Month: August 2025

Which one of the following correctly describes the period for which client identification documents must be kept under money laundering regulations?

Select ONE answer:

1. For a minimum of five years and until five years have elapsed since the relationship with the client has ceased
2. For a minimum of seven years and until seven years have elapsed since the relationship with the client has ceased
3. For a minimum of five years and until seven years have elapsed since the relationship with the client has ceased
4. For a minimum of seven years and until five years have elapsed since the relationship with the client has ceased

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct == > Money Laundering Regulations 2007 state that client identification documents must be kept for a minimum of five years and for five years after the relationship elapses.
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Which one of the following correctly describes the period for which client identification documents must be kept under money laundering regulations?

Select ONE answer:

1. For a minimum of five years and until five years have elapsed since the relationship with the client has ceased
2. For a minimum of seven years and until seven years have elapsed since the relationship with the client has ceased
3. For a minimum of five years and until seven years have elapsed since the relationship with the client has ceased
4. For a minimum of seven years and until five years have elapsed since the relationship with the client has ceased

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct == > Money Laundering Regulations 2007 state that client identification documents must be kept for a minimum of five years and for five years after the relationship elapses.
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

For each of the following statements, select whether they are true or false in respect of the audit engagement letter.

Statement 1 – The engagement letter should be sent before acceptance of the appointment.
Statement 2 – The engagement letter should be sent after the appointment of the auditor but before the commencement of the audit.
Statement 3 – The engagement letter should be sent after the start of the audit but before the signing of the auditor’s report.
Statement 4 – An engagement letter should be sent to all new clients.

Identify whether the statements made above are true or false?

Select ONE answer:

1. Statement 1. True and Statement 2. False and Statement 3. False and Statement 4. True
2. Statement 1. True and Statement 2. False and Statement 3. False and Statement 4. False
3. Statement 1. False and Statement 2. True and Statement 3. False and Statement 4. True
4. Statement 1. True and Statement 2. False and Statement 3. True and Statement 4. False

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct == >    The engagement letter is essentially the contract between the client and the auditor and therefore, should be sent to all clients. It confirms acceptance of the appointment by the auditor, so it must be issued after acceptance but before work is commenced.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Which ONE of the following procedures should NOT be carried out after the audit firm has decided to accept an appointment as auditor?

Select ONE answer:

1. Perform checks to ensure that there are no legal or ethical reasons why the new audit firm cannot act as the auditor
2. Ensure that the outgoing auditors’ removal/resignation has been properly conducted
3. Ensure that a resolution has been passed at the general meeting to appoint the new auditors
4. Submit a letter of engagement to the directors

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct == > Checks on legal and ethical restrictions should be performed before the appointment is accepted. Once the appointment is accepted, legal and professional obligations need to be addressed, options B and C (as per Companies Act 2006) and option D as per ISA 210, Agreeing the Terms of Audit Engagements.
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Tick and Co LLP, an audit and assurance firm, has the following factors to evaluate for a prospective client and decide whether it is high or low risk.

For each factor, select whether the inherent audit risk is high or low.

Factor 1 – Company has prudent accounting policies

Factor 2 – Company carries out unusual transactions

Factor 3 – Company currently has no finance director

Are these clients high or low risk?

Select ONE answer:

1. Factor 1 – Low and Factor 2 – Low and Factor 3 – Low
2. Factor 1 – Low and Factor 2 – High and Factor 3 – High
3. Factor 1 – Low and Factor 2 – Low and Factor 3 – High
4. Factor 1 – High and Factor 2 – High and Factor 3 – High

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct == > Prudent accounting policies would constitute a low-risk indicator as directors would appear not to be aggressive in interpreting accounting policies to enhance the performance portrayed by the financial statements. A company carrying out unusual transactions would be high risk, as each transaction would require a separate understanding, leading to a higher risk of error. Having no FD is a high-risk indicator – the staff in the function may not be supervised, and they may not have the skills or the knowledge to apply accounting standards and address the key risks in the systems of the company.
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.