Month: August 2025

Which ONE of the following are auditors always required to do on being invited to accept an audit engagement?

Select ONE answer:

1. Ensure they are professionally qualified to act
2. Do a general search on the internet about the prospective client
3. Obtain references for key personnel within the entity to be audited
4. Communicate with the existing auditors to discover any reasons they should not accept the appointment

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 == > It will not be necessary to obtain references when the entity is already known to the firm. It will not be necessary to contact previous auditors in the case of a company’s first audit.
2. Not correct
3. Not correct
4. Not correct

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

The level of assurance provided by an assurance engagement will depend on the type of engagement.

For each of the following examples, select the level of assurance which would be given: Report on profit and cash flow forecasts?

Select ONE answer:

1. Absolute
2. Reasonable
3. Limited
4. Unlimited

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 == >    A statutory audit provides reasonable assurance, which reflects the comprehensiveness of the audit procedures carried out. No assurance engagement, not even a statutory audit, can give absolute assurance. A review of financial information gives limited assurance, which is a lower level of assurance than a statutory audit, and thus, its conclusion would be worded negatively. A report on profit and cash flow forecasts gives limited assurance because forecasts are, by nature, about uncertain future events and so cannot be made with enough certainty to give a ‘reasonable’ level of assurance.
4. Not correct

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

The level of assurance provided by an assurance engagement will depend on the type of engagement.

For each of the following examples, select the level of assurance which would be given: Review of financial information?

Select ONE answer:

1. Absolute
2. Reasonable
3. Limited
4. Unlimited

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 == >    A statutory audit provides reasonable assurance, which reflects the comprehensiveness of the audit procedures carried out. No assurance engagement, not even a statutory audit, can give absolute assurance. A review of financial information gives limited assurance, which is a lower level of assurance than a statutory audit, and thus, its conclusion would be worded negatively. A report on profit and cash flow forecasts gives limited assurance because forecasts are, by nature, about uncertain future events and so cannot be made with enough certainty to give a ‘reasonable’ level of assurance.
4. Not correct

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

The level of assurance provided by an assurance engagement will depend on the type of engagement.

For each of the following examples, select the level of assurance which would be given – Statutory audit?

Select ONE answer:

1. Absolute
2. Reasonable
3. Limited
4. Unlimited

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 == > A statutory audit provides reasonable assurance, which reflects the comprehensiveness of the audit procedures carried out. No assurance engagement, not even a statutory audit, can give absolute assurance. A review of financial information gives limited assurance, which is a lower level of assurance than a statutory audit, and thus, its conclusion would be worded negatively. A report on profit and cash flow forecasts gives limited assurance because forecasts are, by nature, about uncertain future events, and so cannot be made with enough certainty to give a ‘reasonable’ level of assurance.
3. Not correct
4. Not correct

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

In the context of a statutory audit, which ONE of the following is NOT an example of the expectation gap?

The belief that?

Select ONE answer:

1. the auditor’s report certifies the financial statements as correct
2. the auditor’s principal duty is to detect fraud
3. the auditor is employed by the directors
4. the auditor checks all transactions

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 expectation gap is the gap between what users of financial statements believe the auditor does and what the auditor actually does. The following three are common manifestations of the expectation gap: • the auditor’s report certifies the financial statements as correct • the auditor’s principal duty is to detect fraud • the auditor checks all transactions. The belief that the auditor is employed by the directors is a common misconception but not a manifestation of the expectation gap. (The company employs the auditor, who is appointed by the shareholders in a general meeting.)
4. Not correct

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