties
D.The possibility that staff members will collude in fraud
10. In the financial statement audit of independent auditor, which TWO of the
following would ordinarily be contained in the overall audit strategy?
A.The results of audit risk assessment
B.The contract between the audit firm and the client
C.List of staff to be involved with the audit
D.Detailed plan of audit procedures to be carried out
11. For each of the following statements in relation to guidance on professional
ethics. Which THREE of the following statements are true?
A.It is in the public interest for accountants to follow a professional ethics
framework
B.Rules-based codes offer a more straightforward ethical framework, as they cover
specific situations
C.Ethical guidance from ICAEW is in the form of rules rather than principles
D.Principles-based guidance is more flexible than rules-based guidance.
12. Which THREE of the following would be found in the overall audit
strategy document?
A.Timetable
B.Calculation of preliminary materiality thresholds
C.Detailed plan of audit procedures
D.Budget and fee
13. When audit inventory, the auditor detected that the inventory is
overstated. The overstatement is material but not pervasive to the financial
statements. Management has refused to make an adjustment to the financial
statements. What form of modified opinion should the auditor issue?
A.Qualified opinion due to a material misstatement
B.Qualified opinion due to insufficient appropriate evidence on which to base an
opinion
C.Adverse opinion
D.Disclaimer of opinion
14. According to the Companies Act 2006 in UK, which THREE of the
following criteria can be used to decide the audit exemption?
A.Turnover <£10.2millions
B.Total assets <£5.1millions
C.Turnover <£10.1millions
D.Number of employees<50
CÂU HỎI 15
Which TWO of the following are elements of a general assurance
engagement?
A.A three-party relationship
B.Sufficient appropriate evidence
C.Determination of materiality
D.An engagement letter
16. Which THREE of the following are benefits of an engagement letter in
respect of assurance services?
A.Clearly defines the extent of the assurance provider’s responsibilities
B.Confirms the scope of the engagement
C.Provides written confirmation of the acceptance of the engagement
D.Certifies the assurance provider’s opinion.
17. Which ONE of the following procedures should be carried out before the
audit firm has decided to accept appointment as auditor?
A.Set up and submit a letter of engagement to the directors of the company
B.Ensure that a resolution has been passed at the general meeting to appoint the
new auditors
C.Ensure that the outgoing auditors’ removal/resignation has been properly
conducted
D.Communicate with the predecessor auditors to discover any reasons they should
not accept appointment.
18. Which THREE of the following statements relating to engagement letter
are false?
A.The engagement letter should be sent before acceptance of appointment
B.The engagement letter should be sent after the appointment and after the
commencement of the audit
C.The engagement letter should be sent after the appointment but before the
commencement of the audit
D.The engagement letter should be sent after the commencement of the audit but
before the signing of the auditor’s report
19. When gaining an understanding of the specific business operations of an
audit client which ONE of the following matters would an auditor need to
consider?
A.Products or services and markets of the client's business.
B.Accounting principles and industry specific practices relevant to the client's
business
C.Acquisitions or disposals of the client's business activities
D.Leasing of property, plant or equipment for use in the client's business
20. The auditor of Grey Co has set overall materiality level at $200,000. Which
ONE of the following could be the performance materiality set for the
financial statements for Grey Co?
A.$220,000
B.$250,000
C.$200,000
D.$100,000
21. White Ltd’s quick ratio has fallen from 1.8:1 to 1.6:1. Which TWO of the
following might help to explain this decline?
A.Credit control has been poor
B.Current liabilities have increased
C.The allowance for receivables has been reduced
D.The entity has purchased a number of inventories for cash.
22. The following are items that might be included in an auditor's report.
Which TWO of the following are reported on by exception only? (không cần
trình bày trên BCKT)
A.Whether the financial statements are in agreement with the accounting records
and returns (BCTC đã nhất quan)
B.Whether details of directors' emoluments and other benefits have been correctly
disclosed in the financial statements. (thu nhập từ thù lao của director)
C.Whether the financial statements give a true and fair view of the state of the
company’s affairs at the end of the financial year
D.Information in the strategic report and the directors' report is consistent with the
financial statements
23. ISA 705 Modification to the opinion in the independent auditor's report
identifies three possible types of modification. In which of the following
circumstances would a disclaimer of opinion be issued?
A.The auditor has not been able to obtain sufficient appropriate audit evidence on
which to base an opinion but has concluded that the possible effects of any
undetected misstatements could be material but not pervasive
B.The auditor concludes that the financial statements include misstatements which
are both material and pervasive to the financial statements
C.The auditor concludes that the financial statements include misstatements which
are material but not pervasive to the financial statements
D.The auditor has not been able to obtain sufficient appropriate audit evidence on
which to base an opinion and has concluded that the possible effects of any
undetected misstatements could be both material and pervasive.
24. Which ONE of the following statements regarding tests of controls is true?
A.Tests of controls are designed to detect material misstatements in the financial
statements
B.Tests of controls are used to collect audit evidence about effectiveness of internal
control
C.Tests of controls are implemented after implementing the substantive procedures
D.Tests of controls must be used in auditing financial statements of all clients.
25. Which TWO of the following describe manifestations of the expectations
gap?
A.Users discovering that the directors refuse to cooperate in providing the auditor
with evidence he requests
B.Users blaming the auditors for a fraud discovered in a company subsequent to an
audit
C.Users believing that the amounts in the financial statements are stated precisely
D.Users believing that the audit firm must not sell other services to the audited
entity
26. The majority of the books and records of Green Co have been destroyed
by a flood and the auditor has no other realistic means of obtaining sufficient,
appropriate audit evidence. Which form of opinion will the auditor issue?
A.Qualified opinion on the basis that sufficient appropriate evidence is not
available
B.A disclaimer of opinion
C.An adverse opinion
D.Unmodified opinion with an emphasis of matter paragraph explaining the
circumstances of the flood
27. Which two of the following are reasons why segregation of duties is
important in an internal control system?
A.It improves efficiency
B.It improves the rate of detection of errors
C.It is a way of assigning roles within a large organisation
D.It helps to prevent fraud.
28. The following is example of internal control which operates at Blue plc.
Select the type of control activity which is illustrated in the following example:
“There are two keys to the locked finance department safe: one held by the
finance director and the other by the managing director”
A.Authorisation
B.Information processing
C.Physical control.
D.Segregation of duties
29. Which ONE of the following statements is true regarding the audit
committee?
A.An audit committee must comprise non-executive directors and executive
director
B.All companies are required to have an audit committee
C.Where there is no internal audit function the audit committee should consider the
need for one on an annual basis.
D.The role and responsibilities of the audit committee are set out in statute
30. ISA 315 Identifying and assessing the risks of material misstatement
through understanding the entity and its environment sets out the five
components of internal control. Which THREE of the following are set out as
a component of internal control within ISA 315?
A.Monitoring of controls
B.Control activities
C.The information system relevant to financial reporting
D.Human resource policies and practices
1. Which ONE of the following statements best describes the evidence
obtained and the opinion given in a reasonable assurance engagement?
A.Sufficient appropriate evidence and a negatively worded opinion
B.Sufficient appropriate evidence and a positively worded opinion
C.A lower level of evidence and a negatively worded opinion
D.A lower level of evidence and a positively worded opinion
2. Audit risk can be split into three components: Inherent risk, control risk
and detection risk. For each of the following examples, select one example
which illustrated for control risk
A.The organization is seeking to raise finance for a new venture
B.The auditor will be using samples in testing
C.Management fails to meet up regularly for board meetings
D.Inventory balance is the largest balance in the account
3. Which of the following is not a benefit of establishing an audit committee?
A.Reduced external audit fees, as the presence of the audit committee reduces
audit risk and consequently, the amount of audit procedures required
B.Greater external audit independence, as the audit committee can be responsible
for appointing the external auditors
C.Reduced opportunity of fraud, as the audit committee can advise the executive
directors on managing the risks in the financial reporting process
D.Monitor and review the effectiveness the effectiveness of the company’s internal
audit function.
4. Which ONE of the following statements is true regarding the audit
committee?
A.An audit committee must comprise non-executive directors and executive
directors
B.All companies are required to have an audit committee
C.Where there is no internal audit function the audit committee should consider the
need for one on an annual basis
D.The role and responsibilities of the audit committee are set out in statute
5. Which THREE of the following threats to independence might arise on the
current audit when an audit team member is involved in employment
negotiations with an audit client during the course of the audit?
A.Self-interest
B.Self-review
C.Intimidation
D.Familiarity
6. ATC & Co is the statutory auditor of Blue Co, a public interest entity.Which
of the following services is ATC & Co prohibited from providing to Blue Co
under any circumstances?
A.Internal audit services
B.Assistance in the resolution of tax disputes
C.Preparing accounting records and financial statements
D.Valuation services
7. The auditor of Blue Co has set performance materiality at $200,000. Which
ONE of the following could be the materiality level set for the financial
statements as a whole for Blue Co?
A.$210,000
B.$200,000
C.$100,000
D.$120,000
8. Auditors obtain evidence using procedures set out in ISA (UK) 500, Audit
Evidence. When audit the financial statements of Blue Ltd, the auditor is
present while a sales order is being processed to test if the controls are carried
out. Which ONE of the following procedures is being used?
A.Inspection
B.Observation
C.Inquiry
D.Re-performance
9. Which TWO of the following represent weakness of a system of internal
controls?
A.Lack of controls over the purchases system
B.Lack of understanding of the purposes of controls
C.Lack of staff to ensure segregation of duties
D.The possibility that staff members will collude in fraud
10. Which THREE of the following should an auditor consider if there is a
threat to independence?
A.Making disclosures to the client
B.Making disclosures to ICAEW
C.Applying specific safeguards
D.Withdrawing from the engagement
11. Which TWO of the following are not elements of a general assurance
engagement?
A.A three-party relationship
B.Sufficient appropriate evidence
C.Determination of materiality
D.An engagement letter
12. According to the Companies Act 2006 in UK, which THREE of the
following criteria can be used to decide the audit exemption?
A.Turnover <£10.2millions
B.Total assets <£5.1millions
C.Turnover <£10.1millions
D.Number of employees<50
13. Which THREE of the following are benefits of an engagement letter in
respect of assurance services?
A.Clearly defines the extent of the assurance provider’s responsibilities
B.Confirms the scope of the engagement
C.Provides written confirmation of the acceptance of the engagemen
D.Certifies the assurance provider’s opinion
14. Which ONE of the following statements is false
A.A positive assurance conclusion gives a reasonable level of assurance
B.Reasonable assurance is a high level of assurance, which allows a conclusion to
be expressed positively and negatively
C.A statutory audit gives reasonable assurance that the financial statements give a
true and fair view in all material respects
D.A negative assurance conclusions givens a limited level of assurance
15. Which THREE of the following are benefits of assurance work
A.Assurance may act as a deterrent to error of fraud
B.An independent, professional opinion
C.Testing as a result of sampling is cheaper for the responsible party
D.Additional confidence given to other related parties
16. Which THREE of the following are limitations of the provision of
assurance?
A.The client’s staffs may collude in fraud that can be deliberately hidden from the
auditor
B.Most audit evidence is persuasive rather than conclusive
C.Assurance work is carried out by people independent of the entity
D.Assurance providers would not test every item in the subject matter
17. Which TWO of the following are purposes of a letter of engagement?
A.Setting out the form of any report to be issued
B.Providing evidence on matters where other evidence is not expected to exist
C.Providing constructive suggestions to management concerning improvements in
internal control
D.Documenting and confirming acceptance of the appointment
18. Which ONE of the following procedures should be carried out before the
audit firm has decided to accept appointment as auditor?
A.Set up and submit a letter of engagement to the directors of the company
B.Ensure that a resolution has been passed at the general meeting to appoint the
new auditors
C.Ensure that the outgoing auditors’ removal/resignation has been properly
conducted
D.Communicate with the predecessor auditors to discover any reasons they should
not accept appointment.
19. Which TWO of the following are true of the auditor’s objectives in relation
to fraud, in line with ISA 240, The auditor's responsibilities relating to fraud
in an audit of financial statements?
A.The auditor must identify and assess the risks of material misstatement due to
fraud.
B.The auditor is not responsible for the prevention of fraud and error but is
responsible for detection
C.The auditor must obtain evidence regarding the risks of material misstatement
due to fraud.
D.The auditor must only obtain evidence regarding the risks of material
misstatement due to error
20. What are the two elements of the risk of material misstatement at the
assertion level?
A.Sampling risk
B.Inherent risk
C.Detection risk
D.Control risk
21. During the planning stages of the final audit, the auditor believes that the
probability of giving an inappropriate audit opinion is too high. Which ONE
of the following should the auditor amend the audit plan to resolve this issue?
A.Decrease the inherent risk
B.Decrease the control risk
C.Increase the sample size
D.Increase the materiality level
22. When gaining an understanding of the specific business operations of an
audit client which ONE of the following matters would an auditor need to
consider?
A.Products or services and markets of the client's business.
B.Accounting principles and industry specific practices relevant to the client's
business
C.Acquisitions or disposals of the client's business activities
D.Leasing of property, plant or equipment for use in the client's business
23. White Ltd’s quick ratio has fallen from 1.8:1 to 1.6:1. Which TWO of the
following might help to explain this decline?
A.Credit control has been poor
B.Current liabilities have increased
C.The allowance for receivables has been reduced
D.The entity has purchased a number of inventories for cash.
24. The following are items that might be included in an auditor's report.
Which TWO of the following are reported on by exception only? (không cần
trình bày trên BCKT)
A.Whether the financial statements are in agreement with the accounting records
and returns (BCTC đã nhất quan)
B.Whether details of directors' emoluments and other benefits have been correctly
disclosed in the financial statements. (thu nhập từ thù lao của director)
C.Whether the financial statements give a true and fair view of the state of the
company’s affairs at the end of the financial year
D.Information in the strategic report and the directors' report is consistent with the
financial statements
25. ISA 705 Modification to the opinion in the independent auditor's report
identifies three possible types of modification. In which of the following
circumstances would a disclaimer of opinion be issued?
A.The auditor has not been able to obtain sufficient appropriate audit evidence on
which to base an opinion but has concluded that the possible effects of any
undetected misstatements could be material but not pervasive
B.The auditor concludes that the financial statements include misstatements which
are both material and pervasive to the financial statements
C.The auditor concludes that the financial statements include misstatements which
are material but not pervasive to the financial statements
D.The auditor has not been able to obtain sufficient appropriate audit evidence on
which to base an opinion and has concluded that the possible effects of any
undetected misstatements could be both material and pervasive.
26. The financial statements of Green Co include a receivables balance of
$30,000 which the auditors do not believe will be recovered. Materiality has
been set at $90,000. There are no other unadjusted misstatements. What form
of audit opinion would be issued by the auditor?
A.Qualified opinion due to overstatement of receivables
B.Adverse opinion
C.Disclaimer of opinion
D.Unmodified opinion.
27. The following is example of internal control which operates at Blue plc.
Select the type of control activity which is illustrated in the following example:
“There are two keys to the locked finance department safe: one held by the
finance director and the other by the managing director”
A.Authorisation
B.Information processing
C.Physical control.
D.Segregation of duties
28. Which ONE of the following statements is true regarding the audit
committee?
A.An audit committee must comprise non-executive directors and executive
director
B.All companies are required to have an audit committee
C.Where there is no internal audit function the audit committee should consider the
need for one on an annual basis.
D.The role and responsibilities of the audit committee are set out in statute
29. The following are examples of computer controls which operate in the
payroll system at Hana Ltd. Which TWO of the following examples are the
types of computer control which illustrate for application control?
A.Manual checks to ensure that timesheets are authorised before details are
processed
B.Approval of new applications by a sample of users and by magagement
C.Range checks on payroll processing.
D.Password protection limiting access to data
30. Which TWO of the following statements are true regarding the controls in
a small company?
A.The external auditor will assess the attitudes, awareness and actions of
management.
B.The external auditor can rely on the controls in a small company.
C.Segregation of duties is often adequate in a small company
D.Evidence of the operation of controls is more likely to be available in
documentary form
1. When gaining an understanding of the investment operations of an audit client
which ONE of the following matters would an auditor need to consider?
A. Products or services and markets of the client's business
B. Acquisitions or disposals of the client's business activities
C. Leasing of property, plant or equipment for use in the client's business
D. Accounting principles and industry specific practices relevant to the client's
business
2. The auditor of Blue Co has set performance materiality at $200,000. Which
ONE of the following could be the materiality level set for the financial statements
as a whole for Blue Co?
A. $210,000
B. $200,000
C. $100,000
D. $120,000
3. Which TWO of the following are true in respect of related party transactions?
A. Related party transactions must be completely disclosed in the financial
statements
B. Related party transactions tend to be low-risk to the auditor
C. There may be a significant control risk in relation to related party transactions
D. Disclosure of related party transactions is unlikely to be material to the financial
Statements
4. Which TWO of the following statements regarding tests of controls is true?
A. Tests of controls are designed to detect material misstatements in the financial
statements
B. When the auditor believes controls are operating effectively,
C. Tests of controls are used to collect audit evidence about effectiveness of
internal control
D. Tests of controls must be used in auditing financial statements of all clients
5. Auditors obtain evidence using procedures set out in ISA (UK) 500, Audit
Evidence. When audit the financial statements of Blue Ltd, the auditor is present
while a sales order is being processed to test if the controls are carried out. Which
ONE of the following procedures is being used?
A. Inspection
B. Observation
C. Inquiry
D. FRe-performance
6. The auditor of Blue Co has concluded that the use of the going concern
assumption is appropriate and that the material uncertainty has been adequately
disclosed. What is the impact of this conclusion on the auditor's report?
A. Qualified opinion
B. Adverse opinion
C. Unmodified opinion without an emphasis of matter paragraph
D. Unmodified opinion with an emphasis of matter paragraph.
7. ISA 705 Modification to the opinion in the independent auditor's report
identifies three possible types of modification. In which of the following
circumstances would a disclaimer of opinion be issued?
A. The auditor has not been able to obtain sufficient appropriate audit evidence on
which to base an opinion but has concluded that the possible effects of any
undetected misstatements could be material but not pervasive.
B. The auditor concludes that the financial statements include misstatements which
are both material and pervasive to the financial statements
C. The auditor concludes that the financial statements include misstatements which
are material but not pervasive to the financial statements
D. The auditor has not been able to obtain sufficient appropriate audit evidence on
which to base an opinion and has concluded that the possible effects of any
undetected misstatements could be both material and pervasive
8. For each of the following statements in relation to guidance on professional
ethics. Which THREE of the following statements are true?
A. It is in the public interest for accountants to follow a professional ethics
framework
B. Rules-based codes offer a more straightforward ethical framework, as they
cover specific situations
C. Ethical guidance from ICAEW is in the form of rules rather than principles
D. Principles-based guidance is more flexible than rules-based guidance
9. The auditor of White Co is performing audit procedures to confirm the
completeness of recording the motor vehicles. Which ONE of the following would
provide the most persuasive evidence of this?
A. Inspection of vehicle registration documents
B. Review of vehicle insurance documentation
C. Physical inspection of the motor vehicles
D. Checking that the motor vehicles are recorded in the non-current asset register
10. The following is example of internal control which operates at Castle plc: “The
finance controller conducts a monthly review of authorization controls over
dispatch notes”. Select the type of control activity which is illustrated.
A. Performance review
B. Information processing
C. Physical control
D. Segregation of duties
11. Which TWO of the following represent weakness of a system of internal
controls?
A. Lack of controls over the purchases system
B. Lack of understanding of the purposes of controls
C. Lack of staff to ensure segregation of duties
D. The possibility that staff members will collude in fraud
12. Which THREE of the following are areas in which a self- interest threat might
arise?
A. Where there is close business relationship between the auditor and the client
B. Where the auditor prepares and audits the financial statements
C. Where the auditor has a financial interest in the client
D. Where the audit firm provides internal audit services and significant reliance is
to be placed on the internal audit work for the purposes of the external audit
E. Where there are a significant amount of overdue fees
13. A private company has requested that its auditor prepare a valuation report on a
prospective acquisition target in order to help it obtain finance for the
acquisition from its bank. Which TWO of the following threats may arise if the
auditor agrees to take on this assignment?
A. Self-review threat
B. Familiarity threat
C. Advocacy threat
D. Self-interest threat
14. Which THREE of the following are limitations of the provision of assurance?
A. Some items in the subject matter may be estimates
B. Most audit evidence is persuasive rather than conclusive
C. Assurance work is carried out by people independent of the entity
D. Assurance providers would not test every item in the subject matter
15. When gaining an understanding of the financing operations of an audit client
which ONE of the following matters would an auditor need to consider?
A. Accounting principles and industry specific practices relevant to the client's
business
B. Products or services and markets of the client's business
C. Acquisitions or disposals of the client's business activities
D. Leasing of property, plant or equipment for use in the client's business
16. Which THREE of the following statements in respect of risk are true?
A. Auditors can impact on inherent risk to bring audit risk to an acceptable audit
risk
B. Auditors cannot impact on inherent risk to bring audit risk to an acceptable audit
risk
C. Identifying business risks is part of the company's risk assessment processes
D. Inherent and control risks are components of audit risk.
17. Which ONE of the following statements regarding analytical procedures is
correct?
A. Analytical procedures are only used as risk assessment procedures
B. Analytical procedures must be used as part of the overall review of the financial
statements
C. Analytical procedures may be used as part of the overall review of the financial
statements
D. Analytical procedures must be used at the implementing phase
18. In the financial statement audit of independent auditor, which TWO of the
following would ordinarily be contained in the overall audit strategy?
A. The results of audit risk assessment
B. The contract between the audit firm and the client
C. List of staff to be involved with the audit
D. Detailed plan of audit procedures to be carried out
19. For each of the following statements in relation to guidance on professional
ethics. Which THREE of the following statements are true?
A. It is in the public interest for accountants to follow a professional ethics
framework
B. Rules-based codes offer a more straightforward ethical framework, as they
cover specific situations
C. Ethical guidance from ICAEW is in the form of rules rather than principles
D. Principles-based guidance is more flexible than rules-based guidance.
20. Which THREE of the following would be found in the overall audit strategy
document?
A. Timetable
B. Calculation of preliminary materiality thresholds
C. Detailed plan of audit procedures
D. Budget and fee
21. When audit inventory, auditor detected that inventory is overstated. The
overstatement is material but not pervasive to the financial statements.
Management has refused to make an adjustment to the financial statements.
What form of modified opinion should the auditor issue?
A. Qualified opinion due to a material misstatement
B. Qualified opinion due to insufficient appropriate evidence on which to base an
opinion
C. Adverse opinion
D. Disclaimer of opinion
22. During the planning stages of the final audit, the auditor believes that the
probability of giving an inappropriate audit opinion is too high. Which ONE of the
following should the auditor amend the audit plan to resolve this issue?
A. Increase the materiality level
B. Decrease the inherent risk
C. Decrease the control risk
D. Decrease the detection risk
23. Which TWO of the following are not elements of a general assurance
engagement?
A. A three-party relationship
B. Sufficient appropriate evidence
C. Determination of materiality
D. An engagement letter
24. According to the Companies Act 2006 in UK, which THREE of the following
criteria can be used to decide the audit exemption?
A. Turnover <£10.2millions
B. Total assets <£5.1millions
C. Turnover <£10.1millions
D. Number of employees<50
25. Which THREE of the following are benefits of an engagement letter in respect
of assurance services?
A. Clearly defines the extent of the assurance provider’s responsibilities
B. Confirms the scope of the engagement
C. Provides written confirmation of the acceptance of the engagement
D. Certifies the assurance provider’s opinion
26. The auditor of Blue Co has identified an unexpectedly high deviation rate
when carrying out tests of control on a sample of sales invoices. Which TWO
of the following would be a satisfactory course of action?
A.Ignore the deviations as they only affect some of the items tested
B.Extend the sample size
C.Replace the sample
D.Perform alternative substantive procedure
27. According to Company Act 2006 in UK, which THREE of the following
statements are true
A.In UK, Financial Reporting Council (FRC) is responsible for issuing auditing
standards and guidance for auditing
B.An individual or firm is eligible for appointment as statutory auditor if the
individual or firm is a member of a recognized supervisory
C.Auditors in the UK are subject to both legal and professional requirements
D.A person who is an officer may act as a statutory auditor of a company
28. Which TWO of the following are benefits of an engagement letter in
respect of assurance services?
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B.Ensure that the audit is properly organized and managed
C.Ensure appropriate attention is devoted to important areas of the audit
D.Provides written confirmation of the acceptance of the engagement
29. Which THREE of the following would be found in the overall audit
strategy document?
A.Consequent, nature, timing and extent of procedures
B.Detailed plan of audit procedures => detailed audit procedures
C.Calculation of preliminary materiality thresholds
D.The accounting policies adopted by the entity and changes in those policies
30. An effective system of internal control requires segregation of basic
functions. Which TWO of the following functions should ideally be
segregated?
A.Budgetary control
B.Preparation of financial statements
C.Custody or handling of assets
D.Recording of transactions