Tag: Audit

Which ONE of the following is not part of an entity’s risk assessment process?

Select ONE answer:

1. Report the process to the auditors
2. Identify relevant business risks
3. Estimate the impact of risks
4. Assess the likelihood of occurrence

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 => Reporting the process to the auditors is part of the external audit process and not part of the internal risk assessment process.
2. Not correct
3. Not correct
4. Not correct

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For each of the following internal controls, which is the principal limitation?

• Segregation of duties in a sales system

Select ONE answer:

1. Management override
2. Lack of Stakeholder Engagement With Reporting
3. Human error
4. Collusion

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 4

1. Not correct
2. Not correct
3. Not correct
4. Correct => Even where duties are segregated, this control can be overridden by the collusion of the parties involved.

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For each of the following internal controls, which is the principal limitation?

• The preparation of a bank reconciliation

Select ONE answer:

1. Management override
2. Lack of Stakeholder Engagement With Reporting
3. Human error
4. Collusion

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 => For the preparation of reconciliations where calculations are involved, the inherent limitation is that these reconciliations are susceptible to human error.
4. Not correct

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

According to ISA (UK) 315, which one of the following is not an aspect of an entity’s control environment?

Select ONE answer:

1. The attitude of the directors to internal controls
2. The attitude of staff to internal controls
3. The awareness of internal control issues in the company
4. The actions of senior management in relation to internal controls

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 =>   it is the attitude of management and senior staff that will shape the entity’s control environment and not that of the ordinary staff.
3. Not correct
4. Not correct

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

Which ONE of the following statements about audit committees is incorrect?

Select ONE answer:

1. At least 50% of the members of an audit committee must be non-executive directors
2. Listed companies are required to have an audit committee
3. Audit committees are considered to be good practice for all large companies
4. Audit committees are an important aspect of a company’s control environment 

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 => is incorrect as all members of an audit committee must be non-executive directors.
2. Not correct
3. Not correct
4. Not correct

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